Posts Tagged ‘entrepreneurs’

By Bryan Watson

What was originally supposed to go from September 27, 2010 until the end of last year, the US Federal Government made a provision to further exempt any gains made from Qualified Small Business Stock until the end of 2011.

Qualified Small Business Investments are defined as follows:

  • Investments of individuals or partnerships in stock of a regular C corporation that has less than $50 million in assets
  • Stock that is purchased directly from the corporation and held for at least five years
  • The amount of gain under this law is limited to the greater of 10x the investment of $10 mio
  • At least 80% of the corporation’s assets must be used to carry on a business or to conduct research or start-up activities
  • Business cannot entail service, finance, mining, extraction, restaurant, and hospitality industries
  • If an acquisition is made within the five-year holding period, the tax rules allow investors to hold the stock of the acquiring company to satisfy the five-year holding requirement

This law provides for a 0% tax rate on 100% of capital gains as oppose to the previous law of being taxed for the first 50% or 75%, and additionally removes the gain from the Alternative Minimum Tax calculation.

This has provided a quick turnaround with respect to funds provided by angels to entrepreneurs, which in turn allow them to grow their businesses and add new jobs to the economy.  See article for further details.

Reposted from National Angel Capital Organization

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.

The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers pro vide a wealth of information based on their personal experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.

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By Bryan Watson

Come join us for Startup Drinks on Wednesday, July 28th! We’re continuing to keep the spirit of the startup community alive, one pint at a time.

It’s a simple concept: a grassroots effort to make sure startup folks get in touch and stay in touch.

All it took was for Raymond Luk of Flow Ventures (http://www.flowventures.com/blog/) (a moving force behind Montreal Startup Drinks) to recruit Toronto all-round-instigator David Crow (http://davidcrow.ca/) who was on board immediately. Now, I am involved through the National Angel Capital Organization (http://www.angelinvestor.ca) and CEO Fusion (http://www.ceofusion.org) is stepping up to help out. We are looking forward to an even better Startup Drinks Toronto 12!

Here are the details for your agenda:

  • Date: Wednesday, 28 July, 2010
  • Venue: Grace O’ Malley’s, 14 Duncan Street, Toronto, ON M5H3G8
  • Time: 6:00 pm – Late

Sign up here, come on the night for a drink and networking! Everyone is welcome.

Not going to be in Toronto? Thats ok! Simultaneous Startup Drinks events will be happening across Canada! Click here to find out!


Local Organizers:

Robin Gittens, Bryan Watson, Mark Evans, and David Crow

Please visit the Fusion Calendar for listings of events/workshops!

Reposted from National Angel Capital Organization

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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By Andrew Maxwell

In the past few months, several people have asked me about the purpose of educating entrepreneurs. They identify research that suggests entrepreneurs are born and not made, and question the purpose of education if this is the case. They point out that entrepreneurs have inherent traits that cannot be taught, and question both the approach to entrepreneurial training and its benefits.

Immersed in this issue because of my long involvement in teaching entrepreneurship, I was initially surprised by the question. However, as I thought more about it, I realized that answering it thoughtfully would both help explain how entrepreneurship should be taught, and the benefits that can be derived from training entrepreneurs.

First, lets start by identifying that there are certain traits that seem to be common to all entrepreneurs, such as the need for achievement and willingness to take risks. While these traits are both a function of DNA and family/social environment, it is evident that they affect entrepreneurial orientation and intention from an early age.

Before discussing these traits, lets discuss two other entrepreneurial characteristics that seem to be linked to an entrepreneur’s likelihood of success: relevant experience and capability. It is often said that entrepreneurship is a “contact sport”. Certainly there is significant evidence that entrepreneur’s are more likely to be successful if they have been involved in previous entrepreneurial ventures, or started ventures themselves. Entrepreneurs are also more likely to be successful if they have existing knowledge of the technology or the market in which their proposed venture will operate. Entrepreneurs, who have had the chance to learn from their own experience and the insights of others, find such experience to be very useful when faced with the many challenges of running their own venture.  One way of training entrepreneurs is to give them the chance both to gain relevant experience and reflect on it in a learning environment (a good example is the co-operative placement programme at the University of Waterloo).

