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By Knowlton Thomas

FMC has launched one of a series of microsites targeted to assist its clients.

This first site is called TechStartUpCenter, and as one may draw from the rather uninspired name, its content is about helping tech startups.

Prepared by FMC’s legal experts in tech and intellectual property, and built on the slogan “The Ultimate Guide from Startup to IPO,” the site covers “legal and business issues impacting technology entrepreneurs, executives and investors.”

Currently, top articles include “Vesting and buyback rights” and “Understanding intellectual property rights,” topics that are crucial for company leaders to comprehend but are often not covered in sufficient detail outside of the legal realm.

There is a surprisingly large amount of content available on the site, covering an impressive range of concepts, and it’s all available for free – so there’s no reason that you’re budding tech company shouldn’t investigate what TechStartUpCentre has to offer.

Reposted from Techvibes Media

Knowlton Thomas is the Associate Editor of Techvibes Media. He is also the Web Editor of The Other Press, a weekly newspaper, and a regular columnist for them as well.

The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers provide 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 Jeremy Grushcow

There are lots of collections of tips for startups that have excellent business advice on building your team, hitting product milestones and pitching to VCs; but not that many that give a corporate lawyer’s perspective. So here’s mine*:

  1. You May be a Genius, but You Are Not a Lawyer
    • Your idea is brilliant and you have what it takes to be a CEO, but you are still not a lawyer (or an accountant).
    • Hire professionals and use them to help you figure out what you need and when.
    • This doesn’t have to be expensive. Figuring out priorities isn’t billable work – executing them is.
  2. Even Though You’re Not a Lawyer, It’s Still Your Job to Read Everything
    • When it comes to your business the buck stops with you
    • You need to read and understand everything you sign
    • Your lawyers’ and accountants’ job includes explaining things you don’t understand
  3. If You Don’t Incorporate, You’re Personally Liable
    • Unless you’ve incorporated (or formed an LP , LLP, S.a.r.l, etc.), you’re personally liable for everything done in the name of the company or by any of your partners
    • Once you have a corporate entity, issue shares (or units, etc.) to yourself and your partners – they are the legal basis for corporate power
  4. A Shareholders Agreement is Cheaper than a Lawsuit
    • Unless you’re the only founder, you need to align everyone’s expectations
    • Drafting a shareholders agreement will help you address key controversies in advance
    • Waiting until there’s a dispute is too late
  5. Be Greedy With Your Equity
    • Once you have a shareholder, they are hard to get rid of
    • It’s tempting to use shares for compensation, advisory boards, etc.
    • Try to use non-dilutive cash or options instead
    • Make sure when you do issue equity that it doesn’t constrain your next steps
  6. Pay Your Taxes
    • There are lots of taxes that apply at early stages
    • Payroll taxes, HST, VAT, sales taxes, etc.
    • You can be personally liable if your company doesn’t pay
    • Ignoring taxes only makes it worse
  7. Protect Your IP
    • Get assignments from your inventors or institutions
    • Get signed development agreements before the work starts
    • Talk to an IP lawyer about appropriate patent filings and permissible disclosures
    • Separate your current job from your startup. If you use time, facilities or equipment that belong to your current employer, they could end up owning your new company’s IP.
  8. An NDA May Ruin First Impressions
    • Don’t drive away potential partners or investors with premature or paranoid NDAs
    • Give potential investors and partners enough non-proprietary information to generate interest
    • If in doubt, run planned disclosures by your lawyers and existing investors
  9. Be Honest With Your Customers
    • Make sure your terms of use and policies are clear, but comprehensive
    • If you’re collecting personal information, you need to comply with privacy law
  10. Talk to Your Investors
    • Let them know about progress and challenges
    • Give them advance notice of future financing rounds

* This is not legal advice (duh, it’s a blog), just my thoughts (not my firm’s – see previous) on how to use legal services efficiently when your business is new. I presented a version of these as part of Ogilvy’s How to Draft a Patent seminar at MaRS.

Re-posted from the Cross-Border Biotech Blog

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.

