“We are pleased to welcome Bob as the new CEO of GreenAngel,” comments Michael Volker. “Bob’s strong operational background and his proven track record in commercializing new technologies will contribute to GreenAngel’s development as an emerging clean technology company.”

Following completion of his Masters degree from Simon Fraser University in 1995, de Wit began his career by successfully commercializing the V-Chip technology from SFU, and has since invested in, mentored, advised, or consulted to, many of BC’s most promising emerging technology companies. de Wit has previously served as a Director and Corporate Secretary of GreenAngel and will continue in those capacities. He is currently the Executive Director of New Ventures BC and sits on the board of the BC Ventures Society.

In 2008 they entered the New Ventures BC Competition but did not progress past the second round. This year they have been engaged by the competition to assist with decision analytics as well as continuing to improve New Ventures BC’s decision process.

Does this mean that decisions on what companies advance in the competition will be made by software systems?

Not quite. As Octothorpe Software founder and CEO Peter Tingling explained during a phone interview, “software doesn’t make decisions, people do.”

New Ventures BC Executive Director Bob de Wit explains the role of Octothorpe in this year’s competition best. “At New Ventures BC it’s critical that our jury process be transparent and defensible so that the companies entering our competition know where they stand relative to other companies at their stage of corporate development. Over the past few years the number of companies — and the judges required to review them — has more than doubled and the jury process has become more complicated. Octothorpe has dramatically improved our ability to deal with uncertainty, reduce the impact of biases between judges, and most importantly, provided more information to the companies entering our competition by more clearly identifying their strengths and weaknesses.”

To expand on that, Octothorpe’s role this year has been two-fold.

First, they conducted workshops with this year’s judges to educate them on the potential biases that creep into decision making. According to Tingling, there are a large number of biases that people bring to the table without even realizing it and the goal was to reduce or mitigate these biases upfront.

While there are more than 3 dozen identified biases that can be reduced using specific techniques, Tingling gives an example that American Idol fans will be familiar with – the Simon Cowell problem. “The basic problem is this: You have a group of judges. One is a “tough” judge. They tend to give average candidates a low rating and “good” candidates a rating equal to other judges average ratings. The net result is that when multiple judging is used that ranking can become inverted. Good cases are excluded and poor cases can advance. It is equivalent to working for a tough boss who rewards the top 5% of their employees while easier bosses reward a weaker 10%.”

Second, they’re analyzing the judges data on this year’s competitors and providing feedback to both the competition organizers as well as the competitors themselves.

According to their website, Octothorpe is a Decision Sciences Company. Octothorpe’s intellectual property is in decision theory and they pride themselves in incorporating leading edge research and industrial best practices. They have a US patent on their unique approach and several PhDs in decision theory on staff that have conducted award-winning research on decision processes.

Octothorpe’s founders have decades of experience working with Fortune 500, government, pharmaceutical, games and sport organizations. Their most recent accolade was for their study tracking the role of wealth in innovation in the National Hockey League which was presented last month at the Administrative Sciences Association of Canada 2010 conference and was awarded Best Paper in the Sports and Tourism Division.

As with any competition where there is money at stake, transparency around the judging process is imperative.  Octothorpe is in the business of better decisions and there is no doubt that this year’s competitors will be better off for it.

NOTE: NVBC is announcing the companies moving through the next round of the competition tomorrow!

Tanner Philp, Lions Capital
Today we’re talking about what I like to call dialing for dollars 101. We’re going to go over the different types of investors as well as how to approach them and get funding of some significance. I’ll give some do’s and don’ts as well as some goofy things we’ve seen over the years.

I’m a Partner in a local venture capital firm. I’m in the business of making startup businesses just like yours. Lions Capital invests in promising emerging life science and technology companies in BC. I come at this topic with a certain background and biases, so if you think I’m being overly biased, go ahead and challenge me. Ask questions!).

Like many people in this room, we’re working with companies from the first money they ever raised to $100 million market capital companies and anything in between.

BC Advantage Funds
This is a Venture Capital Corporation fund offering a 30 per cent refundable tax credit. The administrative and reporting burden is very small. You do need to get an allocation for this.

The tax credit is offered on a first-come, first-serve basis so check it out sooner than later.

Financing Strategy
For the people who have a sales and marketing background, it is the same kind of blocking and tackling process for getting investors. You need to have a strategy for funding your company and for what objective you are funding.

A lot of entrepreneurs don’t think about the financing strategy when they’re just starting out, but it needs to be considered before a launch.

You should be raising funds towards a series of milestones. The more you achieve those milestones, the easier it will be to raise further funding and take it to the next level.