While inherent capability is also something an individual is born with, many basic entrepreneurial skills can be taught. At the business development level, these skills include the development of business plans and cash flow statements, while at the personal level this can include training in time management, project planning, and making presentations.

In addition, there are some basic knowledge components, which can help increase an entrepreneur’s likelihood of success, such as how to file a patent or complete a market survey.  Most of these skills are the ones we focus on when we teach entrepreneurship courses.  While they cannot make an entrepreneur out of someone who does not have the basic traits required, they can certainly help an entrepreneur who has the required traits to increase their likelihood of success.

Finally, acknowledging there are certain inherent entrepreneurial traits suggests that education cannot modify entrepreneurial behaviors. However, there are important aspects to entrepreneurial traits where awareness can help the entrepreneur increase their likelihood of success.

Some of the most common entrepreneurial traits include: high levels of confidence, enthusiasm, and passion for the venture. There is no doubt that these are all prerequisites for entrepreneurial success. However, there is evidence that excess amounts of these same traits (such as over confidence) can reduce the objectivity of the entrepreneur’s decision-making, which can in turn reduce the likelihood of venture success.

It would seem that the same traits that are important in moderation for an entrepreneur could actually become his or her Achilles Heel. Helping an individual entrepreneur understand these potential issues is another important role for entrepreneurial training. Entrepreneur’s aware of these issue can either find individuals with complementary traits to join their venture team (as co-founders, senior managers or board members) who are able to moderate the entrepreneur’s pre-dispositions. Alternatively, the entrepreneur can try to build in some self-control (such as wait 24 hours before sending an important email), which can enable him or her to have second thoughts about important issues.

Providing some ideas into how entrepreneurship education can help entrepreneurs also answers another strategic question I was recently asked: if most entrepreneurial activities fail, what is the point of encouraging entrepreneurship through increased levels of entrepreneurial education.

I think that there are two important answers.

The first is that the impact of entrepreneurial activity on regional wealth creation is often understated. Entrepreneurs are the engine of wealth creation and are able to react quickly to new opportunities, based on market or technology changes. Entrepreneur’s who react fastest to these opportunities, often have the greatest chance of long-term success, suggesting that showing them how to identify opportunities and assemble the required resources is critical.

Second, there is no doubt that many entrepreneurial activities fail, this is not a reason to reduce the number of entrepreneurs, but a driver for increased education that teaches entrepreneurs, not about entrepreneurship, but about how to increase their likelihood of entrepreneurial success, by reducing their likelihood of failure. Enhancing entrepreneurship education, by helping entrepreneurs understand potential causes of failure, based on their own personalities as well as market and technology issues will increase the percentage who achieve success. In turn, this will stimulate more individuals with entrepreneurial traits to consider starting and growing their own ventures, and reaping the rewards.

Andy is currently working at the Canadian Innovation Centre and pursuing a Ph.D. in the area of new venture creation at the University of Waterloo. In his spare time, he enjoys teaching technology entrepreneurship at UTM and the University of Waterloo.

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By David Pasieka

I had the pleasure of being at the 2010 Olympics for the Gold Medal action of the final week. We witnessed first hand the power of our Hockey, Curling, Freestyle Skiing and Sliding teams in serious competitive action. What a complete and fulfilling experience. This is something that needs to be added to any “Bucket List”.

As the Entrepreneur’s Entrepreneur, I am always thinking about how we can “Accelerate the Path to Commercialization” for Ontario’s technology companies. As I watched the teams progress, I wondered about the profiles and journey of our medalists. Are there any key learning from their profile that could be applied to help support our early stage Companies?

With the support Shantanu our co-op student at the RIC Centre (www.riccentre.com), we pulled the profiles of our Gold Medal winners and started to do some analysis.

