Vancouverite Michael Cheng, the only child of immigrants from Hong Kong, participated in the Next 36 session that ended this summer. The faux-hawked 24-year-old has 11 business ideas on his LinkedIn profile, from self-tightening shoelaces to an online method for buying and selling used cars. But the plan he worked on at the Next 36 was for Needle, an online market for designers.
After Cheng delivered one hyperconfident presentation, Satchu asked his classmates: “Does anyone have any doubts about Michael or Needle?” To Cheng’s surprise, several Next 36ers went at him; as Satchu pointed out, Cheng’s cocky attitude aroused more animosity than admiration. Still, Satchu awarded Cheng the program’s highest accolade—a prize in Satchu’s own name—for Needle, whose new office is at Ryerson’s dynamic DMZ incubator. Needle was officially launched in August, and now has 11,000 registered buyers, 120,000 designers and 2.5 million pieces of work; Cheng and his partners have persuaded six angel investors, including a B.C. judge, to contribute an undisclosed amount of seed funding, on top of the $80,000 they got from the Next 36.
“I appreciated Reza taking me down,” Cheng says, a few days after delivering his final pitch at the program’s closing session. “It sounds odd, but I did. It was about authentic leadership. If you’ve been authentic, when you mess up, people stand by you. They want to help you. I obviously hadn’t been. I’d brought other things to the table, but not that—being honest about my weaknesses as well as my strengths. You learn, hopefully fast. My parents have worked so hard to give me opportunities.” He pauses; there are tears in his eyes. “I’m committed to making a go of this.”
If Satchu was Cheng’s biggest critic (“I’m hard on the people I think highly of, who have a real shot,” he says), local investor Dean Hopkins has been his biggest supporter. In far-off 1994, Hopkins, a Waterloo grad, left McKinsey to start an Internet company, Cyberplex. “It was so early that people were saying, ‘What’s the Web? Why do we need a website?’”
He sees a bright future for Cheng. “Michael and his generation grew up immersed in the Internet, and for them, the world is flat,” Hopkins says. “They have online friends and contacts all over the world, and they think globally. Michael knows how to access resources and customers abroad. It might not be this project that takes off—but with Michael, it’ll certainly be the next, or the one after that.”
Show me the money
The big money in Canada hasn’t really gone in for tech. Real estate, natural resources, financial services, yes, but not tech. There’s money here, sure, but it’s spread across small, government-established angel networks and private financiers—mostly guys who did well in the Internet’s first big run and cashed out before the crash.
Perhaps the biggest financial fish in the local tech pond is OMERS Ventures (a wing of the $60-billion Ontario municipal employees pension fund). David Crow invests in and advises hot start-ups, and works part-time for OMERS, as its Evangelist-in-Residence (seriously). He has major cred on the scene—not least for a blog post he wrote last fall, titled “Don’t Panic: A Hitchhiker’s Guide to the Toronto Start-Up Ecosystem,” that has become something of a bible for scenesters: which weekly events are worth crashing, which classes are worth taking, which hackathons and demos draw real talent. He’s relatively new to OMERS, which has a good track record so far, having backed, among others, Vidyard, Vancouver star start-up Hootsuite (which helps companies and individuals manage their social media profiles) and Desire2Learn, a global education software company housed in the same Waterloo building as Communitech.
I met Crow at the OMERS Ventures offices, high up in the same gold towers where RBC is headquartered in downtown Toronto. He was wearing a jaunty striped gondoliers’ T-shirt and green jeans—not exactly typical Bay Street couture.
Canadians, he says, are a cautious bunch. “We love our GICs.” Here, investors want to know who else is in; the Valley business model is to take big risks in search of big payoffs. “Our major investors are used to the risks with mining and natural resources, and they can be considerable,” says Crow, who was born in London, Ontario, and is a veteran of the Valley and the Austin, Texas, tech scenes. “But they don’t yet seem to understand tech. The risks aren’t any greater; they’re just different. One of the problems is that a number of Canadian financiers got in to the market just a couple years before the last big crash. They didn’t get to ride that cycle when it was hot; they just got the big downside.”