People chronically underestimate the time it takes to gather the funds. In the case of a high net worth individual, you may be able to close a deal over the first bottle of wine — but in most cases, it is far more challenging. Often, starting out you can be looking at four to nine months… and closer to nine than four.

Example: For me to get unanimous consent from my partners, just to get a presentation with everyone in the room, we’re looking at three to four weeks. Now you can see why some of these deals can take 10-12 months.

Price in these timelines. If you can’t raise equity in the meantime, the terms for venture capital will be egregious.

My firm will do twelve financings in a year. Some of the most seasoned entrepreneurs will have just six to ten financing processes under their belt.

It’s much easier to utilize other people’s assets than do it all yourself. You need to ask yourself what is the best use of your time. Are you prepared to spend 40 to 60 hours a week for six months trying to get funding? That’s how much time it could take.

First Step
Building a good board of directors is one of the first things you need to do. You need someone with financing and fundraising experience, a sales and marketing person, possibly a technical expert. But the financing or fundraising board member is critical.

What’s the right number of directors? From day one, you might be looking at three, including the CEO. As the company progresses, that may get up to five, but more than five can become unmanageable.

Investing Through Bankers
There are a few credible people and a large number of bandits. Talk to your lawyer, check two to three references. It amazes me how people will fail to check references and they’re paying bankers huge fees.

There are a lot of shady characters out there. Check references.

What You Need to Do: Sales Approach

Sources of Capital and Characteristics of Different Investors
You can get money from any of these organizations and you should get money from all of them.

Friends, Government, Angels, Venture Capital, Banks and Lenders and Employees.

NOTE ON GOVERNMENT FUNDING. BC is one of the most positive areas to do research and development from government subsidies.

Banks
Banks and most lenders by definition are looking for businesses that have sustainable cash flow over the past three to five years (which actually works out to about seven to 10 years). It can be a waste of time.

If you own a house, it is way easier to negotiate with a mortgage broker than it is for a commercial banker. Don’t waste time going to the commercial lending group.

Angel Investors
Ideally, you’re looking for someone who has experience in your area of business, have a thick rolodex and of course, a check.

Venture Capitalists
We invest other people’s money. Angel investors invest their own money. That’s the difference.

Funds are slow, angels are faster (but still looking at six months, most likely, to raise the funds). You could be a couple of years away. When planning your milestones, plan for this time.

You need to be talking to your customers and investors now, while you’re still building the thing you’re going to sell. You need to be ready for later.

A typical scenario. You raise $50,000 from an Angel Investor, but that money runs out and you miss your funding milestones. The Angel investor may provide a second round of $50,000, but not likely a third time. They’re going to get tired.

What astounds me is the number of people who take money from investors having an expectation of a passive investor, but they instead have an active investor who a CEO has to manage every two weeks or even more often. You need to have that conversation early.

Most investors in BC are generalists. You may not be restricted in getting investment in certain types of business or tech based only on the investor’s experience.

Government Programs
SRED, IRAP/NRC, Government funds, VCC Program, Innovation Grants, EDC, Non-dilutive.

You have to ask yourself, what are you really getting with an active investor. People will tell you that they have certain expertise, but check their CVs. They may not have that background. They should have great connections and networks.

Dealing With Pressures
One of the most important things is understanding the motivations and what is driving behavior from the other side of the table. What are the pressures?

When you raise money, you are taking away reasons to say “no”.

A high net worth individual who invests $10,000 that grows to a $1 million dollar value may get $100,000.

Five to seven investments is a portfolio.

The people who have dollars also have masters. It could be their wife. In the case of funds, it’s their investors.

VC’s are looking for something that aligns with the interests of their shareholders. Understand the influence.

You should also be able to articulate the time horizon for the investment. This is important for selling the investor. It’s not just the rate of return. It’s the time involved. If you are promising a high rate of return but after 10 years, and the investor only wanted to be in for three years, you could have a big problem with the investor calling the company every single week. “Why aren’t you selling the company? I want you to buy me out.”

Portfolio Diversification
The Sequoia portfolio had 10 investments. All except one didn’t work, but YouTube was the one that did work, with a phenomenal return. For the investor, it worked. But for the company requiring investment, you may have only one shot.

VC’s are of the opinion that you either go big or go home. We will push the company to go for 5X or go for zero.

Who To Call?
To build a sales funnel, you need customers. Fortunately, this is usually pretty clear. Look at the background of the investors and those who have done similar deals.

If you go with someone who understands your line of business, you’ll have a much easier and faster process than if you have to educate the investor.

Example: The guy who runs the big construction company and has a ton of money is not the ideal investor for your software startup; here, you might look for those from successful gaming companies.