Shantanu researched the early Gold Medalists including:
Maelle Ricker (Snowboard Cross) – a story about attending her first Olympics in Nagano in 1998, missing the Salt Lake games due to injury, having 8 knee surgery, placing 4th in Turin and subsequently finishing up the year on the top of World Cup standings just prior to Vancouver.
Christine Nesbitt (Speed Skating) – placing a disappointing 14th at Turin in her winter Olympics debut Christine vowed to remember what “losing was all about”. She turned up her training and unlike many Athletes decided not to “save” herself for the Olympics – “fighting” and pushing her “mental toughness” to a new level.
Jon Montgomery (Skeleton) – a flamboyant competitor who was a crowd favourite in Whistler Village as he auctioned off a half pitcher of “golden beer”. Jon was quoted as saying: “I’d give my right eye to be able to represent Canada at something. I don’t really care what it is — tiddlywinks, volleyball. As long as it’s something.”
Alexandre Bilodeau (Moguls) – calls his older brother -Frederic his inspiration. Alexandre burst onto the World Cup scene as a wide-eyed 18-year-old, capturing FIS rookie-of-the-year honours in 2005-06. He felt “stung” by an 11th-place finish at the Torino Olympics in 2006.

Shantanu also analysed the backgrounds of the early Silver medalists including Kristina Groves (Speed Skating), Marianne St-Gelais (Speed Skating), Mike Robertson (Snowboard Cross) and Jennifer Heil (Moguls). By the middle of the week the pattern was pretty clear and the Canadian Medals were starting to show up on the podium with significant regularity. Curling and Hockey were also just around the corner!

The patterns that emerged were very powerful and have a significant parallel for our early stage Entrepreneurs. They include:

Determination to Win from an early age. Many say that Entrepreneurs are born with their desire to Build, Create and Innovate.
Love for their sport. Without Passion in your idea, venture or team you will not succeed.
Inspiration from Coaches and Family. Family and Friends, Boards of Advisers and Board of Directors are important tools in accelerating venture success.
Disappointments at earlier events and a thirst to prove themselves in Canada. A Key trait of any Entrepreneur is their resolve to achieve in spite of the odds.
Congratulations to all of our Athletics at this year’s Vancouver Olympics. I know that you will be an inspiration to many of our Ontario based companies who are driving toward the Commercialization Finish Line.

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 http://www.cedarvue.blogspot.com

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By Andrew Maxwell

All entrepreneurs need to form a network of informal and formal relationships in order to be successful. The entrepreneur’s desire to be opportunistic and act quickly can sometimes cause them to make mistakes in their partner selection that can prove damaging and/or expensive to the business in the longer term.  I hope that by sharing a few of these negative experiences, entrepreneurs might gain some ideas and insights into how to improve the quality of their decision-making about partner selection.

First, I will recount some of my experiences with partnership formation between founding entrepreneurs. All too often, I have had to spend time, several years after a venture has formed, unraveling the partnership and clarifying original intentions and commitments. More than one person starts most companies, consequently the relationship between founders is critical to long-term venture success. Co-founders can provide complementary perspectives on decisions to be made, and improve the speed and quality of decision-making. All too often the selection of partners is based on friendship or other similarities that may not be the best basis for the decision. While friendship or similar backgrounds might be important, for instance in the alignment of core values or creating a pleasant work environment, individuals who are too similar can have the same blind spots or limited experience base. This can reduce the quality of decision-making.

Partners need to enjoy working with each other, but not necessarily be friends. They should take the time to get to know each other, and only then formalize their relationship. Importantly, while flexibility and adaptability are critical to the early stage of a venture, there is a need to document the relationship through a formal agreement. This agreement is usually in the form of a contract that outlines expectations about business objectives, how partners will make decisions, and what happens if one of them wants to leave the venture. Some formal ideas about each partner’s roles and responsibilities can also be useful.

Other strategic relationships are critical to venture success, as an example I will discuss the relationship between entrepreneur and investor. Many of the comments made about the relationship between entrepreneur and investor can be applied to other strategic relationships. It is important to understand what an investor can bring to the table, and what help the venture needs. In general, the right investor brings a good deal more than money to the venture, based on their experience, and existing relationships.  While this may seem obvious, it is surprising how many times an entrepreneur takes money from an investor who is unable to add much additional value, rather than waiting for a strategic investor. Often, entrepreneurs who are action orientated, make the choice of an investor with limited ability to add value, because attracting the strategic investor is harder or involves a lower valuation. In general, this is because the entrepreneur really does not understand the true value of the right investor.

