AirZone, of Kelowna, was a finalist in the first New Ventures competition in 2001. While they didn’t win that year, they’re still around and doing well. AirZone manufacturers tents with pneumatic inflatable poles. This makes them easier to set up, in “less than 12 seconds” with an air compressor, bike pump, or CO2 cartridge. They’re also very durable and suitable for extreme weather where traditional tents would fail.

After competing in New Ventures BC, AirZone received good coverage from the likes of Popular Science, Wired, and Western Living magazines, to name a few. They have also expanded the technology to other uses, included a Golfnet practice tent, and other construction and entertainment tents. They have also established a UK office.

Everyone loathes spam email, and while the quantity of it continues to increase over the years, it has become less of a problem due to continued innovation by companies like MailChannels, based out of downtown Vancouver. A New Ventures BC competitor in 2004, MailChannels has quickly become a world leader in email spam filtering. Their software is designed for enterprise level customers: ISPs, large companies, governments and educational institutions.

Selling anti-spam software to large enterprise customers can be tricky, since the open source Apache SpamAssassin software is free, effective, and widely used. Rather than compete directly, MailChannels’ Traffic Control software works with SpamAssassin to provide an extra layer of filtering. When receiving email from a questionable source, the software deliberately stalls the connection; legitimate mail servers will be patient and wait to finish sending, but spam bots will usually give up and move on. This technique alone blocks 90% of spammers.

Company CEO Ken Simpson says MailChannels is in its second profitable year with annual growth of 500 percent. This level of success has allowed them to give back to the community. They recently donated infrastructure to support the SpamAssassin project, and the Traffic Control software is free for non-commercial users that receive less than 10,000 connections per day.

Over the coming week, we’re going to look back on some previous New Ventures BC competitors and see where they are at now.

While the once frequently prophesied dream of the paperless office still isn’t a complete reality, the majority of new business information exists in the digital realm. While digital documents can be infinitely copied, the lifespan of digital storage media is often shorter than that of analog media. Despite technological advances, the need for proper archiving remains, and is often required by law.

Datawitness, a fourth round finalist in 2004 based out of Richmond, provides a robust data retention solution for small to large business, education, and governments. In addition to archiving documents in their secure data center, Datawitness also transfers those documents to microfilm, creating an analog copy suitable for long-term storage. Documents are digitally fingerprinted to guard against tampering. On top of this platform, they provide a “Mailwitness” service that tracks delivery and receipt of sensitive email, along with archiving.

The service has been approved for use by the governments of British Columbia and Ontario. In 2006, they won an “Investor’s Choice” award at the 20th Angel Forum in Vancouver. In 2007, Datawitness received “Eligible Business Corporation” status, allowing investors to receive a tax credit under the New Media Venture Capital program. Also in 2007, Datawitness launched an API, allowing third party developers to plug in to their service.

Datawitness’ innovative technology, competitive pricing, and attention to legal requirements has rewarded them with pleased customers and stable growth. As more of the world’s data is converted to digital form, and data retention standards become more strict, demand for Datawitness’ services will increase into the foreseeable future.

While filming elevator pitches at one of the seminars this year, the fine folks of Fundfindr shot some additional interviews and put together a five minute “webisode” video that gives a nice overview of the competition, its history, and its mandate. The video features Angie Schick, NVBC Program Manager, Dave Thomas of Rocketbuilders, competitor Boyd Cohen of 3rd Whale, and Ross Waddell of the BC Innovation Council.

Visit fundfindr.tv for more video on entrepreneurship topics. If you’re interested in professional video production for your event, demo, pitch, product or service contact shannon@fundfindr.tv.

After some quiet months, Basil Peters (presenter at Seminar #7) has posted new content to AngelBlog, his resource on “Best Practices for Angel Investors and Entreprenuers”. The new posts cover raising funding from friends and family, and why early exits are a good thing. Based on Basil’s 10+ years of experience as a fund manager, AngelBlog contains a wealth of information for entreprenuers, all relevant to doing business in British Columbia and Canada. A must read for NVBC entrepruenuers.

The seminar series might be over, but you’re still welcome to come out for the “Meet Your Mentor” networking event. It takes place this Wednesday, June 18, 5:30pm, at SFU Harbour Centre, 515 W. Hastings St, Room 1400. The Round 3 finalists will get a chance to meet their mentor match-ups, and everyone from the NVBC community is welcome to attend, chill, nibble, and network.

The event is free, but please register online.

