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Booted out of Bootup Labs (livejamie.com)
345 points by livejamie on Apr 15, 2010 | hide | past | favorite | 158 comments

When I saw this title, my immediate thought was "hmm, I wonder if this is about Bootup Labs?"

I've met the people behind Bootup Labs, and I like them. They're smart. They're enthusiastic about what they're doing. But I was never really convinced that they were able to make things work financially. I've seen enough startups that I can usually tell when a startup is running on fumes and spending all their energy on trying to raise more funding... and that's the vibe I've been getting from Bootup Labs for a while. Not really a good vibe to have coming from a group with the raison d'etre of providing funding.

On behalf of Canadians in general and Vancouverites especially: We're really sorry about this. Nobody should have to go through what happened to you. We hope you'll come back some day under better circumstances.

In case this makes anyone think cperciva is not very bright, I replaced the original HN title with the title of the blog post itself.

Don't worry, Paul, I'm sure everybody here already knows that I'm not very bright.

Thank you.

I don't think it is your responsibility to apologize for bootup labs or on behalf of all vancouverites or canadians for that matter. I've interacted with the bootup labs team on more than one occasion and have never gotten a good impression from them. They are the kind of middle men who take too much from entrepreneurs and give too little. I feel bad for anyone who is convinced to enter into their system, both entrepreneurs, and the investors who give them money.

Furthermore, Canadians do not apologize for everything. I know plenty who never apologize for anything.

Also, a little more ranting about Bootup labs, there are way too many programs like this that are actually credible. I encourage all who are thinking of applying to their program to strongly consider otherwise. If you can't get into another better incubation program, it means your idea needs more work. I haven't seen anything positive from bootup labs and I can't say anything positive about the leadership behind bootup labs -- this was true way before this very revealing incident.

Any entrepreneur considering joining the bootup labs program is better served to keep their day jobs and bootstrap their company without bootup labs. Please, stay far far away.

I don't think it is your responsibility to apologize for bootup labs or on behalf of all vancouverites or canadians for that matter.

Most of us are really sorry about this. A few of us take ourselves far too seriously.

Any entrepreneur considering joining the bootup labs program is better served to keep their day jobs and bootstrap their company without bootup labs.

For what it's worth, I considered Bootup Labs and decided that I was better off continuing to bootstrap -- but I'm not sure that what was best for me is necessarily best for all startup founders.

What are some of the better startup incubation programs?

My girlfriend's from the gulf islands in B.C. so of course I always hear how wonderful it is and how nice Van is. Needless to say I was especially excited when I read about Bootup Labs.

Even after contacting them it never felt right and we passed. I really feel for these guy, that could have been us.

I second this, Vancouver is really sorry and we hope you will come back and visit.

Vancouver is not sorry. There are plenty in Vancouver who predicted something like this would happen as a result of doing business with Bootup Labs.

If anything, Vancouver has benefited from this because it is now more likely that Bootup Labs will be booted out of Vancouver. Bootup labs has been hurting the startup community in Vancouver for quite some time and it will help the environment there if this kind of sour leadership is forced out of town.

For one, it was partially a joke. Canadians apologize too much and for anything.

Let me be clear, I'm not sorry this happened to Bootup. I'm sorry because I don't want anyone to think bad of our city because of an event like this.

Bootup can close down tomorrow for all I care. I take it personally when a fellow entrepreneur (and HN user) gets screwed over, and especially when it happened in my city.

Thirded. It's awful that these two had to go through this, but on top of the awful experience, it happened as a result of moving to what I believe is the most beautiful city in the world. Being so excited for something and having it turn into an unmitigated disaster is depressing.

Believe me when I say the whole tech community here feels awful about this. Don't let it sour you on our city!

What I learned from this blog post is that I need to visit Vancouver someday.

I grew up there, and please do, because after living in a bunch of other cities nothing quite measures up.

You have no idea how depressing it is to live a stone's throw away in Seattle - it's like wallowing in a pit of mud right outside the gates to Eden. No offense to Seattleites, but your city blows in comparison.

> On behalf of Canadians in general and Vancouverites especially: We're really sorry about this.

Allow me to note something. As a Canadian and a Vancouverite.

While I do not particularly like Bootup Labs for a variety of reasons, I cannot say that I believe either side of the story and that I can form an objective opinion. For this reason I find it strange that you take it on yourself to apologize on my behalf.

As a Canadian, I'm sure you realize that we apologize for everything, whether it's our fault or not. :-)

But aside from that -- even from what Bootup Labs is saying, this situation is very unfortunate for the status.ly founders and something I hope nobody else has to go through.

As a Canadian, I'm sure you realize that we apologize for everything, whether it's our fault or not.

And this is a hang over from your British heritage.

Sorry about that. :-)

Danny, one of the bootuplabs founders just posted this comment on the post.


This is not how it went down Jamie. After everything that we did for you and Steven, I'm shocked at how you have twisted the truth for PR reasons.

- you were in our office for 2 months, not 3.

- you program is 5%-15% for $150k over 8 months

- you received $6k over that 2 months

- we received nothing in return.

- we paid your legal fees.

- we introduced you to many people who you can still call on today.

We are not out of money, we just closed a round. It was a condition of their investment that we let you go.