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 David Crow

Local angel investor Paul Maasland was murdered, his body was found north of Toronto at a public boat launch. We extend our deepest condolences to Mr. Maasland’s family. And our sincerest concerns go out to his friends and colleagues at Maple Leaf Angels and his investments (according to Mr. Maasland’s LinkedIn profile) including:

The conversations with his investees shed some light on Mr. Maasland as an investor. From one of the portfolio companies CEOs:

“I’d just say he was very generous with his time and resources and provided great input into how we ran [company removed]. He always was positive and excited about the initiatives we were doing.”

These comments were repeated throughout Mr. Maasland’s portfolio. He was a knowledgeable, generous investor that provided useful guidance and support for his companies.

This is an unexpected situation for anyone including many startups. It opens questions for startups about succession planning for Board Directors, questions around the Shareholders Agreement and the shares of a deceased investor. Hopefully most Boards are experienced in succession planning. As the shareholders change over time with new investment, replacing board members is a fairly straightforward and common practice (albeit usually under very different circumstances). Regarding what happens to a deceased investors shares this is decided between the deceased’s estate and the shareholders agreement. If an estate needs or chooses to liquidate the investment, many shareholders agreements have a clause that allows the company or other shareholders to purchase the investment at Fair Market Value. There are tax and legal considerations, so this should not be considered tax or legal advice, please consult a professional.

It’s unfortunate for our small close-knit community to suffer such a sudden, tragic loss. We are deeply saddened to hear about the loss of a member of our community.

Paul Maasland photo source: CBC & OPP

Reposted from StartUp North

David Crow is an emerging technology and start-up advocate/evangelist. At Microsoft Canada, he is responsible for helping Canadian start-ups gain access to software, support and visibility in the Microsoft ecosystem through programs like BizSpark (details at microsoft.com/bizspark). David blogs at http://davidcrow.ca/ and http://startupnorth.ca/ or follow him on Twitter @davidcrow.


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 David Crow

Is there any questions that the Canadian venture capital industry is in turmoil? There is a change that is happening, it might just not be happening as fast as it could. Mark McQueen talks about  the creative destruction of the VC industry in Canada.

“There’s no robust “new class” of VC firms coming in behind the current oligarchy, with a similar amount of capital to deploy as those they are planning to replace. We are witnessing the destruction piece of the equation, for sure, but not the rebirth that is the essence of “creative destruction” if it is to succeed.” – Mark McQueen, Wellington Fund

While there are a few new players entering the market (I’m looking at you ExtremeVP and Mantella VP), we’re seeing a lot of roadkill. There are firms that are not able to raise their next fund, partners that are on life support, startups that are left to wonder what happened to their partners in raising additional capital. However, many that remain are digging in and fighting for their way of life. They are lobbying for support to “manufacture an environment that is hospitable to their investment style”. Adam Adamou at Caseridge Capital Corporation argues that the existing venture players, the Canadian VC oligarchy, have successfully lobbied for restrictions that have kept out new players including the public/private venture capital that was used to fund RIM.

“The traditional venture capitalists see themselves as the founders of a “Silicon Valley North” and they follow the US trends, which unfortunately do not apply to our Canadian market. They seem to see themselves as avant-garde investors in tomorrow’s technology companies, however, they behave more like bankers[sic] – preferring security and downside protection over opportunity”

Yikes, that’s a damning review of the Canadian venture industry. However, I’m not sure that the suggested alternatives including Capital Pool Companies and the TSX-V are really better choices for Canadian entrepreneurs (or investors). (I’m not an expert on CPCs or TSX-V but when my friends and trusted advisors like Mark McLeod provide commentary, I listen). What I took away from The Adamou Rant is that many of the funds have a vested interest in the maintaining something akin to the current system. Governments should look critically at the numbers being presented and who is presenting them.

The State of a Nation

Is the sky falling? What is the state of venture capital in Canada? Is it really this bad? And why does it matter to early-stage entrepreneurs? Should we all just move to Silicon Valley, New York City, Boston or somewhere else?

