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Posts Tagged ‘Angels’

Rob Koturbash of the Maple Leaf Angels and Bryan Watson of the National Angel Capital Organization (NACO) were recently featured on the ‘In Business’ show on Rogers TV.

Rob and Bryan talked about who angel investors are, what businesses they invest in and what are some of the important differences between Angels and VCs. They also talked about the upcoming co-investment summit on June 8th and the importance of organizations such as the RIC Centre to help innovative companies on the path of commercialization.

Check it out here.

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By Stephen Rhodes

Innovation seems like a simple idea in our world economy. Invest in new ideas, processes, products and services and excel on the world stage.
Why is it as a country we have failed to understand that the real economic engine is the innovation that comes from entrepreneur in small business?

We do alright in some respects. We have a highly educated population, reasonable tax incentives for research and development and competitive corporate tax rates.

And our governments are starting to understand  the importance of innovation in the wake of a declining manufacturing sector.

Finance Minister Jim Flaherty devoted a large portion of last week’s federal budget to measures to encourage innovation.

The Conference Board of Canada recently gave  Canada’s a “D” for innovation capacity. Out of 17 countries, Canada placed a disappointing 14th.   RIC Entrepreneur-in-Residence David Pasieka wrote last week “many of Canada’s industry sector policies are designed to preserve existing industrial production rather than generate new, highly innovative ones. Rather than this short-term type of innovation strategy, Canada needs to implement long-term innovation policies that would help transform existing industries into new ones.”

When Industry Minister Tony Clement held a round table with Brampton Board of Trade members a week or so before the budget he said that manufacturing is still the lifeblood of Ontario. He also said we have to get better at how we do it.

That takes innovation.

The issue in Canada is a shortage of investors. Angels and Venture Capitalists are still reeling from the economic decline of the last 12 months. Allowing more foreign investment, as Flaherty has promised, could unleash new investment capital but it remains to be seen how Canadians respond to even more foreign investment in Canada.

What do you think?

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By Bryan Watson

Capital for early-stage companies around the world has become much more scarce than it was a few years ago. To any entrepreneur looking for investment, this is absolutely no surprise and there are plenty of articles that speak of this. When investments from venture capital firms into companies in Q3 of 2009 in provinces like Ontario drop 87% to $24 million it is hard to miss the fact that the market for money for a start-up, or for growth-oriented companies, has become extremely difficult.

There is a growing ray of hope in Ontario, however. Angels. During 2009, the Angel community continued to invest. There were many investments completed by Angel groups in Ontario (e.g.: Well.ca) and even new Angel groups formed to meet the demand such as the Maple Leaf Angels – West Chapter formed in partnership with the RIC Centre.

Given that Angels represent one of the last sources of capital for start-ups and growth-oriented companies (with notable exceptions in the VC world that co-invest with Angels) another source for hope is the fact that the Office of the Leader of the Opposition (Federal) recently added the Innovation and Productivity Tax Credit (IPTC) to their platform.

The IPTC is a credit that companies would apply for. Once a company has been approved as being eligible and allocated a specific tax credit allotment, individual investors could invest up to that amount in the eligible company. Upon making their investments, investors would apply for a suggested 30% refundable tax credit. (More information can be found here.)

A tax credit of this form has shown to stimulate significant Angel investment into companies in many jurisdictions such as BC, Manitoba, the UK, and others. Similar programs have also been adopted by many other countries, including, most recently, Singapore.

So, though we do not have this Tax Credit yet in Ontario, should the Federal Government adopt it Ontario-based companies can look forward to a significantly increased supply of Angel capital looking for strong opportunities in which to invest.

To learn more about and show your support for the IPTC, please click here.

Throughout his career, both in Canada and the UK, Bryan J. Watson has been a champion of entrepreneurship as a vector for the commercialization of advanced technologies. Upon his return to Canada in 2004, Bryan established his venture development consulting practice to help emerging-growth companies overcome the barriers to success they face in the Canadian commercialization ecosystem.  Visit Bryan’s blog and the National Angel Capital Organization.

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The most important factor in the success of a business with proven concept is the strength of the leadership team.  Good leadership is a critical item on the checklist for potential funders including banks, government programs, angels and venture capitalists.

But what is a good leader and how do you improve to become a better one?  This was the subject of the RIC Centre’s Growing Your Business Session on Creative Leadership, Feb 17th.

