In the 15 years he's spent helping startups get off the ground as an investor, entrepreneur and founder of Montreal's Year One Labs accelerator, Raymond Luk kept bumping up against a curious phenomenon: After cashing their cheques, young companies drifted away from their investors.
"Every angel investor has had this experience," he says. "You have this weird, awkward scenario where you're sending an e-mail, asking, 'Hey, are you still in business?'"
It's not a matter of negligence: Getting a startup off the ground is a frenetic experience. When a new company leaves an accelerator program, which offers investment along with close supervision and business guidance, it's easy for investor relations to slip down the list of competing priorities.
So Mr. Luk set about finding a better way.
Now he's got a new service of his own: Hockeystick, a web application that replaces ad-hoc reporting with a system that keeps entrepreneurs in touch with their investors, and investors on top of their burgeoning portfolios. The service is developed by Scalability Inc., a professional back office company Mr. Luk founded in 2012.
The service – whose name refers to the revenue curve (fingers crossed) of a company whose product has just hit the market – presents entrepreneurs with a simplified, customizable one-page form to periodically fill out. Among other things, it tracks revenues, expenses, offers a customized set of legal disclosures, as well as resources for entrepreneurs in the areas they need help. Investors can click to 'raise their hands' if they can volunteer assistance.
"We work with accelerators around the world, and the feedback is universal: Let's keep the report to one page," says Mr. Luk.
The software then distributes the form to the people who need to see it, and archives it in a secure environment. The software will also send out the e-mail reminders to keep the reporting on track.
Hockeystick arrives at a time when investor relations is getting more and more labour-intensive: The rise of crowdfunding is seeing startups go from being funded by a few big investors, to many small investors. In the United States, online services like FundersClub and AngelList are making it easy for accredited investors – typically, millionaires – to sink as little as $1,000 into a startup. And the forthcoming JOBS Act has the potential to let even non-accredited investors into the game.
In the past, small-time investors were restricted from investing in private companies by securities regulations that were meant to protect them from snake-oil salesmen. This is why services like Kickstarter can only offer investors with trinkets as rewards, not equity or actual returns.
The upshot is that entrepreneurs could find themselves with a lot more correspondence with investors – and investors, in turn, are going to have bigger portfolios to manage. Mr. Luk hopes his product will appeal to both.
While Mr. Luk's six-person company, Scalability, was only founded a year ago, the Hockeystick platform is already in service at accelerators funded by the Business Development Bank of Canada, as well as across the Global Accelerator Network. And as a startup supporting other startups, Mr. Luk understands the challenge as well as anyone.
"When you're a big company, you've got a department for everything. When you're a small company, you are the department of everything."