Concurrent to the New Ventures BC Competition, Fundfindr (also a NVBC competitor), ran a competition of their own, called the Pitchies Warmup, exclusively for NVBC competitors. Entrants were challenged to submit an elevator pitch video to the Fundfindr site. Today, the winners of that were announced, with the grand prize of a weekend in Whistler being awarded to Nikki Layton of Volo Innovations. Unfortunately, Nikki didn’t make it through to round 3 of the NVBC competition, but with her pitching skills, should have no problem wooing investors. Runners up include Pneuvation, Cellmaps, and Adhack. You can watch the winning video here:

 

There’s still opportunity to enter into the Pitchies main event, already going on.

Watch your inbox for the second New Ventures BC Seminar Series Survey. Anyone on the New Ventures mailing list should receive it. Its quick, and your feedback helps improve the competition. Thanks in advance for your responses.

David Shore, Stirling Mercantile Corporation and Tanner Philip, Lions Capital Corp / BC Advantage Funds

A Venture Capital Corporation fund, sponsored by the BC Ministry of Finance, entitles investors to a 30% tax credit. It is very popular and has sold out for the year.

A management team is like a three-legged stool: research and development, sales and marketing, and financing.

There are only six venture capital funds in BC, and only three are able to invest at the moment. The market is tough. Steps in the process: Package the business plan, identify appropriate targets, meet targets and follow up, complete due diligence, negotiate final terms. The process can easily break down at any step, time means nothing. Be emotionally prepared.

Question: How regional is the investment community?

Answer: Very. Investors tend to stick to their area. Investors also want to be close for face time when required. Regions have their specialities, in Vancouver: biotech, gaming, web, mobile.

Sources of financing: equity, debt, grants, and revenue. Banks will generally ignore you. Lots of good government money available.

Angel investors: the best angels are the ones that know you. It’s about building a relationship with that investor. They usually invest in areas of business they’re familiar with, and have had previous successful exists. They are faster moving and tend to invest early. (these are all generalizations and don’t always hold true.

Venture Capital funds: they may be active or passive, focused or diversified. They’ll participate through multiple rounds, move slower and more carefully.

Question: At what point does an active investor start to seek more control?

Answer: “When they cut the cheque?” *chuckles*. Soon and early.

It’s important to understand what motivates your investors. They think long term. VCs focus on the 10% of investments that go 100x. They have a diversified portfolio, you have one shot. VCs have a 20% performance fee, meaning they get 20% before the shareholders of their fund.

With Angels, there is one decision point. In a VC organization, there is a lead contact but also multiple decision makers within the organization. When you bring in equity investors, there is a dilution of your control, and increased governance and oversight. But you also gain access to their network of contacts and business insight.

Before seeking investment, it would be good to get even a small board together, 3 people. The yearly cost of director compensation might be around $15,000. Another option is to give them equity and similar values.

Question: What do investors think of having two founders on a board?

Answer: General practice is that only one is on, usually the CEO.

Targeting investors that understand your company and have done similar deals. Look at their CVs and portfolios. Find the right person at a firm; having the right one can make or break the deal. Ask who the best person in the firm is. Lever contacts to understand where you are in their queue.

Your first contact shouldn’t be a presentation, meet for coffee first. Talk about the business, not the technology. Follow up on this first meeting the same day. Answer questions, and ask some. Suggest another meeting and specific topic for it.

Executive Summaries: keep it concise. Start with a simple description of who your clients are and why they will buy from you. Have a clear value proposition. Keep it down to about two pages, and proof it with others. Don’t use technical jargon and acronyms. Make it clear how much money you will need. Each paragraph should explain why the company has value. You should be able to explain the value of your business in one line. Consider Science Proposition vs. Value Proposition; you want to be talking about the value. Avoid saying: “our projections are conservative”, “we have no competition”, “we have first mover advantage”, “we only need to capture x% of the market”.

Pitch presentations. Pitch time should be about an hour. 20 minutes of slides plus interaction. Ideal presentations: 12 slides, cover product, market, management, and interactive discussion. Don’t bring your entire team or focus too much on the technology.

Expect that angels or VCs will get on your case for due diligence items, such as: business plan and executive summary, all material contracts, details of financial and revenue models, Management CVs and references.

What are investors looking for? Opportunity to earn 20-35% compounded annually. Experienced Management. A sustainable competitive advantage. Market validation. A clear lucrative and sustainable value proposition. Large market opportunity and the ability to scale it.

Deal terms. Some terms of preferred shares: paid first upon liquidity, option to convert, dividends, varying levels of control over the business. Investors will often have more experience of the management, have had experience with many different companies. “Consensus is when both parties are equally unhappy”. Remember that investors are future business partners.