“We must develop and nurture the leaders who will create the right products and services for tomorrow’s marketplace,” says Larry Chester, Process Design Consultants. “We are a wealthy country, but our population is aging and this is happening as our economy globalizes and we must compete in world-wide markets.”  Larry is a partner at Process Design Consultants Inc., and offers support to business for strategic and operational decision-making, change management and project management.

Leaders set the tone and direction of a company. “A good leader must be able to communicate a common purpose, shared passion and collective power,” says Max Carbone, Team Works.  Max is an entrepreneurial strategic planning advisor, private investor, director and visionary. He helps leaders build plans, teams and drive business results.

“A leader must be able to dream, and plan where the company needs to go next.  The challenge with start-ups is that leaders are often the dreamers and the doers.  It’s a difficult balance but not impossible.”

Paul Wickberg, CEO of EnviroTower Inc. shared his challenges and successes from more than 20 years of business leadership and senior management.    Key tips from Paul are:

  • Be a “doer” in what you do best and set the standard in that discipline
  • Find one or two “Stars”
  • Plan conservatively, create winning scenarios
  • Transparency is always the best practice
  • Teach and practice relationship building – it’s a dying art
  • “Customer Focus First”
    • Share company goals openly with everyone
    • Communicate how your team’s goals contribute
    • Insist on process in every project or discipline
    • Your reports’ goals should be supported by their staffs’ goals
    • Every employee earns incentive from the same metrics

“Success in business is not complex; it’s about getting the basics of purpose aligned with clear vision of outcomes.  Relationship building is a dying art, but relationships with our customer and employees are critical to business success.  Everything we do is about customer and your employees need to share that vision,” said Wickburg.  EnviroTower provides a patented water treatment system for clean cooling.

Watch on RIC TV.

See all three.

The next Growing Your Business session is scheduled for Wednesday, March 10th on Intellectual Property.  For more information visit the RIC website at www.riccentre.com

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By Hari Venkatacharya

After having returned from my fourth trip to India in the last year three weeks ago, I’ve been thinking hard about where I believe Canadian companies need to focus in the next twelve months to create momentum, and buffer themselves against the vagaries of the US economy.

Although the overall sentiment in North America is certainly more upbeat than it has been in 12 months, there is no doubt that most people, including myself, are very sceptical about whether the US, and so also the Canadian, economy is now on a growth path, or simply making up some of the lost ground from the carnage of last year.

Although we saw some good growth in the job market in Canada in November, this was more than compensated for by more losses in December 2009. In addition, the new US budget is not only including significant deficit spending, but is also hinting at tax increases.  In Canada, our finance minister has indicated that at least five years of budget cuts will be needed to again balance the books. Where does this leave the entrepreneur?

I believe that there is still the potential for huge growth for companies that target a specific niche market, and look at both organic and inorganic growth in emerging countries. I do not believe that the North American markets will grow anywhere near the 9-10% GDP growth that is being predicted for India and China, for this year. We may be lucky to simply not have our economies shrink!

Here are some predictions for 2010:

  • SME companies in Canada will start to de-couple from an exclusive US-focused growth strategy and will engage with companies in emerging markets.
  • The traditional VC model will cease to exist. More investments will come from strategic partners, government agencies, and angel investors.
  • The Canadian economy will shrink an additional 2%
  • We will have a new government in Ottawa.
  • Canada will allow significantly more foreign investment from Asian companies, specifically focused on the clean technology sector, like the recent Samsung deal in Ontario.
  • Canadian government-backed innovation programs will more aggressively pursue US and foreign VCs to leverage their investments.
  • Canadian early stage investments will go down by 20%, with more funding allocated to M&A and consolidation plays.
  • The oil sands will be forced to focus future development on a more environmentally friendly model, mostly due to international as opposed to national, pressures.

Fundamentally, Canadian companies at any stage need to re-focus their attention to non-US markets, or they will be left behind in the huge growth opportunities that exist globally. The urgency has never been greater to diversify our base of business, and to take advantage of true global networks and connectivity.

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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Session 5 of Keep Growing Your Business focuses on raising cash from Angels and VCs. The seminar is scheduled for January 20 at the Faculty Club, South Building University of Toronto Mississauga at 3359 Mississauga Road from 7:30 to 10 a.m. Pre-registration is $20, at the door $25.  Registration fees include parking and breakfast.

