Archive for November, 2009

The Mississauga Board of Trade recently hosted the 2009 Business Awards of Excellence. Presented annually, these awards honour the efforts of successful Mississauga businesses whose achievements have made important contributions to the economic well-being of Mississauga and its citizens.

RIC Centre was proud to be a part of the awards this year by sponsoring the Technology & Innovation award. This year’s winner was Covalon Technologies, an advanced medical biosystems company that has developed and patented advanced therapeutic biomaterials for wound care and surgical applications and coatings.

Judges Andrew Maxwell of the Canadian Innovation Centre, Fred Hausmann of the FRED Group, and Neil Mallard from the BDC, said Covalon exemplified a local business focused on fostering innovation not only within the company but within the community as well.

With Covalon CEO Frank DiCosmo away travelling on business, Val Ditizio, Covalon’s Chief Scientific Officer, did a wonderful job of representing Covalon and conveying their gratitude for being honoured with the award. The event was a huge success with a sold-out crowd, great dining, and fabulous entertainment and RIC looks forward to being involved again next year.

Pictured, Val Ditizio, CSO, Covalon is congratulated by Pam Banks, Director of Commercialization for RIC.

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By Sharon Dotan

As moderator James Sbrolla said it best, it figures that a panel of three brilliant women would be participating in a session on market intelligence.  Our last Growing Your Business session hosted by the RIC Centre and OCETA involved Usha Srinivasan, Director of Market Intelligence at MaRS, Christine Konig of Konig & Consultants, and Isabel Alexander, founder of Phancorp Inc., on the topic of “Using Market Intelligence as your Strategic Weapon”.

Growing Your Business is a monthly educational series that covers a variety of topics relevant to entrepreneurs and small business owners. These days, entrepreneurs are trying harder than ever to stay on top of their markets. And in order to do so, they must do all they can to fully understand the market – including the roles that both their customers and competitors play there. This is where market intelligence comes in.

Srinivasan, Konig, and Alexander all stressed the importance of knowing your customer, knowing their pain, figuring out how you will solve their pain, and communicating a clear value proposition to them. But market intelligence doesn’t stop with your customers. It is crucial to stay on top of what your competitors are doing, keep up with new and dynamic market trends, and create an innovative and effective business model.

Although this seems like a lot to do, knowing the marketplace that you plan to do business in is a vital part of Growing Your Business. Fortunately, there are numerous resources available to help you. Check out MaRS Discovery District’s Market Intelligence program and for more information, you can download the presentations from the event.

Join us on December 9th for “Accessing Government Programs – Leveraging Resources to Grow”. Visit www.riccentre.com for details.

Sharon Dotan is a student in the Master of Biotechnology program at the University of Toronto Mississauga. Through her internship at the RIC Centre, she has gained a passion for cultivating and promoting innovation. With her background in life sciences, Sharon has been able to assist RIC’’s our Entrepreneur-in-Residence with various client needs, including market research, business plans, and go-to-market strategies. Sharon is also responsible for the Growing Your Business breakfast series as well as maintenance of the RIC website.

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Re-posted from the Cross-Border Biotech Blog

By Jeremy Gruschow

David Pogue waded into the Electronic Mediacal Record (EMR) narrative recently, with a piece on CBS News that took a look at the U.S. efforts with an interesting focus on Kaiser’s EMR efforts. Pogue follows up with a blog post containing a transcript of his full interview with David Blumenthal.  Interestingly, the main negative angle in his CBS piece is cost; but as we’ve noted, many providers are offering loans or guarantees or both to cover the cost until the federal payments kick in.

Meanwhile, Australia is only three years away from a full national EHR system, complete with a lifetime ID and scary music for the privacy-related segments:

Jeremy Grushcow  is a Foreign Legal Consultant practising corporate law at Ogilvy Renault LLP. He has a Ph.D. in Molecular Genetics and Cell Biology. His practice focuses on life science and technology companies.

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Reposted from Maple Leaf Angels

By Craig Hayashi

I thought I would write a couple of posts on legal issues start-ups should be aware of early in their lifecycle. In particular I wanted to cover some issues, that if not handled correctly, can have a detrimental impact at a later stage in the company’s life such as when they are looking for outside financing.