Yes, it wasn't an ideal situation, and we didn't plan on it working out this way. But in the end, I made sure that you got the better end the deal


Sad to see them trying to argue over facts when these guys moved across the country and gave up everything to be there, then they act like they should be happy to have even had the chance. Wow.

Customer, to Taxi driver: "I'll pay you $40 to take me to the airport."

[Taxi driver takes customer 4 miles, throws him out of the cab in a bad neighborhood to pick up a more profitable customer, and drives away. Customer flips off driver as he speeds away.]

Driver, yelling out of window: "What are you complaining about? I took you 4 miles and didn't even charge you!!"

Wow what a clean way to explain this crazy matter to my son.

My response which I posted:

Hey Danny.

I apologize that you feel like I'm twisting the truth.

It was the last week in January until the end of last Month. While we were there 3 months of the year, you are correct 2 months would be more accurate,

I was just getting the $100k off of the Bootup website, I understood that we got $150k, but that $50k went back to Bootup, is that not what the original terms were?

You did pay our rent and our legal fees to get incorporated. I mentioned the rent, but I didn't mention the legal fees. I apologize.

I didn't suggest that Bootup was closing down or was out of money.

I wouldn't suggest that I got the better end of the deal as it was extremely expensive to move to and live in Vancouver.

I wish you all well.

>I didn't suggest that Bootup was closing down or was out of money.

The title of this posting is "Moved to Canada to participate in a startup incubator that had no money"...

And this is why you don't embellish titles. Even when retitling your own original post.

Can we please not do that, at least here on HN? A direct link[1] to the comment in question would be better for a number of reasons.

[1] http://news.ycombinator.com/item?id=1266864

why are you apologizing? Seems like it should be the other way around...

Soory you guys have had ahard time, Hope this experience doesn't scare too many other people off doing startups in vancouver or coming here to start a business

I'd like to think that most people ballsy enough to start a startup in the first place will take it as lessons learned and still see Vancouver as a great opportunity. I know I would, if given the opportunity. I'd just be a little more careful now, having read about Statusly's ups and downs.

Wow, they're really clutching at straws. The legal fees were presumably spent setting up a Canadian corporation. What use is that to the founders now? Similarly, the rent being paid - the cost of throwing all your stuff out (and presumably having to buy it again later) will be for most people way higher than a few months worth of rent.

It's often too easy to jump to the wrong conclusion... but I'm struggling to see a decent explanation for this. And anything less than a full apology is a huge red flag.

Correct me if I am reading too much into their response. But it sounds like they were at the tail end of closing a round of financing. The investors didn't like some of the startups in the current cohort so they made it a requirement that Bootup cut them from the program before the new round closed.

So instead of honoring their word they choose to take the money. Very poor business practice IMO.

I should clarify that by "decent explanation" I meant one that would make me think, "oh, that's reasonable", not merely one that fits the evidence!

seems if they didn't take the money, everyone loses

"closing a round" could be code for didn't have the money when the intake offer was made and couldn't raise the money for all the startups... so picked and kicked to stay afloat.

Out of everything said here, this sticks out like a sore thumb:

we received nothing in return.

Isn't the whole point of these programs to enable founders to do their thing in an environment they can't find anywhere else?

If you're expected to manage a project and provide deliverables over a timeline, why not just go out and find a customer? You get to keep all their money and all your equity. And you still get to advance your product.

If, on the other hand, you want to develop a game changer, uncontrained by customer demands, you save up or take investment and go to your lab. Your are no longer a developer; you are an inventor. Sure, everyone wants to show progress, but not at the expense of pursuing the breakthroughs you will need to hit the home run desired by your investor(s).

Investors, if you want a home run from your founders, you may just have to wait a while for the baby to gestate. Expecting "something in return" in the first 2 months of a 10 month program is an unreasonable expectation IMO. Just do your share and get out of the way.

"After everything that we did for you and Steven..."

You know, there are any number of people in the city I live in who are quite willing and able waste a few months of my life, drain my bank balances and crush my spirit without asking me to move to another city in another country.

In the long term the introductions might be useful but they are they only upside I see in this whole situation.

Agreed with DanBlake: "Wow".

--then they act like they should be happy to have even had the chance.

This is a common tactic of a con-artist and or sociopath. They try to deflect back onto the one drawing attention for two purposes. One to discredit the one lodging complaint and two to try and strong arm the more passive party into silence.

Humans, as a general rule of thumb, dislike conflict. You can see it in Jamie's responses where he is still apologetic to these guys, when logic would dictate that he should want their head on a platter.

Sociopaths see human responses such as this, like an artist sees a completed painting on a blank canvas, and they will use it against you. When I read that line quoted above, I realized right then that Dan is most-likely a sociopath and a person to be avoided.

From http://blog.bootuplabs.com/2010/04/14/wertz-joins-board-firs...

"We supplied a great deal of support and value to the 7 companies over the first 2 months of our 2010 cohort, and we received nothing in return for the 4 companies that were cut"

It seems like they are implying that the 4 companies somehow owe them something.

The more of these kinds of comments I read, the more I feel sick. The first time I met one of the founders of Bootup Labs, this was when I was fairly new to Vancouver, I got a deep upsetting feeling in my stomach. I felt the same kind of energy from others involved in meetups they put together. They used to hang around workspace as well.

