From today's Globe and Mail
More space for JDX, IMO.
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Alofs' fever for dot-com cools
by Mark Evans - Thursday, January 13, 2000
Less than three months after loudly proclaiming he was returning to Canada to jump-start the dot-com industry, Paul Alofs has
decided not to go ahead with plans to set up an Internet incubator.
Mr. Alofs said he believes dot-com fever is cooling and there is less of an appetite among investors for risky Internet startups,
even though he received more than 5,000 business plans from hopeful entrepreneurs.
"The year 2000 will be different for the Internet economy than 1999," he said. "There will be more pressure on Internet startups
to not only generate revenue but profits, and I think there will be fewer Internet startup deals available that will be profitable."
Instead, Mr. Alofs said he will make personal investments in two to three on-line deals a year with partner Rita MacDonald, who
used to work with Mr. Alofs at San Diego, Calif.-based MP3.com Inc., one of the Web's hottest companies.
Mr. Alofs and Ms. MacDonald will invest $250,000 to $500,000 in startups focused on the fast-growing business-to-business
market. Mr. Alofs said they will be looking at deals in Canada and the United States, and he plans to split his time between
Toronto and California.
"This gives me the freedom and flexibility to pick and choose the deals I want," he said. "It gives me more upside and equity in
the deals I am making."
Mr. Alofs's only direct experience in the Internet is the five months he spent last year at MP3.com as its head of strategic
business units. In Canada, he made his mark in the early 1990s by expanding retailer HMV Canada Music Stores Ltd.'s
revenue sixfold to $200-million.
The 43-year-old marketing whiz's retreat from the incubator market is a surprise because he was so gung ho about it last
October when he unveiled his plans by hiring a public relations firm, issuing a press release and talking about how there was a
"void and vacuum in the market."
Almost overnight, Mr. Alofs became a much-demanded speaker at investment conferences while his public relations firm was
kept busy fielding media requests and inquiries from entrepreneurs on how they could forward their business plans.
While his style may have been over-the-top, Mr. Alofs's timing was perfect because Internet incubators, which provide
management expertise, contacts and seed capital to early stage companies, are a red-hot concept on the strength of their
ability to invest in companies that can quickly become valuable entities.
Mark Skapinker, a partner with Brightspark Inc., a Toronto-based incubator that opened its doors in November, said he is
puzzled by Mr. Alofs' decision because there is a strong demand for Internet incubators in Canada to support ideas and highly
skilled people looking to start their own businesses.
"There is no reason why an incubator can't exist in Canada," he said. "If anything, the only restraint we have is how fast we can
go."
Mr. Alofs said he has no regrets about the media frenzy he incited with his earlier plans, which included raising $20-million to
$30-million in capital.
"If you're not willing to take a strong stand in the Internet, there is no way you are going to succeed," he said. "As Canadians,
we are less promotional and less willing to say what we're going to do. You have to be willing to go to the nearest rooftop and
scream."
globeinvestor.com |