The Canadian VC environment has been challenging for a lot of entrepreneurs. As entrepreneurs, you need to understand the environment that you will start, fund, and grow your company. Canada has a strong track record of access to capital, a stable economic policy and should be a great spot for entrepreneurs. It’s also unique. Canadian companies tend to be at a later stage of corporate development and raise less money than their US counterparts. I’ve written about the impact of the state of the funding environment has on startups. And what entrepreneurs can continue to expect to see, includes:

  • The number of investors will continue to decrease
  • Valuations will continue to decrease
  • Customer uptake will be slower
  • Need to become cash flow positive
  • Acquiring entities will favour profitable companies

Mark McQueen provides the best summary of state of the Canadian Venture Capital landscape I’ve seen in a while:

  • VC investments in Canadian firms hit a 14 year low in 2009
  • US venture market saw US$18 billion invested in 2009, Canada saw only $1 billion (5.5%) our economy is approximately 12.5% the size of the US economy
  • Up to half of current Canadian VC funds will not be able to raise their next fund
  • Ontario government has sunset the $1 billion Retail Venture Capital Industry
  • “Section 116″ was fixed in the 2010 Federal Budget, however, this is not a silver bullet
  • 117 disclosed cross board investments since January 2008 (this includes Canadian investments in US companies)
  • Canadian Fund of Funds have lots of capital to invest in foreign led funds: EDC ($1.2 billion); Teralys ($700 million); OVCF ($205 million)

A New Hope

We need to hope that from out of the ashes will emerge a better funding environment for Canadian entrepreneurs. Whether this is led by new funds, angel investors, US funds, or the existing players learning from their mistakes, it doesn’t matter.

We’re starting to see a strong set of the big players making acquisitions across Canada:

Our startups need real capital to continue to compete on the world stage. But they can’t survive on SR&ED credits alone. We need to hope that this creative destruction happens quickly, so that something can rise from the ashes and we can witness the rebirth of the Canadian tech startup.

Reposted from StartUp North

David Crow is an emerging technology and start-up advocate/evangelist. At Microsoft Canada, he is responsible for helping Canadian start-ups gain access to software, support and visibility in the Microsoft ecosystem through programs like BizSpark (details at microsoft.com/bizspark). David blogs at http://davidcrow.ca/ and http://startupnorth.ca/ or follow him on Twitter @davidcrow

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By David Crow

Our friends at the C100 are hosting 20 Canadian companies on May 18-20, 2010 in Silicon Valley. Interesting tradeoff, accepted startups will need to weigh participation in the C100 with participation at OCE Discovery, MeshU and Mesh (assuming you don’t win the GOAP ticket from StartupCamp Montreal). It shouldn’t be a huge debate, because the opportunity to engage with Canadian mentors in Silicon Valley should be pretty straightforward for most startups.

This is a variant of TechStars for Canadians. You get the chance to connect with the most connected Canadians in Silicon Valley. You can the opportunity to pitch, receive mentorship, and gain access to business development resources. This is a great opportunity for local startups to gain access to markets, companies, and decision makers in Silicon Valley.

“These customers and markets don’t need to be located in Canada. In fact, Canada can often serve as a providing ground, an incubator, for a variety of market segments. We need to leverage the unique attributes of a diverse population of immigrants for the creative tension of differing viewpoints, and to help forge connections with remote markets.” Creating a Venture Culture, The Mark News

It is an opportunity for a Canadian startup to build locally and market globally.

Requirements

To qualify, companies must:

  • Be substantially Canadian in leadership, employees or location
  • Have a product/service with users/customers
  • Be in a position to expand its business in the U.S. and internationally
  • Be willing to cover its own expenses (flights, hotel, some meals)
  • Be endorsed by a C100 Charter Member or a C100 Seed Partner
  • Apply online

Reposted from StartUp North

David Crow is an emerging technology and start-up advocate/evangelist. At Microsoft Canada, he is responsible for helping Canadian start-ups gain access to software, support and visibility in the Microsoft ecosystem through programs like BizSpark (details at microsoft.com/bizspark). David blogs at http://davidcrow.ca/ and http://startupnorth.ca/ or follow him on Twitter @davidcrow

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Reposted from StartupNorth

By David Crow

Are you curious about what being a startup is really about? Do you think there are too many events in Toronto?