Someone introduced me to a bootup labs person and within just a few sentences I knew these characters were to be avoided. It is difficult for me to rationalize these feelings in ways that can help stop the bad future I see that makes me have these feelings. I don't want to share the feelings, because they are just feelings. I try to only share opinions I can rationalize, because I don't want to be wrong about a negative feeling if the person is actually good and I'm wrong in my assessment.

It's like when I interacted with them, I saw how the compounding negativity of their influence was going to affect the startup community in Vancouver. My feeling made me want to stay far, far away from anyone involved in bootup labs or involved with them or their "groups". I want a good group to be seen as the leader in Vancouver, but it's almost like the stage has been set there and it was designed by bootup labs.

I don't know where the impressions like these come from. I don't know why I have them or how exactly I knew bootup labs was going to turn out badly.

In Texas, there is a saying, "All hat and no cattle." I don't know if there is a similar expression in BC or not, but it's like I can tell that what they were saying was intended to "sell" those who simply didn't know enough to steer clear of them. The bootup labs people are great at sales and giving the impression of power, certainty, and success -- but I never saw any of it.

I want to help people steer clear of individuals like this, but people who say negative stuff about others are often themselves looked down upon. Moms say, "If you don't have something nice to say, don't say anything at all." Well, sometimes, keeping your mouth shut can itself have negative repercussions.

As someone who is still struggling with how to properly behave in social situations, how am I to react when I am confronted by a situation like this?

I feel your pain, man.

I was involved years ago with a group of individuals in a different industry. We were working on some advanced machine learning stuff. It was really cool, and the tech was going somewhere. We were getting market interest too from some big players.

I ended up cutting and walking away. Basically I burned several years of work in the process (I designed almost all the tech), and was left with debts that I'm just now getting rid of.

Getting away from the folks I was working with was worth more to me than any of the possibilities that were on the horizon. I also had a strong feeling that if it was a success that I would see none of it, so there was a bit of plain old self-interest too.

"All hat and no cattle" is pretty good. The one guy running the whole thing was, I think, a pure psychopath. I was actually afraid of him for a while, thinking that he might come some night and kill me and my family.

He was charismatic as hell and really, really good at projecting an aura of limitless success and at getting people interested, but nothing ever panned out. He was surrounded by slimy opportunists and clueless followers. I was one of the latter for a while. He had a way of stroking your ego and making you feel powerful, when really you were just being used.

Since then, I now have a real sense for such people and such arrangements and can sort of smell them. Like you, I can't really describe it. It's a bit of too-good-to-be-true and a bit of too-slick and a bit of... some ancient animal threat response.

I've never been to Vancouver or met any of the principals involved in this story, so I really can't comment directly. But your "sense" may indeed be accurate. I sure know that smell now.

Unfortunately, the startup world and the larger tech industry is absolutely crawling with these reptiles.

My advice? Just steer clear. You can't really do much else. You can't go around badmouthing people, as it just makes you sound like a jerk and could also attract legal harassment. Surround yourself with people who aren't slimy, and avoid even those who are unfortunate enough to be in the orbit of slimeballs. All you can really do for people like them (and like I was years ago!) is to wait and hope they come to their senses. If they are your friends, you might be able to tell them or hint at them... but it's really just as bad as when someone you know is dating someone awful.


I'm not really sure how I feel about this. It seems like they behaved pretty reasonably for a regular company, but as a fiduciary, they probably should have held off and not funded anyone without funds in the bank, vs. relying on a mid-term capital call. (I wonder who bailed on the capital call and why)

After this, I would probably be reluctant to move to Vancouver based on their line of credit promise unless I could see the funds in escrow; a LoC of $100k should mean $100k in an account I control, with equity going to them based on how much I withdraw. If they were Sequoia I'd be willing to accept a promise, but clearly how they have demonstrated they have pretty limited resources.

They at least seem fairly transparent about everything, so it's not dishonesty, merely bad judgment.

I'm also curious why 4/7 were cut -- was it that they were mediocre teams/products that Wertz didn't want to fund, or was it just that you ran out of money in the bridge period? It seems unlikely to me the latter, or you would have tried to structure some kind of bridge (or asked the teams to do this themselves by not drawing on the line of credit, which seems to be your only marginal cash expense per team). How else would you pick which companies to keep vs. eject?

I'm not trying to be a dick, but when you burn people (even unintentionally or with the best of intentions), it makes it harder for everyone else to do deals.

What a horror story. What sort of program offers $100k to that many groups and doesn't follow through? "Whoops, we were $500k short."

That goes beyond just being embarrassing.

What sort of program offers $100k to that many groups and doesn't follow through?

Not to be facetious, but: A program which doesn't have as much money as they're offering people.

The founders of Bootup Labs put some of their own money in, but they're raising money (or trying, at least) from VCs for the rest. They're paying themselves [EDIT: or not -- see reply from dannyrobinson below] from the $50k/startup management fee, not just from expected future profits.

Are there any other startup accelerators which do things this way? I'm not aware of any.

