Tonight’s speaker: Dave Thomas, Rocketbuilders

Of interest to New Ventures competitors: Vancouver Enterprise Forum, on May 27, 6pm.

Marketing Plans. When putting together a marketing plan, one must begin with the end result in mind. Focus on market entry.

Some key market research questions: What is your target market, how big is it? Who buys your product, and who will use it (not always the same)? How does the customer fix the business problem you are addressing? What business problems are more important to them than this one? Why would they buy from you?

Markets can be segmented in many ways. Evolutionary vs. Revolutionary products. Segmenting is important to focus marketing and development efforts on the most ideal group. It narrows the product definition and limits competitors. Selling more isn’t always optimal, smaller markets can be more profitable.

Primary market research, talking directly to customers, is important. You have to be able to describe your product. Develop a consistent set of interview questions. Various online survey tools available.

Understanding the technology adoption cycle is important to developing a marketing strategy. Following a bell curve, you have technology enthusiasts, then early adopters, followed by the early majority, late majority, and finally, laggards and resistors. Tech enthusiasts will ignore missing features. They lead others in purchases. Early adopters are attracted by high-risk, high-reward technologies, and envision strategic applications to them. Late majority followers and risk adverse and resistant to change.

“The Chasm” is the gap between early adopters and the majority. You have to find aspects that appeal to the majority. So how do you cross it? Understand the customer’s whole problem. Develop a whole product, and a marketing plan.

The actual product, plus all associated factors (services, partners, warranties, image, training), form the “Whole Product”. Some areas can be filled by partners, ie, software requires someone else to sell hardware. What is the total cost of ownership?

 

Whole Product Audit Exercise:

- What complimentary services must be acquired with your product?

- What additional hardware or software must be purchased to deploy your product?

- Will customers achieve ROI without complementary products or services? How will these “total cost of ownership” issues affect the sales process? Customer satisfaction?

Positioning: why will they buy from us vs. the competition? It means fitting the product into a predetermined mindset of the customer. Example: premium vs economy. Factors that effect positioning: partnerships, pricing, distribution, service/support, sales cycle, competition, and company valuation.

 

Product Positioning Exercise (12-18 months):

For [target customer segment]

who wants/needs [solution to problem]

the [product name] is a [product category]

that provides [compelling reason to buy from vendor]

unlike [main competitor]

the [product name [key differentiator]]

 

Can a competitor’s product name be substituted for your own? Then your positioning is weak.

Pricing is tricky. You’ll often hear objections of it being too high or two low. Better to start high, it’s more difficult to raise the price later. There is always a price ceiling. Competitive pressures and seller reputation. There are many models for pricing in software: per seat, per service, concurrent user, site license, per volume, or business value. Too low of a price can create a perception of lack of value. 

Pricing strategies. The pricing model is more important than the price. Cost plus: set a specific profit margin. Target return: set price to achieve a target ROI. Value-based: value to the customer relative to competition.

Ad-Hoc Pricing Audit Exercise:

• What are some common price objections you hear? Is your price too high or low?
• How does your pricing model compare with the industry? With your competition?
• Do you offer promotional pricing? How effective is it?
• What licensing alternatives do you offer?
• What discounts do you provide to resellers?

New Ventures BC is reaching outside of the Lower Mainland and “taking the show on the road”. Seminar #8 will be offered in three other locations.

Kelowna - May 27, 2008, 3pm
Early Stage Financing: Dialing for Dollars - speaker: Tanner Philp
Landmark Business Centre, 406-1708 Dolphin Avenue
Hosted by OSTEC
REGISTER

Victoria - June 4, 2008, 1pm
Early Stage Financing: Dialing for Dollars - speaker: Tanner Philp
Vancouver Island Technology Park
Hosted by VIATeC
REGISTER

Prince George - TBA, watch this post for updates
Early Stage Financing: Dialing for Dollars - speaker: Tanner Philp
Hosted by the Prince George Innovation Resource Centre

Fundfindr is a Vancouver based site, self described as “speed dating for entrepreneurs”, they use video to connect investors and entrepreneurs. As mentioned at the last seminar, Fundfindr is running a competition for New Ventures BC competitors. Submit your pitch to their site for the chance to win a weekend in Whistler.

By pitching between May 7 and May 20, New Ventures BC competitor companies are not only given a bonus entry into The Pitchies, but are eligible for The Pitchies Warm-up Prize of a luxury Whistler weekend: One lucky member’s chance to unplug!