Learn who’s who from your lawyer, an entrepreneur and agent and www.cvca.ca

The best candidates have oodles of money and experience in your space. After that, the second-best investor still has oodles of money but may be able to take high-risk investments.

Remember that those who seem like they may have money might not. Timing can be a factory. In the current climate, VCs may be looking at funding fewer companies.

Cold Calls
In my opinion, cold calls can work. I do answer cold calls (perhaps because of my background starting out cold calling). Cold spam does get deleted. But I’ve been told even the cold phone call is a waste of time. You want to find that mutual contact who can make the introduction. A mutual contact will shortcut the relationship-building timeline.

This is a small town. If you network enough and meet the right people, you can get an introduction to anyone in this city.

First Contact Advice:

• Go for a coffee or a glass of wine or a beer first.
• Listen 50 per cent of the time, talk 50 per cent of the time. You’re not trying to bombard someone with information. You’re trying to build a relationship.
• Don’t talk about the technology. They want to know about you and how you’re going to make money.
• Ask about their portfolio and deals they would like to do and why. Ask them what the next steps are that would come in the process. How does the investment process work? How will this affect your strategy? Understand their process and desired terms. That way, you’ll know if you’re succeeding or failing in it.

Follow Up

• Write a thank you note the same day.
• Ask for a follow-up meeting.

Presentation Etiquette

• 1 Hour, 12 slides maximum
• Sell the business, not the technology. Most investors will do due diligence on the technology or get an expert to do it for them. It’s just a box to tick, not the fundamental reason they’re making an investment.
• Know your audience. “Nice to meet you, guy I don’t know at all and whom I want to get $100,000 from.” Do your homework.
• Don’t contradict yourself. (I’ve seen arguments over strategy during a presentation. It just looks really bad).
• Contents: Product, addressable market, team, competition, financial.

Do a Throw-Away Pitch
Your presentation should be able to be understood by a seventh-grader. Bring one of your colleagues and give them your pitch. They aren’t going to be investing in you, but with cynical feedback, you’ll be able to refine your pitch.

Timing the Schedule of Your Pitches
Schedule your best probability investors in the middle of the day. By the same token, if you’re spreading out your fundraising process over several months, go to the good ones in the middle of the process because you’ll be in the groove (and not exhausted yet!). You’ll have canned answers, developed responses to criticisms and you’ll have energy.

War Stories and Things Not to Do in a Presentation

Note#1

We once had a presentation by an owner of a software company who had made millions of dollars when his company went public. We asked him how much of his own money he was going to invest. He said “None! It’s too risky!” Obviously, we just wasted an hour in that presentation. Moral of the story — most investors will expect you to invest in your own business.

You should expect that many investors will expect that you put hard cash into the business. Why should a funder put money into your venture when you’re not willing to do it yourself? This is absolutely going to come up.

Note #2

Two local funds. Funders were looking at a clean tech pitch. They asked the founder which law of physics they were breaking. With a stone cold face, he answered, “the fifth”. It belied a total arrogance that was unworkable.

Note #3

Generally not a good idea to bring your entire management team to a presentation. The investor can feel “outnumbered”. It’s not conducive to a good interactive discussion

Note #4

The CEO must be the one to give the pitch. 10 per cent of the time, the founder or CEO (who is still at the helm of the organization) is not comfortable giving the message. That’s an automatic “no”. If you can’t carry the ball, you can’t be in that role.

Due Diligence

Typical items include a management references and CVs, a strategy review, techn ical review, market analysis, IP review and much more. You want to be prepared in advance. Organize a due diligence binder ahead of time (you don’t want to have to take two months to get back to them. You don’t want to lose their attention for even a moment. Know where you are in the due diligence process at all time.

Keep two due diligence binders (One for your investor, one for yourself). Include even simple things like the CVs of your people.

What Investors Are Looking For

• An ideal company for an investor has:
• A team with applicable knowledge
• Addressable large and growing market
• Competitive advantage
• Clear and scalable business model
• Market validation
• Credible vision of success

No company has all of these, especially at the early stage. You’ll need investors who are willing to help. But investors are in the business of saying no. A large part of raising funds is taking away their reasons to say no. Understand their issues and hurdles.

Just ask them, what are the top three reasons they don’t want to make this investment?

Can’t Get Money?

Something like 50 per cent to two thirds of the investment decision will be based on the quality of the team. One of the first things you have to ask yourself is do you have the right people? Do I have the right technical people? Sales people? Most of the time, when an investor says “no”, it’s because you’re missing an element.

You can get advisors, management team additions or new employees to address this.

Another problem is when you’re looking at the wrong group of investors. For instance, we don’t invest in online companies. We just don’t.