> $50k/startup management fee


Bootup Labs is structured as an investment plus a services contract. They give you $50k in exchange for 5% equity, then you immediately pay the $50k back to them in exchange for the office space, accounting services, legal services, mentoring, et cetera. Then they give you a $100k line of credit which converts (at their option) at 1% equity per $10k.

It's a very effective way of protecting themselves from downside risk -- if all the startups bomb, the startup founder have nothing and the investors have nothing, but Bootup Labs still has their $50k/startup -- which might be part of the reason why they've had trouble convincing VCs to invest. I think many VCs would be skeptical of a startup CEO who said "we have no revenue and a completely untested business model, but we're going to pay ourselves $100k salaries with your money".

Incubators that ask you for money _and_ equity make me a little bit sick.

Either sell me a service or give me cash for equity. Don't do both.

the ____ giveth and the ____ taketh away!

It's pretty common for VCs to have the company being invested in pay for legal/research/etc. expenses out of the investment amount -- so you raise $500k and immediately pay $50k back to the VC for their costs.

It's weirder here due to the small scale of investment relative to the costs, and the non-cash services, but not totally implausible.

It also might be part of the reason why they're desperate to get funds from VCs in the first place. The whole "pay us out of the money we just gave you" model doesn't make sense unless the funding is coming from an external source.

My impression from reading all of this is that Bootup Labs is a scam. At best, they have a significant conflict of interest at the heart of their business model.

So would that imply that the founders could try to collect part of the $50k from Bootup Labs? It sounded like when they got kicked out of the program, Bootup Labs only covered the previous months rent, when Statusly should have already paid for rent and services for the entire length of the program.

Now if Statusly was only in the program for 2 out of the 8 months, then it seems like the founders could be owed around $35k (50k2/8.95) for the money that they paid to be in the program for the rest of the 6 months.

I would assume that Statusly never paid Bootup Labs the $50k, due to Bootup Labs never giving them the $50k to give back.

You guys are getting confused with the "rent" word. We paid Statuslys out of pocket expenses (i.e. their apartment and food) because they had no money.

As I understand it, they had no money in part because you didn't keep your side of the agreement.

True VC firms would never invest in this structure for many reasons. Naive angels or silver-spooners, maybe.

I could see someone smart investing a small amount purely for bizdev/dealflow.

As a manager of Bootup, I can assure you that we haven't been personally paid anything. The $50k is funnelled through the company to maximize canadian tax credits, which can amount to a meaningful amount of money. And it's used to pay for rent, legal, accounting, and other services that are for the benefit of the startup.

Doesn't your legal counsel suggest you , you know, don't engage in arguments in public internet forums that could lead to actionable court cases?

Should this turn out to not be the truth, even the slightest unintentional misappropriation of funds for a pizza could end up costing your company a great deal.

It won't, because the Canadian justice system is much saner than the US justice system.

It is much saner, and more importantly we're far less litigious as a society - but it still seems like it could bite you in the butt later.

Maybe I've been around the gringos too long.....


As a manager of Bootup, I can assure you that we haven't been personally paid anything.

My apologies. I had understood that you were drawing a salary from Bootup Labs based on a conversation I had with Boris a few months ago, but I can't remember exactly what he said, and it's quite possible that I misinterpreted him.

Even if you're not personally getting paid anything, I think $50k is a rather generous fee given that other startup accelerators don't seem to need any such fee at all.

Other accelerators get the same fee as well. There are expenses to operate the accelerator plus an investment in the startup, which is exchanged for % in the startup. Often 5%-6%. If you add this up, effectively, the companies are getting $60k of real money spent on them for 6% of the company. That's a $1M post money value. (note: YC is probably an exception to this math since it has no physical space) But, that's how it works for most accelerators. In Bootup's case, we simply funnel the operating costs through the company in order to maximize canadian R&D credits which can amount to 50%+ of development costs. It's just a smart way to leverage more money into the startup, but in the end, the math works out to be the same and those fees are paid to operate the accelerator.

So essentially what you are doing then is taking money from investors who give you money to put into startups, giving two thirds to the startup and taking one third for yourself.

At this rate, what do you care if the startup succeeds or fails? You get $50k no matter what.

I can't fathom how you think this is a good deal for anyone but you. This kind of behavior is why vancouver will be better without you.

R&D? at the pub?

Yeah, usually the Irish Heather (http://irishheather.com/).

I want you to know that this is completely shameful. I'm kind of astonished that you have the balls to show up here after this. You really owe it to Jamie and Steven to make some kind of recompense.

Tax credits are one of the reasons I didn't start my business in Canada. (I'm Canadian and I know the workings of some Canadian tech companies, but my current projects are all in Silicon Valley.)

The way it works is that you get 50% of your R&D expenses back from the gov't, in cash, several months later. To claim it, you have to write reports explaining the R&D value of each project. Besides the obvious bureaucratic overhead, it ends up affecting the organizational structure of the company. It distorts the way the business is run, maybe by only 20%, but that's enough to make you lose in the market in the long run.

What constitutes R&D expenses if I may ask?

I used to work at a startup that makes no money at all. They asked me to sign some sort of "fake" stock options as part of the SR&ED requirements. Of course the numbers were meaningless (pennies or whatnot). So I'm very interested on how this works.