I recently met with Joe Milstone, partner and co-founder of Cognition LLP. Cognition is quite active in the start-up space in Toronto. They work with start-ups by offering a dedicated lawyer to act in the role of in-house counsel on a fractional, as-needed basis, and at a cost that is about a half to a third of a more traditional business law firm.

Craig: Joe, thanks for taking the time to talk with the StartupNorth readership today. Before we start, I guess we should get the formalities out of the way by stating everything we will cover today is meant as general information only and not meant to imply specific legal advice. For this post, I thought we would talk about intellectual property. From an investor standpoint, intellectual property can be a very strong factor in how an investor values a company and forms a big part of their decision in the company’s investment worthiness. When people think about intellectual property, the first thing that probably comes to mind are patents. However, there are many other aspects relating to the ownership of intellectual property that a start-up needs to ensure are in properly place, correct?

Joe: That’s right. Most start-ups will use their own employees, outside consultants, and external vendors to help create a product. Intellectual property ownership rights need to be clearly spelled out in all of these relationships to ensure when a company goes to file a patent, seek investment or often even to complete and comply with their own sales and marketing documentation, that there is no possibility that an outside entity can stake claim to their intellectual property. We work with companies when they are at the stage when they are looking for angel or VC financing and also when they are targets of acquisition. We know that investors or acquirers will look for this in their due diligence so we advise our clients to ensure they have a strong foundation from the start.

Craig: Ok, let’s start with employees. If you have an employee on payroll, doesn’t general law cover this off and give the employer rights to any intellectual property they may develop while employed?

Joe: That is correct as a broad and general proposition, however it is best practice to get an employment agreement in writing that will cover off this and other aspects that can have a determinant on the success of a company. For example, there are certain slippery residual rights that all inventors of intellectual property retain, whether they are employees or not, and that if not handled correctly, can impede what a company can do with the intellectual property. Also, without a specific employment agreement there will be more grey areas that everyone wants to avoid. Like what if one of their employees works on their own computer/equipment on their spare time – the employee may stake claim that some of the intellectual property is his or hers. Additionally, we have also run into situations where everybody in the company has an employment agreement except the founder. This covers the founder’s interests when he or she owns all of the shares, but when outside entities are looking to make an investment, they are obviously investing in the company as an entity, not the founder.

Craig: What about non-competes?

Joe: From a company’s standpoint, the knee-jerk reaction is to seek a broad non-compete clause if it ends a relationship with an employee. However, this is usually counterproductive, because courts believe fundamentally in the rights of people to work wherever they want. As a result, courts have a strong aversion to enforce almost any non-compete against an employee unless it is framed reasonably narrowly so as to address a specific business concern that can’t be protected in other ways. A company would be better off to have a very tailored and proportional non-compete clause that outlines specific timeframes, geographies, narrowly defined businesses, etc. Even better and more likely to be upheld is the use of other mechanisms to achieve generally the same results such as non-disclosure agreements and non-solicitation covenants with respect to employees, customers and even key suppliers of the company.

Craig: Start-ups often use flexible compensation structures in the early days when money is scarce (i.e. giving people below market salaries in exchange for equities). Any comments on legal aspects around this?

Joe: Ideally in those situations, there should be a cash component and the company should ensure that the market value of the overall compensation is sufficient to ensure that the employee has received adequate consideration in exchange for him or her agreeing to be bound by any non-competes, non-disclosure and IP assignments. The main thing is to get the relationship properly documented so both sides have a record of what kind of ownership is actually being provided and on what terms, and so the company can document and comply with corporate and securities legal requirements. Also, companies should ensure that the value of any services they receive is roughly equal to the fair market value of the shares that they grant in return. This is important from a corporate governance perspective as well as a tax perspective, and companies should avoid the temptation to entice an employee by back dating share grants to a period when the market value was lower.

Craig: Any other issues around the topic of employees / employment agreements?

Joe: The other thing would be around termination (either by the company or employee). Notice and severance period should be spelled out so both sides are clear on what their responsibilities are and so, from the company’s perspective, it can set and minimize its exposure. If the wrong language is used, the company can be exposed to a multiple of four or five times. If the employee has stock options, it should be carefully spelled out what happens to unvested options as well as the exercise of vested options. This can often vary depending on whether the notice period is or is not treated as part of the term of employment, and again there is careful language that has to be used to get it right.