Your timing can be wrong. Eg. Greece is going to hell in a handbasket, their portfolio is down five per cent or whatever. Summer is often a horrible time. You don’t want to be running out of financing in July or August. Every high-net worth individual is off on vacation, unreachable. Only one or two in ten financings get closed in that window. The people you’re typically asking for money have lots of it and they usually like to travel.

Another big problem is that your terms are not right for the market. High net individuals typically all know each other. They share terms with each other. They will call up their buddies and ask about the terms.

How do entrepreneurs overcome this built-in advantage investors have? It’s very hard for an entrepreneur to know this information, but a good securities lawyer would be able to know if your terms are market-ready or not.

Other entrepreneurs who have been successful in raising funds here or south of the border will be able to also help you determine appropriate market terms.

Synonyms for No

A lot of things actually mean “no”. First and foremost is “maybe”. This is true eight out of ten times. If an entrepreneur is in this situation, go to your mutual contact and get them to find out information. Find out what the issue is.

Other legitimate reasons are: It doesn’t fit our mandate. We don’t have the money right now. It’s too early (certain milestones have not been met).

Sometimes, “it’s too early” means they’re not buying it. They don’t want to rule it out in case you hit it out of the park next year.

For investors that say “we only fit companies that have revenue”, keep them on the burner. When you do progress, you’ll meet their criteria.

“Needs a new CEO”. This is a tough objection to fight.

Strive to get to “No” as quickly as possible. The next best thing to “Yes” is “No”, so you can get on to the next investor faster.

In contrast the only good synonym for “Yes”… is “Yes”. Until the money is in the bank, you can’t start counting it.

Do Investors Sign NDAs?

No. Investors don’t sign NDAs. Especially people who are on the technical orientation side, this scares them. But it’s a practical reality that you have to deal with.

The reason is that any investor who looks at any volume of deals has no way to know if they’re breaching an NDA. As a whole, the industry has said that they will not sign them so they don’t have any liability from signing the NDA and looking at another proposal from a different company.

Best thing to do is not give any information to investors that you don’t want to show up on a wall in Starbucks. Just don’t give that information. This is also true for anything that is unique about your business plan.

What About Legal Costs?

I’m an investor and I want to make an investment in your business. Who pays my legal bills? It is the de facto standard that the company pays the investor’s legal bills. You should expect that. But get them to cap the amount. Put a limit and restriction on it. How much? Million-dollar financing could be $10,000 in legal bills or under.

What to Look for (or Avoid) in an Investor

Be wary of investors who say they can take care of all your problems but can’t deliver.

Deal Terms and Structure: The Basics

Price, Pre-Money Valuation, Investors, Amount, Capital Structure, Legal Bills, Date

Not-So Basics

Board seats, liquidity preference, preferred shares, control, common shares, dividends, drag along, anti-dilution. If investors start talking about this stuff, you’ll need to talk to your lawyer. You need to know what sort of control you’re giving up in your business.

The structure should match the stage. Angel investors are now filling a lot of the funding gap that used to be taken by other types of investors. Typically, if you’re looking at $2 million or more, you’ll be looking at institutional investors.

Negotiate Terms

• Investors often have more experience than entrepreneurs, so get advice from your lawyer.
• Consensus is when both parties are equally unhappy.
• Remember that investors are future business partners and expect the same in return.

Valuation

Start-ups are very hard to value rationally. They’re not based on investments previously made or discounted cash flows. The revenue budget is ALWAYS wrong. The only thing that means anything is when we’re going to run out of cash next.

What you do is look at similar companies. Eg. You’re an outsourced IT company. Apply a valuation with a similar market cap, take all of the big companies out of the equation.

Talk to lawyers and other entrepreneurs to try to get valuation information on six to ten companies that are comparable to yours.

Be realistic. The higher the input valuation, the lower the return at the end of the day. It’s all a bit of voodoo.

Most start-ups are valued in the $1 million to $3 million range. You want to think through your total fundraising strategy. Call investors you are anticipating for the next round. Tell them what you have planned in terms of revenue and ask them what they think the valuation would be and what sort of terms they might be looking for. Always increase the valuation.

If your company gets revalued at only half of last year’s value, this is not nice to granny (friends and family). Your first investors are not really investing in your business model — they’re investing in you.

I’ve been very up front with family and friends. “There’s a very high likelihood you’re going to lose every dollar you give me.” Because I’m honest up front, I can talk to them after if the value does indeed go to zero.

The people who are going to bear the brunt with revaluation are your friends and family. Start off with a low valuation, increase it reasonably.

A Must Read: Top 10 Lies of Entrepreneurs from Guy Kawasaki

Also read the Top 10 Lies of Venture Capitalists

Steven Lukas, Fasken Martineau
When you put together a corporate structure, you’re bringing together a series of people for a common purpose. A company just sets out relationships of how they work together and what the responsibilities of them are.