“Being in the community is important to you, but being in front of your customers is what is important to your startup.” –  Jevon MacDonald

Well, we’re trying to help connect entrepreneurs, designers, developers and others interested in starting new high potential growth companies. Why? Check out Paul Graham’s What Startups Are Really Like. In particular, 17. The Value of Community. We’re trying to create a peer group, people who are facing similar obstacles in creating new tech, software, mobile, social Internet startups.

“One of the most surprising things I saw was the willingness of people to help us. Even people who had nothing to gain went out of their way to help our startup succeed…The surprise for me was how accessible important and interesting people are. It’s amazing how easily you can reach out to people and get immediate feedback.” – comments on What Startups Are Really Like

I want a vibrant, connected, accessible community of founders, investors, advisors and others in Canada. And I’m not alone. There are great communities across the country in Ottawa, Montreal, Waterloo, Guelph, Edmonton, Calgary, and Vancouver (and be sure to check out StartupDrinks).  Here’s what we’re doing locally:

  1. Consider attending DemoCamp Toronto # 25 on January 27, 2010.
  2. Are you looking for a social opportunity to connect with the individuals that fund high potential growth startups in Canada? You should consider applying to attend Founders & Funders on February 15, 2010.
  3. StartupEmpire is happening on May 20, 2010. Stay tuned for details.

So it’s not about partying, but it is about finding others facing similar challenges and those that might be able to help your startup.

I hope you will participate.

David Crow is an emerging technology and start-up advocate/evangelist. At Microsoft Canada, he is responsible for helping Canadian start-ups gain access to software, support and visibility in the Microsoft ecosystem through programs like BizSpark (details at microsoft.com/bizspark). David blogs at http://davidcrow.ca/ and http://startupnorth.ca/ or follow him on Twitter @davidcrow

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davidBy David Pasieka

In yesterday’s blog, I wrote about boomers emerging as entrepreneurs or boomerpreneurs.

A Boomerpreneur is a individual born between 1947 and 1966 who has started their own business. In Canada, this age group represents about a third of the total population and is estimated to control about 65% of the wealth in the country. A study done by Delta Economics (Dec 2008) suggested that over 30% of the Entreprenuers in the US were over 50 years of age. A formidable force indeed!

Here are things to consider.entrepreneur woman

1) Personal Inventory– Not everyone will be cut out to be a Boomerpreneur. Create a series of lists – What you like to do? What you hate doing? What are your core skills? What are you lacking? What puts a smile on your face? What would you like to do before your number is up? These lists will give you an honest assessment of who you are and what you could be passionate about.

2) “The Thing” – For some “The Thing” is something that they have always wanted to do perhaps a hobby that could develop into a business. For others it may be joining forces with another Entrepreneur who already has an idea and needs a partner.

3) Networking – Help for your idea will come from many sources including family & friends and other early stage Entrepreneurs trying to get their business off the ground. Input from all sources will help shape your thinking.

4) Build a Plan – You can’t  jump into this without a “plan of action”. This plan may start out on a “cocktail napkin”, progress to a “two pager”, a PowerPoint and finally a 25-page business plan. Regardless of its form, you will need research, assumptions, validations, financial models, Go to Market implementation plans as well as risks and contingencies.

5) Brand – I am a big believer in creating your Brand (vision, mission, logo, website) and getting your messages out there. You will probably need some professional help in this regard.

6) Understand the Implications – Becoming your own boss has a significant set of implications on your time, quality of life, family, cash flow and personal being. Create a list of implications and associated stakeholders. Be sure to constantly review your progress and its associated impact. Be prepared to “course correct” a number of times.

7) Assess and Celebrate – Constantly review your progress to your “plan of record”. Celebrate the wins regardless of the size and revisit the reasons that things did not go according to “Hoyle”.

For those who have made the leap, I can truly say that they are in a better place then they were before. I plan on writing a lot more about this phenomena as my friends and clients gain traction as Canadian Boomerprenurs.

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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