Craig: Moving on to consultants and outside vendors, in today’s outsourced business model it is pretty common that start-ups will use outside entities in the development of their offerings. What should start-ups be aware of?

Joe: Dealing with intellectual property ownership is critical with outside entities such as consultants and vendors, because by definition they are separate business entities from the company offering their own distinct services and sometimes products. Each consultant or vendor contract needs to clearly spell out proper IP transfers , waivers and other cooperation and assistance. Unlike employees where the employer has default ownership of the intellectual property, this is not the case for vendors and consultants, so the scope and phrasing of the contractual inclusions is even more paramount.

Craig: Start-ups often hire people on as consultants vs. employees to reduce exposure to EI/CPP payments, wrongful dismissal, etc. Have you seen any issues with this?

Joe: The biggest issue is with the Canada Revenue Agency. They have published a guide as to how they will examine a situation to determine if a consultant is actually an employee, but the criteria often don’t point all in the same direction. Start-ups should ensure their consulting agreements and arrangements fit into the guidelines outlined by the CRA. Otherwise, simply calling someone a “consultant” won’t cut it. If a start-up has been using a consultant on a consulting basis that the CRA determines is actually an employee relationship, the start-up will be exposed to fines. The other issue is to realize that a true consultant is by law an “outside” entity, meaning that more tailored and elaborate IP provisions are necessary, and also that the company has to be mindful of such relationships when entering into non-disclosure agreements, joint ventures, privacy policies and the like, particularly where that consultant will be involved and will receive sensitive information. For example, a consultant will not be bound to a NDA that a company signs with another commercial party, meaning that those terms need to be properly “flowed through” to the consultant’s company and often the consultant individually too.

Craig: A lot of good information here, thanks again for taking the time today Joe. In my next post, I’ll be talking with Rubsun Ho, also from Cognition, to discuss term sheets from an entrepreneur’s point of view.

Craig Hayashi is a founding board director of Maple Leaf Angels, Ontario’s largest and most active angel investment group with more than 40 members and approximately $6m in financings closed since the group’s inception in 2007. Follow Craig at www.mapleleafangels.com and www.startupnorth.ca

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By Jeff Bowman

As a second generation business owner, I tend to put  stock in tried and true methods of business development and enhancement.  That doesn’t mean that I don’t use the technology of today to improve my business processes, I would be naive if I didn’t.

A company should always have its finger on the pulse of the marketplace, including the economy, new and emerging opportunities and technology that may provide cost savings internally and growth or product opportunities externally, and most importantly, the competition. 40 years ago we called this “the big picture”, today it is known as market intelligence.

Market Intelligence (today’s business guru’s give everything that should have importance short- forms like MI) is defined as the information relevant to a market, which is gathered, studied and documented to enable more confident decision making. This information can be accumulated from external sources and internal sources, or by other nefarious methods such as corporate espionage.  The internet has made this easy.  At the click of a mouse you have access to information that might otherwise have taken years to collect.

Today we can analyze  market trends, consumer attitudes, investment risks, and competitive activities through news releases, publications and annual reports. Corporate websites sometimes provide us with more detail than we really need to know. Online searches can provide the rest – the good, the bad and the ugly.

Compare this to the Willy Wonka style of corporate spying that still goes on today.  Bribes to competitive employees for the inside scoop, some even have gone as far as paying contractors to bring the garbage of a large competitor to their office to be sorted and filed. It seems businesses will go a long way to gain market intelligence.

Market intelligence also includes our own internal data. We can segment our customer information, order history, products purchased and internal surveys to determine opportunities for new products, service improvements and up-sale potential.  Our own websites, if optimized, can give us details about who views what, pages that are of interest and what people are looking for. Customer service departments and your sales force can provide first line information direct from the client that can be used in a variety of ways. And Social Media can provide us with the tools to listen to and engage our customers.

Knowing the marketplace that you choose to do business in is a critical activity that must be part of your strategic planning.  With all the tools available today, it takes most of  the guesswork out of business planning.