I met with an entrepreneur this week, who rather than accepting an investment from a VC, had taken an initial investment from Business Angels who had limited ability to help him with his business. He chose the VC when he needed a second round of finance, because the VC team had in-depth experience in the area and could actively help grow his business. In addition, the investment from the VC gave the company a level of credibility that allowed them to attract customers and strategic partners. Finally, the VC also was well positioned to attract further rounds of finance from other VCs.

Clearly, it is important to be strategic in your choice of partners, investors and customers. While the attraction of a concluding a short-term agreement and taking advantage of an opportunity maybe too much to resist, there maybe a good strategic reason to search for a partner who can provide many levels of benefit. Having a contract with a market leader might be challenging and take time to consummate, but it says a great deal about the company to other potential partners. 

Andy is currently working at the Canadian Innovation Centre and pursuing a Ph.D. in the area of new venture creation at the University of Waterloo. In his spare time, he enjoys teaching technology entrepreneurship at UTM and the University of Waterloo.

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By David Pasieka

We can’t but admire Mother Nature and this Great Canadian Weather. As the weather turns cold – many of us are stopped in our tracks. The same” stopped cold” phenomena exists for early stage companies who are faced with making those dreaded first- time calls to prospects and potential partners.

The Frigid Cold Call is the most dreaded part of any sales or business development process. Understanding the dynamics and tuning your approach can be one of the more satisfying experiences for a Senior Executive. With a number of start-up and turn-around companies to my credit, I thought it was timely to provide some “snowshoe tracks” to guide you through the snow this winter. I break the process down into three Blocks of Ice.

“It’s Cold Outside”
In this block, you know that making these calls will be paramount to the long- term success of your company. You have been sitting on the sofa by the warmth of the fire thinking about going outside and physically exerting yourself on the trail. Like many examples in life you know it will feel good after you have completed the task.

Overcome the resistance and get on with it! Your first steps include:
Build your Lists – Whether you are at the Prospect or Suspect stage you will want to create a list for your potential clients and one for your strategic partners.

Research your Targets – It’s a good idea to know as much as you can about your Prospects. Warm introductions, web research and industry publications can contribute key content.

Set your Call Objective – It is not  feasible to close a sale or partnership on the first call. There is industry data that suggests that it takes up to 5 calls / visits to actually close a new sale. Think about your situation and set your objective bar at a high but realistic level (“The objective of this call will be to fully qualify a Suspect into a Prospect and / or obtain a Face to Face meeting.”)

Story Board your Pitch – Prepare a crisp 30 second story that describes who you are, what you have and why you would be compelling to meet . The Pitch should not be completely scripted or read verbatim on the call. I suggest having a block diagram with a couple bullet phrases in each block. Anticipate some key questions about your company and what makes you different. Think about some open-ended questions that you would like to deliver to enable an ongoing engagement throughout the call.

“It’s Snowing Really Hard”
In this block you have completed all the necessary preparation and you are ready to start making calls. You have moved off the sofa and have your hat, scarf and mitts adjusted appropriately. With snowshoes in hand you venture into the cold crisp air. Tips to avoid “frostbite” include:

Block your Calendar – Think about the time of day to make your calls. I am a morning person and I like to do them when I am fresh. Many executives arrive early to get some work done before the staff arrives. Your hit ratio may be enhanced at this time.

Polish your Manners / Adjust your Attitude– Dave Kurlan -author of Baseline Selling -suggests that the formula for a successful call is 50% phone manner (Warmth, Sincerity, Pitch, Speed, Pace and Volume), 32% Attitude (I know I can do this) and 16% Script (Message content and call to action). Remember that many executive assistants are there to manage the executive’s time – ensure that you are treating all live interactions with the highest level of respect if your call is intercepted. One UK-based blog suggests that if you “smile while you dial” you reduce the tension in your voice. Try it for yourself – it really works.

Check Your GPS Positioning – In real time, assess where you are in the process of achieving your end objective. Make necessary course corrections and utilize your know how about your prospect and your value proposition to converge on the close. “If not you, can you suggestion a more appropriate contact? Can I use your name in my next conversation?”

“Pushing Through the Snow Drifts”
The hard work doesn’t stop after you have completed the call. You need to clean off the ice from your snowshoes and place you mitts in a place where they can dry out.