I think this includes your salary/compensation. That's probably why they asked you to sign those stock options, so they could say "Hey look, we paid this guy $X for R&D. That's a tax credit of $Y."

I'm speechless, that's pretty darn good.

What if the startup is a one-man show, making money and start to pay himself? Sort of like owner-but-paid-annually? (Or maybe a one-man consultant).

So let me get this straight, let's say a startup has 4 employees and each employee got paid $50k annually. When the SR&ED is done correctly, the owner can get at least 50% back from the salary alone?

For my company it's pretty much any expense related to an engineer. Salary, rent, power, computer, etc.

So to clarify: almost all expenses (hardware purchases included) will be reimbursed 50% by the BC?

Can rent be substituted as mortgage (say working on your own garage)?

Basically, no. It is 50% of the loaded labor rate of all employees doing R&D activities on projects that your liaison agrees qualify as R&D. When you work out of your home, rent/mortgage on your home are specifically excluded as business expenses (by CRA), so they can't be included. Working out of an office, you get about 65% of salary back; out of a basement (my situation), it is basically 50% of salary.

Oh -- hardware purchases and the like don't count, and you have to be able to prove the salary was paid, so as far as I know there is no game to be played with stock options.

> hardware purchases and the like don't count

Odd, we got to put the entire amount of the Tesla grid that we put together towards the SRED credits. Having said that I just filled out the paper work and handed it to the lawyers and accountants, perhaps they took it off afterwords?

You shouldn't have accepted companies that you couldn't afford to pay. You shouldn't have asked them to move to a different country. Very reckless and irresponsible and to then attack the poster as "twisting the truth" about tiny details seems even worse to me. You should be sorry. You should show some humility.

I agree completely with apphacker. Being evil or unfair on the Internet is anathema to a (web) startup-related enterprise. 3 out of 7 startups funded is ridiculous. With this hitting the HN community, your best hope is that all three of those startups make it big, or you've just lost whatever credibility you have (with startups that count).

Good luck.

Perhaps in the interests of total transparency on this, Bootup should come clean and reveal precisely how the so-called "Management Fee" is disbursed going forward?

$50K for 8 months is a lot of rent and accounting services.

If the Management Fee pays for the managers' salaries, like Danny and Boris Wertz, then they are not necessarily incentivized to have quality startups in each cohort... more important to Bootup in that circumstance is having enough startups to cover their overhead in each 8 month cycle.

Boris Wertz is a Vancouver VC who now invests in Bootup, Boris Mann is a founder of Bootup Labs. Just wanted to clear that up.

As someone who made the same decisions that Jamie did as a cohort member at Bootup, in reference to your comment I don't think this is accurate. We knew the deal, which was contingent, and I moved from Chicago with that knowledge.

ditto that. gong show. The main skilz were self promotion and beer drinkin'.

I shouldn't have said that Bootup Labs had "no money" - I should have put "no money for us."

I'm not trying to suggest that Bootup Labs is bankrupt or anything, I apologize.

That makes it so much worse. If they were bankrupt, they would have had no choice but to send you packing. To break their promise to you to raise additional capital is a super-dick move and I hope that future startup founders don't make the mistake you did. Thank you for warning the community.

I shouldn't have said that Bootup Labs had "no money" - I should have put "no money for us."

I think we all understood that, given that your post mentioned that 3 of the 7 companies in the cohort were not being cut loose.

Alright, sorry.. I'm used to reddit moreso than HN.

Jamie, I have a friend at Digg who is trying to contact you. They're looking for designers, if you're interested in a job.

I responded to their DM, thank you very much!

Boo the VC's in this one!

The investors of BootupLabs did not have confidence in 57% of their latest pool of startups. i wonder why they invested at all if they dont fully back their judgement?

Here's what probably happened, I bet the investors squeezed Boris and Danny with the alternative option being closing their doors early on all 7 companies. Sometimes VC's do evil things to extract more ownership in last minute negotiations (knowing very well that BuL was out of cash). I bet Boris and Danny would have wanted to follow through.

I can't speak for every investor in this incubator but Boris Wertz of W Media Ventures has money in my own startup and I've always found him to be an upstanding, helpful guy - First Round Capital introduced him to me and I've always been grateful for that. I wouldn't particularly call Boris a VC, though - more of a large angel, investing the money he made from the startup he founded himself.

It's a bad idea to slight individuals you don't know anything about just because you think they belong to a generic 'VC' category.

A lower tide sinks all boats.

I hear you when you say it's bad to slight individuals you don't know anything about. I am very familiar with Boris Wertz (through multiple friends of friends) and the good he has done for the small Vancouver tech scene. However, this is a massive blow in the effort to encourage tech companies to establish a presence in Vancouver (effecting the Vancouver VC recruiting pool). Some other city will be drinking Vancouver's Milkshake.

This might be a valid assertion if there were any VCs investing in Bootup Labs. There evidently aren't.

Evidently, the VC's investing in BootupLabs are 'W media ventures' and 'growthworks'. http://blog.bootuplabs.com/2010/04/14/wertz-joins-board-firs...

growthworks has one of the lowest rates of return of venture funds,

Right! And where is the investment support from all the big name, successful mentors?? Guess they're either free-riders or store window dressing...