Jeff Bowman is a Sales and Marketing Specialist with The Marketing Pad Inc.. Follow Jeff’s blog at Blogpad or visit www.themarketingpad.com.

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By Hari Venkatacharya

Recently, I’ve met with early stage companies that have truly revolutionary technology in the mobile mapping and traffic monitoring spaces, as well as in the financial services software space.

What sets these companies apart is that not only have they spent an enormous amount of time and money developing their products, but they have spent a disproportionately low amount of time on developing effective sales channels and business models.

The number one reason that start-ups fail is that they have not fully understood customer requirements and the business model that is most cost-effective and still most impactful from a customer’s perspective.

While initial customers may need a lot of customization, the move towards standardized SaaS models of software deployment has truly matured, and is becoming the norm for most new companies. However, the question of whether companies should charge up front set-up fees, and monthly or per-seat license fees, is still not resolved.

One interesting model that I recently came across was no initial set-up fee, nominal monthly fees for the base model of the program but significant customization fees to actually help drive the vendor’s product development. In this case, the model worked because the SME customer  was willing to start with a small installation and grow the implementation with the vendor.

Primarily, I continue to see early stage companies still selling directly to end customers – brokerage firms and insurance companies for instance, in the case of the financial services software company.  But after being in development for more than five years, and being out to market for two, they have only been able to scale to $5 million in revenues.

A more proactive approach – partnering with compliance and audit firms, as well as companies involved in the processing and clearing of transactions – could be an ideal fit for such a company. With hundreds of thousands of broker dealers in North America, not to mention the significant growth of wealth management professionals in emerging markets such as Brazil and India, the time would be right for such a company to look abroad for channel partners who understand specific markets, and would be able to help scale the company’s implementation. It would be extremely difficult to accomplish this with a direct sales strategy, but most early stage companies do not engage with partners early enough to customize their solutions to the specific partner’s client’s requirements, thereby losing valuable time and market opportunities.

Hari is a seasoned entrepreneur with over a dozen years of experience in building and exiting businesses in Canada, US and India.

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By Ingo Koenig

In B2B markets, the Internet has changed the way we do business significantly. Not only is the amount of information about products and services offered almost infinite but also it is slowly and steadily changing the way we all make our purchasing decisions. Who does not first quickly look up a company, product or service before making a purchasing decision or prior to meeting a representative of that company?

The image we’re developing of companies is today largely influenced by what we see and experience of them online. We go to their homepages to find the nearest outlet or subsidiary, look up product features, find out who our best contact person is, who the CEO is, and if we’re actually their target client, and in general, how do they differ from their competitors.

We click our way through the company’s website following our interest, instincts, and curiosity. We pause to download documents, enlarge pictures, watch corporate videos and sometimes even take the time to read what has actually been written there.

We are leaving our silent footprints all over the homepages of these companies. What a wealth of information for marketers! If only they could see, hear, and understand what we’re doing.

In the old days of marketing we used to shout at our clients. In typical Outbound Marketing fashion,  we’d try to make sure we’d be heard above the noise, we’d shout a lot, everywhere, and at everyone. True, we tried to do our homework and be more specific as to what to shout at, whom, and where.

But now, thankfully, we don’t need to do that anymore. The innovators and visionary marketers don’t see much value anymore in trying to stand-out above the cacophony of commercials, advertising, and telemarketing surrounding us. Now, thanks to Inbound Marketing techniques, we prospects/clients are actually whispering at the companies through the Internet.

All that marketers needed was a hearing aid and a vision correction system to see, hear and then understand our needs, interests and desires being made visible through our online activity and behaviour. People surfing a company’s homepages, are actually the ones that do care about the company and who have actively contacted it, virtually of course. Why not whisper back?

We believe intelligent collection and analysis of this digital-footprint information will allow creating customer knowledge in a revolutionary way and at a depth never seen before. No survey can yield such unbiased results on what customers are actually really interested in, what touches and moves them, and certainly not at the low costs afforded by Inbound Marketing techniques.

Next week I will look at how this new Inbound Marketing and Marketing Automation can dovetail with and help drive your strategic product development plans.

Ingo studied business administration and economics at Kiel University where he received a PhD in economic policy and also earned an MBA from the University of Southern California in Los Angeles, USA. Visit www.koenigconsultants.ca

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