Follow Through / Follow Through – As the conversation unfolds, highlight the appropriate next steps. Be sure to summarize the actions before you hang up. If you make commitments to deliver something by a certain time frame – ensure you do.

You Can’t Remember It All – Invest in some tracking software that helps you remember the call, its associated action items and any other relevant facts about the Prospect that may be relevant down the road (plays golf, has 2 kids, hates pushy sales executives etc.) Many companies start with Excel and graduate to Salesforce, Microsoft CRM, Goldmine and ACT! to name a few of the available options.

Bounce Back Quickly – All of your calls will not go as planned. The key will be to recognize that it is not personal and that you need to move on. When pushed into a pile of deep stuff, you need pop out quickly or suffer the cold wet consequences.

It’s time to take that breath of brisk air and get into a serious Canadian snowfall. See you in the lodge.

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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By David Pasieka

A friend of mine , who was recently promoted to the top of her company as President and CEO, contacted me for some assistance. “Did I have any advice?”

“You Bet! – you will need to build that 99 Day Plan reflecting your first quarter on the job. This is one of the most valuable things that you can do to maximize the start of your new role.”

99 Day Plans are based on the theory that in the first 90 days of a new assignment, an individual will be consuming more value from the organization than they are able to contribute. My two favourite books on the topic “The First 90 Days” (Watkins) and “You’re In Charge, Now What” (Neff & Citrin). Some of the key principles are the following.

Turnarounds, Start-ups and New Promotions all pose a unique opportunity for Leaders to come “out of the gate” in full stride. Although all three situations require different skills and approaches, the underlying theme is still the same – There are four fundamental phases of building and executing the 99 day plan – In support of my Energy and Smart Grid clients, I have affectionately named them Inspection, Pre-Wiring, Lights On and Charging Forward.

In the Inspection phase you are in an early Due Diligence state. You may be contemplating a new start-up venture, have your name in for a promotion or trying to figure out how to accelerate or turn around an existing business. Your objectives in this phase are to spend a couple of days utilizing the information that you have at hand to determine your interest level in jumping into the assignment. You will utilize “generally available” materials (websites, public information, local knowledge) to help formulate your interest and determine your ability to be able to deliver the results. You may or may not have access to the key Stakeholders (Shareholders, Employees, Senior Management) at this point in the process. This phase may consume up to 5 days in a 99 Day Plan.

In Pre-Wiring, you have now determined that more detailed visibility is required on the opportunity. Objectives in this phase include determining the critical priorities, risks and opportunities and a complete alignment of all stakeholder interests. For an individual being recruited for a job, your visibility will come through the interview process and access to the key stakeholders. It is during this phase that you will formulate your ideas on what needs to get done, negotiate your start day and draft a 90 day plan with specific deliverables every 30 days. Specific emphasis should be put on identifying the “Low Hanging Fruit” – things that your individual skills and talents can add early value to an organization including changes to process, people and customer interaction. I also endorse drafting a Multi-point Objective Statement that addresses the phrase: “By the end of 90 days I would expect that……”

The Lights On phase will start the first day of your new assignment. You will need to ensure that you have specific action plans for what you plan on saying and doing with the Senior Leadership team, the Employees , Customers, Shareholders and other Stakeholders. I suggest maintaining a journal of all key interactions, observations and things that were “positively or negatively surprising”. At the end of each week you are “tuning” your plan to reflect the things that you have discovered. Early feedback mechanisms for Stakeholder communication should also be critical components of your 99 Day Plan.

Charging Forward reflects the key execution phase of the plan. Utilizing your journal, reflect on your daily and weekly notes. Ensure that you are executing around key interactions with employees, customers, shareholder and key influencers. Be prepared to dynamically modify your plan to reflect any surprises that you have uncovered along the way. I also endorse the concept of creating a rolling 90 plan that reflects the execution road map and supports the last phase of the plan, which I call Burning Efficiently Bright.