If you aren’t able to record yourself, Fundfindr will have a “pitch station” set up at the next seminar, May 14, to do just that.

Sean’s slides available here.

To begin, a couple notes of business. Firstly, round 2 deadline is May 21. Second, next week, FundFindr, will set up a “pitch station”, where you can record your pitch for their website for investors to see. Practice and refine your pitches!

Tonight’s speaker is Sean Hodgins of QCDocs discussing Basic Finance for Business Plans.

Annual financial statements should include the following: balance sheet income statement, cash flow statement, supporting notes. Find a company similar to yours and read their public financial statements. Reliable data is important, and multiple scenarios should be considered. List key assumptions. 

Key Terms:

• P&L: Profit and Loss statement.
• EBITDA: Earnings before Interest, Taxes, Depreciation, and Amortization.
• Cash burn: EBITDA plus capital purchases = rate of cash expenditure
• Runway: Amount of cash until you run out.
• Pre/Post-money Valuation

Key Programs:

• SR & ED: Scientific Research and Experimental Development (refundable tax credits)
• EBC: Eligible Business Corporations (30% refund to investors)
• NRC-IRAP: National Research Council-Industrial Research Council (up to 75% of R&D staff costs)
• Telefilm

Keep it simple. Numbers are instrumental in telling the story. Costs should focus on R

Elements of a business model: Who’s going to buy what you’re selling? What price? How does it compare to competitors? When do the sales happen? Customer acquisition costs? Customer support costs? Alternatively, you have the “Eyeballs Model” of bringing visitors to a site, valuing visits over revenue.

Case Study: QCDocs Systems. Streamlines bookkeeping through Software as a Service. The opportunity was in small businesses of under 100 employees. Sean goes through a number of tables that they used to map out the business model, highly recommended that you check out the slides.

Investors put numbers under major scrutiny. If they’re wrong, credibility suffers. It’s important to have someone with financial expertise on your team.

Question: Is what you’ve show us sufficient, do you need more detail?

Answer: If the pitch is good, and the numbers make sense, it should work. If they say “do more financial analysis”, it’s a nice way of saying they aren’t convinced of the value. 

 

Question: How did you estimate the number of customers in that model?

Answer: Analysed how many sales people could be hired, how many sales they could do.

 

Question: Did your estimates anticipate that VCs double them?

Answer: Yes. They will often question your costs as too low.

 

Question: Heard of someone having to produce 10,000 pages of documents to prove the risk, hwo do you deal with this?

Answer: Software packages help organize and produce this information.

 

Question: Between here and California, have you seen common threads in businesses that have been successful?

Answer: Raising capital is easier in California, but BC offers more government incentives. The US has bigger incentives for Angel investors.

 

Question: NRC R&D credit: at what stage do you have to be?

Answer: Concept stage is good enough. You can’t pay yourself, you have to be paying employees and provin a viable business opportunity.

Join us next Wednesday for Seminar #5: Basic Finance for Business Plans with Sean Hodgins of QCdocs Systems Inc. We’re back again at UBC Robson Square, 800 Robson St., Room C-180. Register online to attend in person, or tune in to the live webcast.

Mike Volker from Simon Fraser University spoke to a packed house at the Simon Fraser Segal Graduate School of Business (and president of WUTIF, the Western Universities Technology Innovation Fund) with his talk on “What Angels Really Want” at the New Ventures BC event held at the school on April 30th. With a background in technology start-ups, Volker was able to tie together advice between innovative entrepreneurs and the investors looking to take them to the next level.

Volker said that good companies will always get funded, but should try to avoid the “e-myth,” which is the assumption that technical-minded people have that they will also be skilled at business. Entrepreneurship and leadership matter, Volker said, and getting the two camps together is most important.

Current conditions, from low interest rates and R&D costs, to great infrastructure and easier financing and special incentives make it a perfect time to start a new business, he said.

New Ventures BC is a business competition, created to find new and innovative BC companies. The instructions to the New Ventures jury were to pick companies that are “the most likely to be commercially viable, with the greatest value.” Volker said the same principles apply when looking for investors.

But he added that it’s important for companies to decide if they’re creating a lifestyle business, built to be self sufficient and not require VC funds, or if it’s an attempt to create a next-level “high-growth, high-tech” company with a large eventual payoff.

Shareholder agreements are important to create at an early stage, he said, and it’s equally important to not rely on boilerplate and instead craft an agreement that suits their needs.

After deciding WHAT their business is, entrepreneurs have to figure out WHO they’re selling it to. They have to sell it to themselves, their staff and customers, as well as investors.