The seminar is sponsored by RIC Centre (Research Innovation Commercialization Centre) and the Ontario Centre for Environmental Technology Advancement (OCETA).

Listen to our expert panel talk about the roles of Angels and Venture Capitalists along the innovation continuum. Our panel includes:

Robert Koturbash, Managing Director of Maple Leaf Angels, is the founding Managing Director of the Maple Leaf Angels, an angel investment group based in the Toronto area. He is an active investor and has invested in several early stage companies. He also sits on the investment committee of the Investment Accelerator Fund administered by the Ontario Centers of Excellence. Rob holds a BSME from Tufts University and a M.Sc. in Engineering Management from Stanford University.

Tim Jackson, Partner, Tech Capital Partners, is a founder and Partner of Tech Capital Partners where he focuses on investment opportunities in the wireless, communications, new media, and internet sectors. Prior to founding Tech Capital in 2001, Tim was CFO and CEO at PixStream, a technology company focused on distributing and managing digital video across broadband networks. At PixStream, Tim successfully raised more than $60 million in equity capital and negotiated the $550 million sale of the company to Cisco Systems, one of the largest technology company acquisitions in Canadian history.

Nic Morgan, VP Business Development, Morgan Solar Inc,has developed a breakthrough solar energy technology – a unique design for a high-efficiency, low-cost solar panel. It started as a family venture co-founded by John Paul, Eric and Nicolas Morgan, supported by a growing team of engineers, technicians and business staff. Initially family funded by angel investor Eric Morgan, Morgan Solar has recently completed their round A fundraising by putting together a consortium of strategic and venture capital investors. As VP of Business Development and Marketing, Nicolas led Morgan Solar’s efforts in contacting and connecting with investors.

Don’t miss this opportunity to learn first hand how to raise cash from Angels and Venture Capitalists. Register here

Visit www.riccentre.com for more information.

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Management

david

By David Pasieka

We have seen some exciting new technologies in the past couple of months and our work to “accelerate the path to commercial success” has been intensifying. Of particular interest are some of my clients with Waste to Energy, Solar, Water Treatment and Smart Grid technologies. Those organizations will be the backbone of the Ontario economy in the not too distant future.

As we work with these early stage organizations, a set of patterns are starting to emerge that are worthy of emphasis. Clearly, these technology companies are focusing in exciting and growing sectors. They are based in science and are well on their way to securing Intellectual Property (IP) protection for their inventions. Businesss models although initially “a little crude”, are being re-worked to demonstrate the ability to successfully “turn a profit”. Any investor who takes a “quick look” is quickly impressed on all three fronts.

So why aren’t we reading more about the successful financing of these companies by Angels, VC’s, Government grants and larger institutions?

A quick canvas of any investor group will tell you that management and its ability to execute often eclipses the process for securing early stage funding. Due diligence teams will ask the leadership team questions such as:

  • How many years of experience does the team bring to the table?
  • Have you successfully built other organizations to a successful exit?
  • Does the CEO have the depth and breadth to move the organization to its next level?
  • Are all key functional disciplines appropriately represented by the organization?
  • Does the management actually act and respond as an effective team?
  • Is the team able to articulate an action plan and deliver those promised results?
  • What kind of dashboards are used to track weekly, monthly and quarterly success?

These are extracts of a long list of diligence questions that any investor will need to be comfortable with before opening the cheque book. How about the one that Kevin O’Leary made famous on Dragon’s Den: “What if you get hit by a bus and you’re road pizza?”

The key for these emerging technology companies will be to do a detailed assessment of their team and its story around executing strategy. The assessment will no doubt uncover several holes that will need to be proactively addressed to mitigate investor risk. These may include:

  1. Identifying key hires that will be added once funding is secured
  2. Assembling that Advisory Board and ensuring that they are engaged
  3. Hiring part-time Mentors to work with lessor experienced executives
  4. Encouraging the completion of supplementary training programs
  5. Joining key sector networking forums and in some cases
  6. Identifying that the existing CEO may need to step aside in favour of a “been there, done it before” leader.

The good news for Entrepreneurs is that if their technology really is a “Game Changer”, the “Path to Profitability” is reasonable and the tactics to augment the “Execution Strategy” are sound, many seasoned investors will take a “serious second look” at the company with great result.

David Pasieka is the Entrepreneur-in-Residence at the RIC Centre. Learn more here.  Visit Our Contributors page for more information about David. Read his blog at www.cedarvue.blogspot.com

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