A company is different from you. When you incorporate, you’re talking about being the owner of the business. As you bring in more shareholders, the company structure becomes more complicated.

The structural map of your company will include shareholders, directors, officers, employees and possibly an advisory panel.

Shareholders
Anyone can be a shareholder. Individuals, companies and partnerships can be shareholders. There is no limit on the number of shareholders.

There are rules on how people become shareholders and when you become shareholders. As well, the rules change once you bring in more than 50 shareholders.

The key to being a shareholder is that their liability is limited only to the money that they have invested. If the company goes under, shareholders are not responsible for those liabilities (though they may lose their investment).

There are an unlimited number of types of shares, classes, rights and restrictions. The key ones include, are they voting or non-voting, participating or non-participating, and coming with options, warrants or rights.

Shareholders have an exclusive right to elect directors, but by and large can’t make the company do anything. Shareholders rights are governed by very detailed contracts. Not all shareholder agreement contracts are equal.

Directors
Directors are elected by the shareholders. They can fill vacancies or potentially add a number of directors.

In practice, who makes the direction of who the director will be? Usually, it’s the CEO (though they don’t elect the directors).

There must be at least one director. In BC, there is no residency requirement and there are no qualifications for being a director.

If you’re looking at your exit involving sale to an American company, it may be easier to do it with a BC company, because of the lack of residency requirement for directors.

Directors have the power to manage the affairs of the company. They have a duty to the company and the shareholders as a whole to act fairly and diligently.

They may be personally liable for breaching duties, taxes or wages. For instance, they can be personally liable if they issue shares for less than what they’re worth. That said, you can be protected by doing due diligence and acting in good faith.

Officers
The power of any officer is set by the board of directors. They oversee the employees.

Employees
They do all the real work.

It’s important to understand the definitions of employee and contractor. An employee works for your company. A contractor works for themselves.

If the CRA second-guesses you determines that a contractor was actually an employee and he doesn’t pay his taxes, then the company can be liable for paying those taxes.

It can be complicated. One example — if you take twelve one month jobs, you’re a contractor. If you take a job and get fired after a month and that’s the end of it, you were an employee.

If the level of sophistication of the person representing themselves isn’t there, then the person is probably not a contractor (even if that is what they would like to be considered).

What does compensation look like? It can be cash, shares or options or any other combination thereof. There is no set model for paying employees.

The Advisors
These people advise the board or advise management from time to time, in their areas of expertise.

Officer Issues
Conflicts of interest ie. your role as a shareholder vs. director. These sorts of conflicts come up all the time in VC positions.

There are differences between being a private company and a public company. When you go public, you’ve got a whole new series of responsibilities.

Initial Corporate Structuring
Incorporation is favorable in Canada, because of:

Financing issues – investors don’t like offshore companies.
Government grants – in most cases, these are only available to Canadian companies
Taxation and employment issues are also simpler to deal with if incorporating in Canada.

Create a structure with unlimited common shares and unlimited “blank-cheque” preferred shares. If you don’t do it this way, you may have to go back to your shareholders to ask for permission.

Financiers dictate financing terms, such as debt vs. equity, price, preferences, terms of SHAG, etc.

If you can, avoid issuing secured debt, using shareholders’ loans, using multiple share classes and incorporating offshore.

NOTE: It’s almost impossible to start a business without creating shareholder loans. Before those investors come in, convert it to equity.

Founder Shares
Founder shares are large blocks of shares issued at a low price to position the founders. It recognizes their “sweat equity” contribution.

What class of shares should they be? Common shares. They can be preferred shares for sophisticated investors if you have a good reason (I’ve never come across one…).

Founder Shares should be issued to founders and senior officers, not employees or outside investors.

Common Mistakes in Allocating Founder Shares
* Not setting aside enough founders’ shares at time of incorporation.
* not setting aside some founders’ shares for future additions to the management team.
* Not vesting the Founders’ shares. In 2-4 years, or providing for “reverse-vesting”.
* Issuing them to the wrong people.

Preparing a Financing Plan
Determine a road map for financing

The company determines its developmental milestones. What are they? By when will they be met? How much funding is needed to meet them?

Sources of financing include government grants, friends and family, angel investors, VCs, investment backers, underwriters (ie. brokers). There’s money all over the place — it’s just a matter of who you can tap into and how.

If you distribute a security, you must file a prospectus or rely on exemption from prospective requirement.

There is no limit on the number of people you can approach for financing.

* What are stock options? The right to purchase a number of shares at a predetermined value.
* Companies must plan for growth an make a notional allocation of their options.
* Companies should vest all options within 2-4 years.