Angels want interesting opportunities, an attractive return (10X to 100X being typical), as well as a willing protege. They also want the 3 I’s (Intensity, Integrity and Immediacy) and the 3 G’s (Goodness, Greatness and Greed….for the company).

In order to achieve their goals, entrepreneurs have to surround themselves with the best possible people for their business, as well as being able to take their idea and translate it into revenue.

Fundamentally, Volker said, it’s all about profit and loss. What are you buying, who will buy it, and how much will you make? He added that a clear passion and understanding for an idea or product make s a huge difference, and will get investors on side.

Volker was an early investor at RIM, but he pointed this fact out to illustrate that the founders of that company were no different than anyone else in attendance at the New Ventures event. By crafting a business plan, RIM was able to reach their current dominant place in wireless, and they did so when they were a tiny start-up. Volker said the secret to that growth was confidence not only in themselves but in their business plan, which carried over to creating confidence in their investors.

In terms of product, the object itself or the service it provides is far more important than the technology inside the device. When addressing investors, explain what the product is, what it does, and how it can generate revenue, not the internal workings or esoteric code that makes it work.

Entrepreneurs should also be careful to protect their intellectual property, whether its through copyrights, or patents. They should also identify what stage they are at, from prototype to production model. And Volker stressed the importance of letting investors know what kind of time frame they’ll be dealing with.

Always be conscious of the status of your business plan, Volker said. Additionally, entrepreneurs should stay on top of both costs and potential competitors, because if they don’t, investors will and may find a better solution.

Distribution channels, strategic partners, and supply chains are all integral to moving the product, and shouldn’t be neglected.

Teams are also a vital component, especially when moving from angel investors to venture capital. Know your shortcomings, and bring in team members (including board members and advisors) who can compliment your skills. Finances, including a cash-flow projection to profitability, are also key to starting a new business.

Most importantly…who will buy the product? Why would they buy it? Can money be made, and if so, how much money? All simple questions, but absolutely necessary to ask, he said.

Congratulations to the companies that made the cut. All participants have been notified by email. Remember that only 30 companies will make it past round 2.

