Chris Carder well remembers the day he and his business partner Chancellor Crawford pitched Air Canada for the deal that would make or break ThinData Inc.
In the wake of the dot-com bust, what they had started as a web-development company was struggling. Carder and Crawford had concluded a new focus on e-mail marketing could save the company, and Air Canada’s Aeroplan – the biggest e-mail marketing user in Canada and one that would expose Thindata’s work to bosses of many big companies – was what they needed to turn it around.
They were a million dollars in debt. As they landed in Montreal, Carder says, he told Crawford that either they won this deal or they would have to close down the company and declare personal bankruptcy.
The $1,000 MinuteIt came down to two companies – 18-employee ThinData and DoubleClick, the world’s biggest Internet advertising company. And ThinData got the contract.
In 2008, Carder and Crawford sold ThinData to Transcontinental Inc. for $18 million. Carder now runs Kinetic Café, a consulting firm that among other things helps entrepreneurs build their businesses and raise capital.
Carder told the Air Canada story in the keynote address at the 20th annual conference of the Canadian Association of Business Incubation http://www.cabi.ca/ (CABI) in Ottawa. He was asked after the keynote why he and Crawford hadn’t brought in venture capital to fund ThinData’s early years. While they borrowed money, Carder said they didn’t sell stakes in the company for fear of getting burned – and he said he wouldn’t be so shy of outside investors if he were doing it again now.
But the investment might not necessarily be easy to find. Richard Remillard, executive director of the Canadian Venture Capital Association, told the CABI conference soon after that venture capital has been in a slump in Canada for a decade, and while there are signs of recovery, “there are some signs that entrepreneurs are getting discouraged.”
There is money out there, but entrepreneurs need to know how to go about getting it. That was the subject of a panel discussion with Carder and two other panelists.
Carder’s first piece of advice was to respect investors and their money. He recalled, distastefully, a meeting with a would-be entrepreneur who said his strategy was to find someone really rich who wouldn’t mind if he lost their money. And he suggested founders considering a potential investor ask themselves why, apart from the money, they want to work with the person.
“These people are part of your lives,” Carder said. “They’re integrated with what you do.” Choosing investors you can’t work with can lead to disaster.
Carder and fellow panelists Wendy Kennedy and Michelle Scarborough stressed preparation.
Carder said entrepreneurs need a series of strategy sessions before they go out seeking investment, dealing with issues like understanding the competition, defining how the company plans to make money in the long term, building presence online and in the market, and communication.
Kennedy, president of WendyKennedy.com and author of So What, Who Cares, Why You: The Inventor’s Commercialization Toolkit, said entrepreneurs must be able to answer the basic question “so what are you doing?” in a way that conveys why their ideas matter. Too often, she said, entrepreneurs talk too much about how their product or service works, use too much jargon, go on about the size of the potential market and fall back on clichés like “nobody else is doing this.”
Instead, she said, they need to concentrate on the customer’s problem, how their idea addresses it, what their competitive edge is and, of course, what they’ve done so far and what the investment they’re seeking will help them do next.
Scarborough, co-chair of the National Angel Capital Organization, said that as an angel investor she looks for companies at the development stage, not the idea stage, with identified market opportunities, working prototypes and scalable business models. But the first item on her list is a coachable management team. Investors don’t want to work with entrepreneurs who aren’t willing to listen and learn.
They also want to see that the founders have invested their own money in the venture, Scarborough added.
That echoed a point Carder made in his keynote, that it’s about commitment. For him that meant buttonholing people in a Toronto bank-tower elevator until he finally met the person who got him a business loan. And it was the key to winning that Air Canada contract. Asked why the airline should choose ThinData over giant DoubleClick, Carder admitted the U.S. company had more money, more offices and all that, But, he told Air Canada, he and Crawford would be waking up every morning thinking about how to improve the airline’s e-mail marketing business.