Don’t necessarily be afraid of reducing your percentage of shares so long as the value of shares keeps going up. It’s better to have a smaller percentage of a bigger pie than a bigger percentage of a smaller pie.

Your Capitalization Plan is your best guess, like a budget. Actual results may differ from your projections. If you figure out sooner what the end picture looks like, you can do better in picking the number of shares you need.

When VCs come in, they change the rules and apply new conditions. The easy part of the discussion is what is the value of your company. The hard part is dealing with contractual obligations while being able to do your job and manage your company.

Sean Hodgins, CA, CPA, Tandem Accounting Group Ltd., speaking on Financial Modeling

We deal day to day with a lot of technology startups. That’s our area of expertise.

In today’s presentation, we’ll look at structuring for success, BC Tech bootstrap structuring, Financial Modeling and a Case Study.

NVBC is a competition. To win, you need to be in a hot space, have huge potential and a great story! It’s a combination of timing and a few other things to hit and win the competition. Even for those who don’t win, businesses can learn a lot.

The Bootstrap Model
1 in 100 companies that apply get VC financing
2 out of 10 VC financed companies make it
Dragon’s den is entertainment, not to foster successful startups! (It pains me to watch that show). Listen and learn from what they’re saying, but I don’t know if it’s particularly healthy other than for that.
Focus on solving a real problem and making a profit.

If you only need one round of financing and can take home big paychecks and have a successful business, that’s where most enterprises are today.

Top 10 words of wisdom
1. Incorporate. Keep is simple and use reverse vesting common shares. It can be a disaster if this isn’t structured at the front end.
2. Raise your first $25,000 from friends and family. If you can’t raise money from those closest to you, how will you get financing from angel investors?
3. Get good at expense reporting (separate self from Inc.). For instance, you paid to travel here. Are you going to expense that to your company? Even if a company has no money and can’t pay you back, you recognize that the company owes you.
4. Register immediately to get your GST back!
5. Build real SR&ED and optimize Proxy rules. This is basically a tax incentive program for technology companies, allowing you to file a tax return, never having earned any money, and getting paid by the government for expenses for development of the product.

Proxy rules are an incentive to hire people as employees rather than contractors. You can gross up their salary and get a tax credit for the gross value. The Proxy comes in if you’ve incurred other expenses.

6. Register as an Eligible Business Corporation. This allows you to raise money from accredited or angel investors.

7. Leverage the NRC-IRAP and other Gov’t programs. NRC-IRAP is like pre-paid SR&ED. You get approved for a grant. Example, if you’re hiring youths, it’s definitely a place to look at.

8. Angel circuit-links to customers and maybe even money. They can develop great networks and create energy around what you’re building

9. Find “customers” who will “help” build your product.

10. Build partnerships and networks early.

Financial Modeling

What to include? (Historic + 3-5 year projection)
* Income statement (profit and loss). A year in time’s perspective.
* Balance Sheets – assets, liabilities and equity
* Cash flows and burn/runway
* Opportunity analysis
* List of assumptions. As you’re starting your business and are trying to develop your financial model, you must develop assumptions on how you are going to build your business.
* Capitalization table

Financial Modeling
* Focus on revenues
* Numbers are instrumental in telling the story
* Make it believable. Test using your network
* Test the angel networks and VC’s
* Costs should focus on R&D and sales and marketing.

Business Modeling
* Who’s going to buy what you’re selling?
* What price are you going to charge?
* How does this compare to competitors?
* When do the sales happen?
* Customer acquisition costs?
* Customer support costs?

Business Model (Eyeballs Model)
* Who’s going to visit your site and why?
* How fast is it going to grow?
* How does this compare to competitors?
* When do you get bought and by whom?
* Cost structuring for rapid growth?
* Customer support costs?

Business Model (Technical Model)
* What trend is hot?
* Who will acquire you and when?
* Need technical excellence!
* need investors in your field and with connections
* $1 Million+ per engineer

These types of companies are acquired for the people who are there.

Opportunity Analysis
* Calculate the size of your target market.
* Story to Market Take Ratio (how good is your story?)
* Rate of growth analysis – key metrics, customer acquisition costs (don’t guess)
* Valuation analysis – support your value

Case Study: QCDocs Systems Inc.

Numbers are a key to telling your story. Focus on the customer and generating revenue and don’t be afraid!

Before getting underway with the seminar, Bob de Wit gave a warm and informative introduction of what NVBC is all about…

The NVBC competition takes place over four successive, and increasingly complex, rounds. Competitors are eliminated after each round until only 10 remain in play to win $300,000 in prize packages.