Bootup Labs has posted their side of the story on their blog:


Adding Boris Wertz was a great move, and not a moment too soon. He adds credibility, and capital, to Bootup at the time when they need it most.

It's a good thing, too. While their misfortune has certainly hurt people, myself included, Bootup is a great addition to the Vancouver startup ecosystem. 3 new companies is far better than 0 in my books. They also throw fantastic events and mentor many more entrepreneurs than they fund.

I was trying to put together a real-estate deal for a Bootup coworking space in December, but in January - when I assume the funding round fell apart - Boris (Mann) became quite scarce. I'm over it. They took on an uphill battle and are hustling to keep the business alive. I think they deserve credit for surviving when others might have folded. As a member of the Vancouver startup community, I'm happy to still have them around. Anyone who has met Boris or Danny can tell that they are genuine in their passion for entrepreneurship and wouldn't have done this if it wasn't strictly necessary. They also have built a kickass portfolio of companies in a short time.

Parties were fun, the rest was just meh. Too much time self promoting and no real resources to really build companies. Not having the right management team is a critical flaw. Look at the track record.

"Bootup is back on solid ground and ready to continue it’s role as a leading North American Seed Accelerator."

VERY bold statement.

Solid ground? Give us a break... they're turning on the reality distortion field, again!

Can I just say that the fact that either party here is duking this out in a public forum is just..... unprofessional? Especially from the VC firm itself?

I suppose I'm a newcomer to this "VC/incubator/startup" community - but in any other life situation, when I decide to pack up and move somewhere far away, I make sure I have stuff in writing, and cash in the bank, and all my i's dotted and t's crossed before I quit my old job and jump on a plane. I also make sure, as best I can, that expectations are the same on both sides. I don't see why this is any different whether it's VC capital for some wild idea or a serious business proposal or just a plain old job somewhere else... what ever happened to common sense?

Can I just say that the fact that either party here is duking this out in a public forum is just..... unprofessional?

Perhaps a bit unprofessional, but I'm personally glad it happens. The startup/VC world is all about reputation, and anything which moves the world from "talk to your friends at other startups and find out if they know anything about X" to "google for X and find out what people are saying about it" is a good thing for startups who are less than fully connected in the gossip network. Think of this as the natural continuation of what thefunded started.

Of course, as a Vancouverite I'm sad that it's Bootup Labs which is getting a bad reputation like this. :-/

Quite honestly YC is the only one of these kinds of ventures that I trust. And even in the case of YC, if I were to advise a budding pair of young entrepreneurs, I'd tell them to move back in with their parents for a year, get a low skill but high paying job to give them sustenance money (e.g., bartend or barista), and focus on implementing their idea. There are nice YC value adds like being introduced to influential folks. But part of being a business person is finding a way to get to these folks anyway. Why pay for this service when you can get them for free?

So many startup folks are attracted to these kinds of programs because I think they mimic the illusion of safety that school offered. You have to be "accepted" and it's not a venture but a "program". Everything is geared towards creating this sense of safety without pointing out you are giving up a lot for it. Know why these programs want to save you the hassle of doing your own incorporation paperwork that took me a day to figure out when I was a teenager? Because they have to put clauses in that will help them, not you.

Again, I'm not saying these ventures are sinister. But you can get by without them and in fact may become a better business person for it.

The differences is that the YC founders are successful entrepreneurs who made money for their investors before YC and since.

Google the history of Spinway, bankruptcy, then sold, Peerflix-a VC fire sale, Bryght-private sale for loss then shut down.

Sometimes you have to take risks to win big. If an opportunity arises you sometimes have to choose between jumping at it and risk falling or watching it slip away.

Honestly, if I where in their situation I probably would have done the same thing, not because I'm dumb or naive or unaware of the risks, but simply because, fuck it, life is too short to always do the dull and sensible thing. And who knows, it might end up being awesome.

Well, unfortunately I think Bootup Labs had to respond to the claim that they "had no money".

It seems that much was true though, at least it was at the time. When you commit to funding 7 start-ups you have to have the full amount for that sitting in the bank. If you have only enough to fund four then the correct claim would be 'not enough money to cover all investments', which is only a small step from 'no money' since it depends on which startup you're looking at whether or not they have money.

If there had been only three start ups and 0 money then the situation as far as those three startups is concerned would be exactly the same.

It's not for them to look in to the bank accounts of their investors, but if you're not getting what is promised then 'you have no money' turned out to be a pretty good guess at the state of affairs. "Not enough money" would have been more accurate though.

One problem is that to create something that's never been done before, and devote the required amount of resources to give it a passing shot at success, requires a certain level of naivete and hubris -- the exact qualities that good investors suppress. So for investors to take advantage of naive entrepreneurs by failing to give full disclosure up front and failing to "do unto them as you'd have others do unto you" is an especially sour pill. Think Grapes of Wrath: it's all just business until the lives of ordinary people are ruined.

One would thing that it would be standard practice that they give you a term sheet on acceptance. As soon as you sign the term sheet, money should be transfered. At the end of the day they are investing in your company, and term sheets are typical. This is how YC works.

Sorry to hear about your experience.

The fact that the Managing Director of Bootup would confront allegations in a public forum does not bode well for his organization.