For my newly minted CEO I also added a couple other items of wisdom to help support her process. These include:

  1. Mental State of Mind: From Pre-Wiring to Lights On you will need to mentally prepare for the new assignment – You are the new boss and the individual charged to fix the past sins – get on with it.
  2. The Cows Have left the Barn: From the Lights On phase, you are In Charge. The key stakeholders will be looking to you for answers, opinion and direction- anticipate the questions.
  3. Plans are “Merely” Forecasts: Change is the only guaranteed constant. Build the Plan, Execute the Plan – but be prepared to modify the Plan as necessary.
  4. Listen Lots / Communicate Often: In your early days on the job you will be given access to individuals and situations that may not have been available in your Inspection and Pre-Wiring states. Listen, Question and Probe.
  5. Emotional Fortitude: Regardless of your prospective (Start-up, Turn-Around, New Position), your plan will involve a series of changes to People and Process. Do the necessary homework and remember why you took the job in the first place. Dig Deep and do the right things in a timely manner.

At what stage are you in your new assignment cycle. Time to start the clock –TIC TOC99 Days will fly by quickly.

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By David Pasieka

Fresh out of school I started my career at one of the icons of Canadian business – Bell Canada. Included in the icon group were other national brands such as IBM, Xerox, Petro Canada and Imperial Oil. At the time, the world was still thinking about starting and finishing your working life with the same company. These organizations were legendary for Leadership Training, Skills Development and Coaching programs that included “a new job every 6 months”.

On my first day on the job, I was given a team of 12 individuals who I had to coach, motivate and manage. To support my efforts, I was sent to leadership training courses every 6 months to fill in the gaps. In hindsight, I now realize how fortunate I was to be part of a New Graduate Training program – my education and practical on the job training has been part of my fabric ever since.

In today’s world a lot has changed. Clearly, the concept of employment for life” has a new time horizon and companies are spending less on their graduate programs. Company training and education services have also been severely cut back. Gone are the days where companies would hire you for your ability to learn and proceed to train you to fill in the gaps. Recruitment today is looking for the individuals who can do the job with their existing tool sets and hit the ground running.

Working with our new breed of entrepreneurs has a different twist. A full 50% of entrepreneurs fall between the ages of 19 and 30. How and where do these individuals get their training and skills development in today’s environment?

In a recent study conducted by OI Partners (www.oipartners.net) a number of key items were identified that were consistently leading to the failure of newly minted leaders. Five of these factors include:

  1. Leadership & Delegation – the ability to get results through others.
  2. Motivation – the ability to rally the troops to higher levels.
  3. Communication – the ability to provide clear and concise messages.
  4. Personal Skills – the ability to relate on an interpersonal level.
  5. Recognition – the wiliness to celebrate the successes no matter how small.

When you scan this list you conclude these factors can be theoretically” studied, but the realty is that they have to be “experienced”. So where do entrepreneurs get the experience to fill the gap?

In a previous blog,we chatted about the importance of Advisory Boards and their impact on improving company success. These boards are helpful to gain traction in the marketplace – but today’s young entrepreneurs will need more. To supplement the experience & training gaps, a strong prescription of Mentorship from a seasoned “been there done it” Coach is clearly warranted.

Coaches will come in many forms and range from a “certified” professional, to a relative or simply a trusted friend. Often coaches are joined together in business forums, where the entrepreneur can open up amongst a group of peers in a “risk free” environment. Regardless of the background or format, the coach will need to add value by identifying and filling critical experience gaps. Rounding out the theoretical with practical experience, will clearly enhance the probability of commercial success.

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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By Andrew Maxwell

Many people thinking of starting their own business are faced with the question; is the entrepreneur or the idea more important?

In a recent series of papers in academic journals, this is referred to as the horse (idea) and jockey (entrepreneur) debate. The analogy is an interesting one, as it emphasizes that both are critical to win a race, while noting that a good jockey can ride other horses, and vice versa, but it is the combination of the two that leads to long-term success.

As with all analogies, such a comparison has its limitations, as it ignores the evolutionary nature of the entrepreneurial process. The relative importance of both idea and entrepreneur requires an overview of the venture creation process, which leads to different relationships between the entrepreneur and the venture over time.