Need more details? Learn more about the New Ventures BC competition.

Check out the winners of past NVBC competitions!

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Bob de Wit:
What defines an innovative product that might be entered by a company into the competition?

• It utilizes new technology
• It combines existing technologies in a new way.
• Utilizes technology to develop new or improved existing products or services
• It utilizes technologies to develop new or improve existing production processes
• It is early stage of a new technology

Bob’s Checklist for Crafting an Effective Business Opportunity Statement or elevator pitch

• Say what you do
• Define the pain
• Define the solution
• Say why anyone should care
• Define how you’re going to win
• The call to action (ie. Show me the money)

Elizabeth Maurer delivers award-winning pitch representing last year’s winner, LightIntegra

For first place in 2009, they won the $120,000 BC Innovation Council prize package. LightIntegra develops a medical device and disposables to measure the quality of platelets before transfusion…

—

Questions and Answers Session following the Presentation

Question
1. You talk about the market and how big it is, but do you plan to take it private?

Answer
We plan on going private. These companies that I have listed here already have an established customer base. We would feed into what they are doing. They don’t have a platelet quality test. They just want us to go through the FDA process.

Question
2. Market adoption and market penetration… You mentioned you were going to start with hospitals because they are most incented. You mentioned they would pay $500 for a bag of platelets. If they find the platelets are bad, would they return them? They’ve already paid for them…

Answer
Once hospitals can determine which one is the better product, they will force the production site to give them the better product. Can they get their money back? I don’t know. Maybe they can do an exchange and not pay for the next product. Something like that? Most cost savings comes from reducing the stay of the patient in the hospital… the cost attached to repetitive transfusions.

Question
3. You won the competition… Were there areas you saw that differentiated you from the competition? Were there paradigm shifts that if you knew then what you know now, would you have made changes?

Answer
I didn’t actually get to hear other pitches, so as a contestant, I didn’t really know how we compared. What we learned… being a scientist, I found it tremendously important to see these seminar topics and get the experience of the mentors. To get the feedback about what we had to think about was essential. To have a good idea is one thing, getting feedback was good. But being willing to listen and learn so that the feedback was actually helping you was also important.

(Bob de Wit: All three of the top teams added to the management team as they went along last year. This should be noted by current competitors).

Question
4. Where else did you get support for growing your venture?

Answer
Within Vancouver, the angel network and the life sciences network, where you can test your pitch is really, really helpful.

8:18 pm – Time For Prizes

New Ventures BC Leather Folio goes to Oliver!

New Ventures BC Jacket goes to Wolfgang!

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8:20 pm Bob de Wit is back! “So, How do you Win?”

Round 1 Questions. What are the NVBC judges looking for?

• Describe the product or service offering
• Describe the innovation behind the idea without disclosing proprietary technology.
• Briefly describe the tech sector
• Provide a brief analysis of the market and competition

How about eligibility?

Our WIPO Definition of IP – Creations of the Mind

Round 2 Entry, Feasibility Test

Deadline is May 10, 2010!

Round 2 Judging Criteria

9 questions, grouped into Baseline questions and Evaluation Questions

Baseline
Where you sell the judge on your venture.
Describe your product or service.
Technology Development.
Who’s on your team?
What’s your Business Plan status?

Q1. Intellectual Property
Describe your IP strategy including plans for how your IP gives you a defensible competitive advantage. Remember, IP is not just patents!

Note: If patents are part of your strategy, don’t disclose all of your secret sauce. Talk about what it does, not how it does it. Patent protection is important to us.

Q2: Market

• 9 out of 10 submissions don’t talk about how they make money. Don’t make that mistake!
• Be specific about the size of your target market in terms of size, segments and trends. You need to come up with a number that shows you’ve researched what the market is.
• Make sure you consider all the markets you could apply your technology to, but keep focused on your first market.
• Next, describe your ideal customer. This really helps you work from the ground up.

Q3. Distribution

Explain the go-to-market plan. Do you have alliances you intend to strike? Why? When?

Q4. Competition

• Describe your company and product’s primary competitive differentiators.
• What makes you unique? How will customers benefit or save money?
• What are the barriers to competition?

Q5. Financial (key numbers)

• What have you spent to date? What funds have been raised? From where? How much do you need?
• When will your venture be cash-flow positive?
• Include your key assumptions that drive your forecasts.

What do Successful Entrepreneurs Understand?

• The market where their product is sold.
• Key defensible qualities that give an edge over the competition
• Strong supporting team
• Philosophy: “Cash is king”. They budget as closely as they can so they always know their cash runway.

Some final tips:

Find mentors to expand your vision

Don’t overplan – take action

Hire people who are smarter than you.