1. CellMap
2. Web-based Global marketplace with dynamic multi-language support
3. Lerna
4. TeraTek Inc.
5. Oprius
6. Modifiable Shoes
7. MealMax.com by BeyondMax Technologies Inc.
8. word of mouth marketing project ltd.
9. Bhubble.com
10. Powering Adventure Travel online: with excellent profit projections
11. Floatek Innovation Inc.
12. Open News Network (Opennn™)
13. StartLabs Research Corporation
14. Smart Nuts Technology
15. Sustainable Easy Computing for Anyone
16. CloudTel
17. dScrybe Personal Financial Assistant
18. Absolute Technologies
19. Tourist Cellphone Rental: Handy Mobile Technologies
20. Ultimate Gift Card (UGC)
21. OnGuard Enterprises - PwerLoc
22. Solar Desalination
23. Red Dot Campaign
24. Thermo Matrix (computerize distribution and managemnet of heat and cooling)
25. In-line Water System Power Generation
26. 3rdwhale
27. fundfindr Media
28. Tecagora Solutions - Photo Sharing Solution
29. Singular Software
30. Scalable Analytics
31. ReThink Diabetes Inc.
32. Raeyco Lab Equipment Systems Management Ltd.
33. Electric Muscle Car Company Ltd.
34. Battery-Free Wireless GPS Security System for Shipping Containers
35. PairCoach
36. Global Cultures Inc.
37. PneuVation Medical Inc
38. AC Global Systems
39. Kreofusion Inc.
40. Mytripjournal.com
41. Transit Alert
42. Wall Share
43. Vvvroom.com
44. SailMeter
45. Project Opus Technologies
46. eCET - electronic Cognitive Enhancement Technologies
47. Taglocity
48. Crowdtrust Technologies
49. DreamBank
50. MYLIFESPRINT.COM
51. “Rain Renewer” Storm Water Pollution Remover
52. Driving School Administration & Scheduling
53. PLASMID AUTOMATED ROBOTICS
54. Replacement Lamps for Streetlighting / Outdoor Lighting
55. Clarity Accounting: Online Accounting Software for Businesses and Professionals
56. Prosthesis product
57. Essential Motorcycle Services
58. Anti-theft alarm system for bicycles
59. Garbage, Waste, recycle transfer system
60. PeerFX
61. Lets Go for Dinner
62. World Rally Sport Media, Inc.
63. RallyAd Media Inc.
64. Inseyed Putters Ltd
65. Omega 3 & 6 EFA extraction and Biodiesel production
66. GR Building Materials Limited
67. Heavy Tool Support Arm
68. 200 MPG 2 Person Commuter Vehicle
69. Trinity Healthy Living Products Inc. [FluSTOP Herbal Antiviral]
70. PerfectMIND
71. TheIndieFilmScene.com
72. Simplified multidimensional liquid chromatographic solution
73. Recon Instruments Inc.
74. Room 88
75. aPhoneTracker
76. Tech Ambassadors - providing technology access to mature adults
77. Sherman Log
78. Wireless Communities
79. Milliondishes
80. Collingwood Carbon Solutions (John Turner, Jacek Gorwa, Andrew Flostrand, Khosrow Mossannen)
81. Megbro Enterprises Ltd. - Biomass recylcing and reuse - total waste reduction
82. Peragro Media Inc.
83. AdHack Media Inc. (AdHack)
84. TorchLight Bioresources
85. mQ
86. Charge It! Payment Solutions Inc.
87. Source the Globe
88. Woopd
89. Modopost Inc.
90. E-Port Systems, Inc.
91. EKEM Power Inc.
92. Health Media Marketing, Ltd.
93. Notionlab Software Inc
94. PacCard
95. Open Box Integration Inc
96. Amotrolex Technologies Corp.
97. RF Therapuetics Inc.
98. Universal Discussion Forum, codename “Wukii”
99. Roadstead Technlogies Inc. home of the Road Runner driveway oil mat!
100. Udutu Teach & Learn
101. Hi=Def Digital Video Solutions for Security and 3D Video Creation
102. Pure Lignin Environmental Technology Ltd.
103. Navigate Media, Inc.
104. I the group
105. Total heath pat
106. Kommonwealth semantic web builder
107. PoGo
108. Indel Therapeutics Inc.
109. Progressive Health Innovations Inc.
110. ForumTrak
111. BookingCalendar.com
112. Kimiatech Specialties Inc.
113. Crown Skis Ltd.
114. PerformanceObjects Inc.
115. Duo
116. goodboog Global Virtual Catalog Inc.
117. Brilliant Lighting Products Inc.
118. Pensito
119. Personalized Genomics
120. The Painters Edge
121. Filmryder Technology
122. Protagonize
123. The Modern Mirror Inc.
124. Brand2hand Media Inc.
125. Volo Innovations Inc
126. CPlates Inc.
127. The Chronicles of Aveon
128. Amadeus Decision Making Software
129. Rezgo - Internet Tour Booking
130. Sharing Books
131. RCOTECH WASTEWATER SOLUTIONS inc.
132. Razor Technology Inc.
133. FireTonic mobile content distribution platform
134. reducing GHG by reducing excessive use of vehicles and gradually reducing speed of cars chased by police to full stop
135. End-user application software creator/cloner (software tool)
136. DailySplice
137. 100Watt Solutions Ltd.
138. Prospero Media Group Ltd.
139. Vanport Ecologies Inc. - VASH-ACCESS Model; Vanport Artificial Soils, Hydrogen and Advanced Carbon and Clean Energy Storage System
140. StrataXL Software Inc.
141. Ubiquitous Discussion Forum
142. Zebra Logic Inc.
143. Vsiant
144. custom pipeline Welding Tractor with unique track suspension system
145. Clean electric power generating system
146. PeerMint - Online Peer to Peer Lending
147. ClicVue
148. QCDocs Systems Inc.
149. Map Manager
150. Greendex
151. Greenhouse Gas Management Business Solutions
152. Echoflex Solutions Inc.
153. Cooling Device for HTS Industries
154. Wireless Image
155. Beetlecrete Products
156. MyOlive Small Business Portal
157. UniversitySolutions
158. PAC RES GRU - Pacific Research Group
159. Small Energy Group
160. iSociety Networks Inc.
161. Etalim Inc.
162. BAIT-CAR.COM PRODUCTS
163. Genist Systems Inc.
164. Chakra Cola
165. Primisyn
166. Portable Logging Trailer Attachment and Clean Energy Engine
167. Innisoft - Intellegent Investment Software
168. Destinations Multimedia
169. SoundOfMotion
170. PortaReader
171. Online English Education
172. ALTEN Energy Solutions Inc.
173. CB Williams Bio-Energy Group - has a Disruptive Clean Energy Catalyst Technology
174. Transphat Imports
175. Mechanized Shrinkage Jumbo
176. Twicebright Lighting Ltd.