I would hope day to day business decisions at Bootup are not done in the same manner. It is ,at best, completely unprofessional.

Why do you say that? It might open them up to some sort of liability (I don't know either way), but as long as they watch their tongue, I think it reflects well on the company to be so transparent.

I couldn't disagree with you more. Discussions of this sort should be done at the very least on the phone. The airing of dirty laundry, if that may be the case, is best not done on a message board. Comments are taken out of context, misquoted etc ... It is at best ill advised. While transparency is paramount that is not what this is --- banter about such matters on an open forum is to say the least petty and completely unprofessional.

Acquisition, investment or acceptance into an incubator are all great things but don't build your startup in such a way that success is dependant upon them.

Ultimately, your success will depend on one thing - you. Build your business for profitably and don't count on money until it's safely cleared in your account.

i wish I could upvote this sentiment more. I've also been accepted into an incubator, but had I been declined, I still would of moved forward with release, and marketing plan. After being accepted, I've adjusted my schedule some, but still on track regardless. To me it seems that Jamie is giving up on something that if he truly believed in it, he should continue even now after finding a real job and getting back on his feet. For this reason, it makes me feel that maybe Bootup made the right decision. Regardless its a terrible situation for everyone involved.

Sad, but I agree. Be curious to hear why the investors wanted to invest In the first place if the idea isn't good enough to keep the founders committed when they hit this sort of minor setback. And weren't they working on the business for two-plus months in Vancouver? No demo? No prototype? No sense of next steps?

likely little meaningful assistance when the fund manager is in panic mode scrambling to raise money...

This has been written about on RWW now:

How to Burn Bridges with Bootup Labs and Other Investors


With a heavy hitting roster like this, it's hard to believe that a startup might bite the hand that feeds it (or at least used to feed it).

Sounds more like the hand that called the dog over with promises of bacon that wasn't there...

This is one of the most one-sided articles I've seen on RWW. Of all the comments here, they choose this one?


And they mentioned Robinson's "This is not how it went down" comment without the main substance of his post (which consisted only of small quibbles) -- or the responses to it.

And does the fact that there was a "a heavy hitting roster" backing Bootup make what was done any more excusable?

Makes it worse! Think about it... would you let your name be used this way, and/or associate with a company that you wouldn't put your own money in when it was badly needed?

How to Burn Bridges with Bootup Labs and Other Investors

They're only investors if they actually invest money.

That, uh, reads a lot like Dana saying: "haha nub, you won't ever get investors now will you!"

Not exactly solid reporting :(

The article should be titled How to Burn Bridges with Blog Readers and Other Audience Members

That article was written simply to be link-bait. She is simply saying the opposite of everyone else to get people to look. Ignore it.

Linkbait? On ReadWriteWeb? You astonish me.

It sounds like Bootup Labs wasn't able to draw down on some of their LPs. So, it's not nefarious, but it would make me think twice before accepting (the promise of) money from Bootup Labs.

It ain't real 'till the money's in the bank.

There are no lPs. Bootup is/was a VCC.

That really sucks! But dude, why give up on the idea? you're selling the domain and moving on? Incubators aren't necessary.. keep plugging away and launch anyway.

Hey Brad,

I'm just in survival mode at the moment, living on my parent's couch at the moment with negative money in my bank account. I need to sell some things to try to get back on my feet again - that's why I'm seeing if I can sell these domains.

With all due respect Jamie, if you're in it, you're in it.

My suggestion (for what it's worth) is that you put this behind you and find a way to make it happen. If you choose not to, you probably weren't going to make a go of it anyway.

You got a raw deal, and that's clear to anyone. Now get back to work on your startup. This can be a roadblock or a speedbump; you choose.

I'm curious--why the downvote?

Isn't this just the sort of test we've all faced at some point in our startup efforts?

That doesn't make sense. Did you just spend two months working on the startup full time? You should have made some headway. Put it on the back burner or something. I mean to sell the domains for $500? Is that all 2-3 months of 2 man full time work is worth?

"Is that all 2-3 months of 2 man full time work is worth?"

I don't find it too useful to think this way. In the end, our time ain't worth jack. Solving customers' problems is where value comes from. If 4-6 man-months was put toward something that didn't solve anyone's problem, then it's worth $0.

Why did bootup labs offer funding that is almost 7 to 10 times the 'industry' standard? It's disappointing that an incubator close to home really wasn't.

well this is most likely because they have no experience in how to finance or run a venture fund of any size.

But now with Boris Wertz on board, new funding secured, and the spotlight of this story, there is no doubt that due diligence on all sides will improve and the next cohort of startups will be better than ever.

Hmm, ok.

Disclosure: Boris Wertz is an investor in Techvibes Media Inc.

Surprise, surprise.

Surprise, surprise.

I doubt Boris Wertz pulled any strings to get the positive spin from Techvibes -- my impression is that Techvibes would find a way to give a positive spin to "meteor headed for Vancouver, is expected to destroy city".

Sure, I didn't mean to imply any particular chain of causality -- just the fact that there is virtually no value in a positive article from Techvibes given their financial conflict-of-interest in this story.

A one-sided, unresearched, fluff article.