Tailor your elevator pitch to different audiences

Play to win but be willing to risk failure

Acknowledge the competition. Never say “there is no competition!”

Don’t let the critics get you down. Use the feedback. Adapt and overcome.

Have fun and don’t take yourself too seriously.

Where to Look for Help?

• Your regional Science Council
• NRC IRAP
• New Ventures BC Competition
• Mike Volker’s website
• Ventureblog.com
• Angelblog.net

Where NOT to Look first for feedback:

• Your bank
• Your family and friends
• Outside your home market
• Business planning consultants (You can’t have someone else write your business plan. It just doesn’t work!)

—

8:42 pm Questions Session

Questions

1. Can we get a copy of the slides?

Answer
Will be available on the NVBC site the following day

Bob – Who’s already joined the competition?

Answer from the audience: Most put their hands up!

The competition goes on!

NVBC is one of North America’s largest technology business-idea competitions -  essentially a boot camp for business start-ups.

• Learn from some of B.C’s best business experts at our business-education seminars
• Network with top professionals in business, law, finance, government and academia
• Improve your business and strategies during each round of competition
• Receive advice and insight from mentors In Round 3
• Present your condensed business plan to a panel of ‘angel’ investors, venture capitalists and industry experts in Round 4

But don’t forget that competition winners share $300,000 in prize packages.

NVBC is open to any B.C. resident, team or business with an innovative technology product or service that has not yet secured significant financing from external investors.  The $200 entry fee covers all of the NVBC business-education seminars and networking events – plus entry in the competition.

The Vancouver-based business-education seminars start on April 6th, the round 1 registration deadline is April 19th and the 2010 NVBC Competition Awards Ceremony is on September 23rd.

Those of you that have been part of the NVBC community in the past will notice that we have made some improvements to our site including streamlining content with a new navigation and layout, adding subscribe links for Twitter and RSS, and redesigning the registration form to make it easier to follow. Let us know what you think.

Now in our tenth year, the technology business idea competition has grown to the point where it needs full-time leadership, says board chair Steven Lukas.  “Last year we had 180 competitors vying for $300,000 in prizes. We want to continue to build on our past success and reach more regional entrepreneurs.”

de Wit previously was an NVBC director and served as jury chair and mentor ‘wrangler’ for the competition’s 100-plus business mentors. As executive director he will oversee and implement the organization’s future vision as it moves into its second decade.

A founder and director of Greenangel Energy Corp., de Wit also runs the SFU Venture Connection entrepreneur-in-residence program. He is an SFU alumnus with an MA in economics. de Wit’s executive experience includes corporate development, corporate finance and competitive market intelligence. He is an active member of the VANTEC angel network and the WUTIF angel fund.

“Bob is an ideal choice to lead New Ventures BC into the next decade,” says Lukas. “With his entrepreneurial background, he truly understands the dedication, sacrifice and persistence that aspiring entrepreneurs bring to our competition.”

Less than 48 hours until we find out who are the winners of the 2009 New Ventures BC Competition and where $300,ooo in prizes will find a home. Just as a reminder, here are the Top 10 finalists in no particular order are:

• Bluekey Energy – Prince George
• Etalim – Burnaby
• G.R. Green Building Products – Burnaby
• Indel Therapeutics – Vancouver
• LightIntegra Technolology – Vancouver
• Lungpacer Medical – Anmore
• Mobify – Vancouver
• Rapid Electric Vehicles – Vancouver
• Veridae Systems – Vancouver
• Vineyard Networks – Kelowna

The winners will be announced on September 24th at a gala reception at the SFU Segal School of Business. The event is invite-only, so no doorcrashers – if you’d like to attend be sure to email us with your request now.

Who’s eligible?
Those NVBC participants who have successfully made it to Round Three of the competition, and whose business base is located outside of Metro Vancouver.

How do I get my reimbursement?
Eligible applicants must submit their expense form, along with original receipts, no later than August 17th, 2009. For budgetary reasons, submissions received after this date will not be accepted.

Important notes:
1.    NVBC reserves the right, providing reasonable notice to participants, to cancel the program. In that event, expenses incurred by participants will be reimbursed to participants as provided for above.
2.    NVBC expects that further funding will be made available, of a similar nature, for later aspects of the NVBC program. Announcements regarding the availability of such funds will be made in due course.

Download the form

New Ventures BC is hosting a networking event on Thursday, June 25th at SFU Harbour Centre from 5:30pm – 7:30pm. The top 30 companies will have the opportunity to meet their mentor match-ups and everyone from the New Ventures BC community (competitors, volunteers, etc.)  is invited to attend and enjoy some wine, canapés, and networking.

Be sure to register to confirm your attendance at this event.