This Wednesday, April 30, Michael C. Volker, Director SFU Industry Liaison Office and President of WUTIF, on the topic of business plans. It’s back at the SFU Segal Graduate School of Business, 500 Granville Street. 

Also, by then, the list of companies moving on to Round 2 will be posted. Watch the Round 2 Companies Announcement post to see who made the cut.

Many people are asking about what the Round 1 questions are.

There are listed below, but the Rounds 1 questions, and the questions for ALL rounds are available in the NVBC Rules.

Round 1: The Idea
In this round participants will have access to seminars, networking opportunities, and online resources.

Completed registration and an outline of the business idea using the online form must be submitted by mail or electronically by April 23, 2008 to the New Ventures BC Competition, and must:

* Show how the Participant meets the eligibility requirements,
* Include a description of product or service offer,
* Include a description of the innovation behind the idea without disclosing proprietary technology,
* Briefly describe the technology sector the idea stems from,
* Provide a brief analysis of market and competition.

Responses to the questions are limited to a maximum of 250 words per question.

Entries will be evaluated on the basis of the five points noted above. Up to one hundred (100) participants will be invited to submit to Round Two. The finalists will be announced by April 28, 2008.

First tonight, Bruce Edmond, Corporate Recruiters.

1980 - 20% of corporate value from intangible assets. 2007 - 70%

Current market conditions are strong. In BC, overall unemployment is 4.1%. In the scientific/technical sector, 2.7%. The dot com bubble has resulted in people leaving the industry and fewer graduates coming into the field. It’s only going to become more difficult to recruit talent.

Recruitment Process (of a recruitment agency). Build a recruitment plan by understanding the business, detailing a position description (early stage companies rarely give a description), and build criteria for the search. Sources used to find people include local contacts, use database (28 years), research, and web research. Mr. Edmond reminsces about his early days, that His job was a lot harder before the web. ZoomInfo and LinkedIn are two major directories of employees. “Who here knows about LinkedIn?” Many hands raise, laughs. Someone in the audience says “It’s the Web Two Point Oh!”.

What can you do as a new entrepreneur? If you’re in new territory, use a trusted advisor who has hired before. Keep an open idea of what you’re looking for. Use a recruitment plan and start early. In Mr. Edmond’s opinion, the most important qualities are, in order: cultural fit, experience, industry knowledge, product knowledge. Where do you find people? Peers and collegues, advisor/investor network of contacts, job postings, and schools.

Final tips: Hire someone who can bring a team. Have multiple interviews, with different people and settings. Have a sense of urgency. Testing is an option, and good for high ranking positions. Follow up references in detail. Don’t underhire, have high standards. Hire for the right stage of the company.

Question: Contract vs. Permanent employment. Which is easier to attract?
Answer: In his business, he only deals with permanent positions. Often early stage companies will have trial periods for new hires

Second speaker: Lorene Novakowski, Fasken Martineau, talking about the laws of employment.

Employment is a contractual relationship, distinct from others. It triggers right and obligations that exist including tax payment, IE payment, Worker’s Compensation coverage. Companies are liable to third parties for employee actions on the job.

Independent contractors vs. employees. The terms of a contract don’t necessarily specify the relationship, under the law the nature of the relationship is considered. Contractor: sets own hours, pay usually based on deliverables. Contractors are still required to be covered under Workers Compensation.

Question: Does it make a difference to have an external companies
Answer: Yes, that is a good way to do it, but it doesn’t change the relationship.

Question: What events could trigger a WCB audit?
Answer: Doesn’t happen often, usually would only happen because of a complaint.

Employment Standards Act; covers things such as minimum wage and work hours. Certain professions are overtime except, including high tech professionals. This includes engineers and developers, but not technical support. Hours still cannot be excessive. Break regulations also don’t apply.

Frequent employer errors: incomplete record keeping. Miscounting of commission earnings and other forms of pay. Overtime claims. Penalties are mandatory and increase exponentially.

Basic IP Law: need contractual protection in place to ensure proper ownership of works. If a work is made by an employee during the course of employment becomes the work of the employer. The best way to protect yourself is a well written contract.

Employment Contracts. Ensure terms don’t violate any laws. Have employees sign the contract early. If the employee is hired to be an inventor, ensure that IP terms are clearly stated. Employees should provide employers with a list of past inventions and patents. Confidentiality provisions should be included in an agreement and specific. Non-compete agreements need to be narrowly defined, restrict to time and geography. A non-solicit agreement can be more effective.