From @bootuplabs on twitter:

> HI all: we're moving up the blog post we were going to put up tomorrow to this eve - please stand by

All Canadian startup hopefuls are/will be watching for an official response closely.

I find the weird part about this is you are selling your domains. I vote no for this move. Find another way to make that cash but keep your domain and your co-founder.

If these guys at bootlab accepted you, there is a high probability that someone else would too.

[who knows post a donation page and see where it goes. I think most of us here knows what survival mode is like, so would be sympathetic to your cause]

How hard is it to set up a Vancouver startup independently, if you have 2-3 US citizens who want to relocate? Assume you have $100-200k of your own funding.

Gaming the tax credits seems like it takes a bit of effort, but lowers the effective tax rate substantially below even Nevada.

Starting a company in Canada among 2 or 3 people is easy. I should know because I did it when I was a teenager. It cost me $15 for some incorporation templates, $150 for a name search report showing potentially similar company names to the one I wanted to start, and $350 or so in government fees. This got me a company incorporated provincially. You can do it federally too but it's a bit more complex. If you have as much money as you claim you could probably emigrate to Canada in a special business class meant specifically for people starting businesses here.

Starting businesses is easy as pie. If you have enough money to sustain the business before it brings in revenue then I'm not sure what the attraction is to these sort of ventures. If your execution is good then VCs will hear you out regardless of whether you've been "accepted" into a program like this. They may facilitate introductions but there are also government funded programs here in Canada that do not charge money which will do the same.

Tax rates for people smart enough to start businesses in Canada are fairly attractive. It is especially so when you factor in healthcare costs or lack-there-of. However one thing to bear in mind is that it is often a severe hassle an American company to exit an investment in a Canadian company. In some cases it would require 900 signatures of limited partners in the American company and for each to file Canadian income taxes. Google "Section 116 foreign investment". It is something the government here is tackling in a bid to spur VC investment in Canada. But there are still some gotchas (and benefits) to starting a company here.

I like accelerators for two reasons: 1) Having a same-time-founded cohort of companies. Moral support, entertainment, and when ~80% of them fail, you can pick and choose assets (great developers) having great visibility into them.

2) I like the idea of accelerators for people with $0 and just out of college or high school, or who need structure. If I could give 5% of my company to give an accelerator a win (both in money upside and reputation), I'd do it, especially if I were in a third-tier city like Vancouver which deserves a second tier startup population.

(I saw I got voted down and should explain)

I think the odds of failure at 50-80%, including my own company, and having a bunch of ready ways to re-deploy those people into other projects is good for EVERYONE -- the engineers can move to the most successful projects. If I worked on something for a year or two and it flopped, I'd love to go work at a startup I'd been following the whole time, rather than trying to find a regular job.

I think SFBA in general is basically an incubator/accelerator, if you've been involved in one startup even as an engineer. Formal accelerators help a lot more in places where most of the people who want to do a startup have NOT yet worked for one. College would be the best example.

So totally true. "Just do it" is the key. Hanging around the "clubhouse" for parties and beer is just not the point and clearly is not working...

Was it ever mentioned that this could be an outcome of coming to Vancouver? Either side hasn't said.

Wow that story really sucks.

everything happens for a reason, I am sure you will create something create after this.

I in no way meant the above to be negative. I was only trying to be encouraging. We have all had bad things happen, it's all about how you bounce back.

Not sure why this was downvoted. It's a little negative, but I do agree from this experience and you blogging about Jamie something better will come along!

Good luck and is the weather in Phoenix still "100 and above it's a scorcher out there" :) ? You emailed me this summer re: my start-up. Good luck!

I downvoted it, because I see it as a stupid comment for situations where something (partly) out of your control happens and you lose. "It's going to be ok" from a friend is nice then, but a comment that "Everything happens for a reason" from a stranger is just weird. Not only he agrees that the bad thing was supposed to happen, he implies that he knows there was "a greater plan" and that he has some knowledge about the whole situation that allows him to predict your future. I hate this phrase, because it's complete BS.

So yeah - downvoted for personal reasons ;)

Good luck to the guys.

Above livejamie has found himself a potential opportunity with Digg.

Bad situations always leave room for learning, growth and positive outcomes, so long as you are willing to look at it from a positive perspective.

The alarm clock thing, right? :)

yup :) (http://sleep.fm)

Not really. Sometime in life shit just happens for no good reason.

And when life gives you shit... http://www.youtube.com/watch?v=bpuFeQZCvOI

Why this has not been bumped up more I have no idea... Fuck man... that is fucking horrible. When I first got into DreamIt Ventures, all of my attorneys and family and friends said the same thing... are you sure? What is the paperwork like?

The Paperwork was 2 PAGES! I was in law school at the time, I was looking at paper work of contracts that were a minimum of 26 pages!!! And 2 get 2 pages?! Unreal... and quite scary. We took a gamble... we signed the documents.

Left MORE questions thn answers... by far. Fortunately, my god, I never realized how lucky we were.

I'll keep my eye out for something that will pay.

Do you have any contracts from them? I'd like to see. Post them on DocStoc.

I do not know Canadian Law, but I know someone who might. Not that I could represent... but I'm curious to see if you might have some legal action!

Embarrassed or not - that is bull shit.


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