The first stage in the venture creation process is ideation, where the entrepreneur identifies a new opportunity. This is a fundamental requirement for most entrepreneurs as an entrepreneur is defined as someone who identifies opportunities – usually where others do not.  At this stage, the key is the entrepreneur who must generate the idea. At the next stage of the venture creation process, the entrepreneur has to assemble the resources for success. It is at this stage that the idea becomes more important. This is because, to attract the resources necessary for success, the requirements of the business must be clear, and something potential partners can relate to.   In addition, the nature of the business is critical, as potential partners need to see the financial benefit of engaging with that venture, either as customers, employees, suppliers or investors.

At the next stage, the entrepreneur becomes more important, due to the challenges of turning the business plan, and managing the earliest stage of the business. Unfortunately, many of the entrepreneurs who have developed a great idea, do not have the ability or the experience to be successful at this subsequent stage of venture development. As the venture grows, the successful entrepreneur will look to attract external financing, and while their own experience may provide a level of confidence in the investment decision, the potential investor will likely first consider the business, and whether it is likely to succeed and provide a reasonable rate of return.  Once the investor has determined this, they will then look at the entrepreneur, and see if they have both the cognitive abilities and character traits, both to lead the business and form a partnership.

Finally, there is usually a point in time when the entrepreneur outgrows the venture or the venture outgrows the entrepreneur. Entrepreneurs outgrow the venture when the need for their creative skills and informal relationship is no longer essential, and where the challenges are no longer there.  In most cases, these serial entrepreneurs will leave to create other ventures. Equally, ventures often outgrow their founding entrepreneurs, as they require knowledge, experience and more formal management processes, which the entrepreneur is not equipped to provide.  At this point, the board or outside investors will often identify the need for a new CEO.

The lessons for entrepreneurs are important; know and understand your strengths and limitations and manage ventures through the phases in their development, where you can be successful. Failure to realize your own limitations can lead to poor venture performance and frustrated entrepreneurs.

Andy is currently working at the Canadian Innovation Centre and pursuing a Ph.D. in the area of new venture creation at the University of Waterloo. In his spare time, he enjoys teaching technology entrepreneurship at UTM and the University of Waterloo.

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hari venkatacharyaBy Hari Venkatacharya

We have all been there- we are introduced to an early stage company that has an amazing technological innovation; they have put a core team together, raised some seed financing and are now ready to take on the world!

Soon, they realize that the skill sets essential to develop a technology are significantly different from those required to develop a product and build a company; but, by this time, they have burned through their capital, their investors are getting frustrated and there is a distinct possibility that the company will have to be shut down.

I keep asking myself: How can we create an ecosystem that nurtures entrepreneurship, brings capital providers to the table, and allows great technologies to have a fighting chance to become great companies?

RiskThe access to smart capital- by which I mean money that comes with those who have built products and/or companies, and successfully exited those ventures – is very rare in Canada.  The risk-taking psychology, so necessary for companies to prosper, is in short supply. No doubt, we are able to fund and create path breaking technologies in the telecom, clean tech and medical device sectors, to name a few. But, fewer than 10% of those breakthroughs will survive more than two years, and fewer than 30% of those companies will actually see customers buy their products.

I believe there are a number of strategies that can be employed to try to increase the probability of success:

  1. Successful entrepreneurs need to spend more time mentoring. Terry Matthews is a great example of this. At a recent Empire Club speech in Toronto, he shared some of his insights into how he has successfully launched 90 companies, out of which only four have failed. The number one reason for success has been the guidance he has given the companies, in addition to the obsessive drive of the founding team.
  2. Canadian companies need to invest more heavily in strategic start-ups. Over twenty years ago, most capital came from companies who identified a niche that they were interested in filling, but could not do so internally. They would then spin out a division or company, fund it and deploy their top technical staff to develop the technology.  This allowed the start up to have access to not only funds, but more importantly critical customer knowledge through their close corporate relationship.
  3. Global connectivity. As I’ve mentioned in other posts, we are globalized, and the centre of commerce has shifted to India and China. However, we must, as a collective, leverage these connections and establish partnerships with companies in these countries and others.

Without these three elements coming together, among others, I fear that although we may invest in and develop breakthrough technologies, we will continue to see only a very small minority of those ventures actually get to market, and successfully grow to create unique global niches. In essence, we need to question whether our vast investments in applied technology development are being wasted, if we cannot grow these start ups into successful world-leading companies.

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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