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Posts Tagged ‘Venture Capital’

By Marielle Voksepp
Gold “Remember the golden rule: He who holds the gold, makes the rules.”

VC’s want money. Not just any money; BIG MONEY.

In last week’s Entrepreneurship 101 lecture, Terms of Investment, Shirley Speakman of the Investment Accelerator Fund (IAF) gave an overview of the realities of seeking out private investment for your start-up.

Because venture capital is high risk, winners need to be big — and big means at least nine-times return with a potential for high growth. Investment from an outside investor also means being prepared to accept new terms for your company. To see a list of considerations to bear in mind before accepting outside investment, read the article:  Are you ready for a private investor?

If you do decide that your company is ready to accept outside investment, you’ll want to use this workbook to ensure you have the right tools in place to raise money: Financing: Identifying, targeting and engaging potential investors.

Most importantly, before spending long hours and a large amount of preparation to  demonstrate your worth to an investor, find out if your company is “VC-able”: watch the lecture video.

Downloads and Resources:

Reposted from MaRS

Marielle works as part of the education team at MaRS. She helps entrepreneurs get access to business resources both online and in-person.

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

FierceBiotech published the top 15 biotech VC deals of 2010 last week, measured by dollars invested. Since they noted an overall uptick in investments in 2010, it seemed like a worthwhile time to look back. Here’s what U.S. VC investment in biopharma and medical devices looked like from 2007 to 2010 (normalized to 2007 levels):

Not unexpectedly, a huge decline between 2007 and 2009, though not as big as the overall decline in VC investments. Here’s the really interesting part — the average amount invested (±1σ) among the top 15 deals each year:

Remarkably stable. Even during a period of steeply declining investment there will be standouts that generate real excitement, proving that as FierceBiotech said in 2008 ”[g]ood science will attract funding in any market.”

It’s not a surprise that good ideas always get some funding, but why do the top investees always attract the same amount?  The price of admission to the top 15 between 2007 and 2010 has ranged only between $39 and $42 million.

It must be that (once a concept reaches a certain stage) the amount of money needed to really propel a life sciences company to success is constant — apparently an average of $50 – $60 million — and recognizing that, VCs will fund their best prospects to that level even at the expense of other investments.  So the next time you’re contemplating a $10 million C round, keep in mind that you’re more than two standard deviations off the mean investment made when VCs really mean it. It’s an interesting idea the other way too: Pacific Biosciences, which IPO’d in the middle of its range at $16/share last October, was the top deal twice in four years (including the +2.4σ variant of $109m in 2010). It’s currently trading at $15.74, giving it  a market cap of $831.43 million, just over double the reported $370 million of VC that it raised prior to the IPO.

Check out FierceBiotech’s list of the top VC investments from 2010, 2009, 2008 and 2007 and apply your own 20:20 hindsight to your heart’s content. Also, keep your fingers crossed that a 3% increase stops feeling like such a victory when we see the 2011 data.

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

The Federal Economic Development Agency for Southern Ontario announced a new Investing in Business Innovation program. The program offers matching grants for early-stage venture funding. This is a $190 Million  program running from 2010-2014.

There are provisions for startups and angel networks. Since we’re StartupNorth, let’s try to deal with the startup side first.

  • Startups who receive a term sheet from a qualified angel investor (as defined by the Ontario Securities Commission) or venture capital firm (registered with the Canadian Venture Capital association) are eligible to apply for up $1 Million in loan from the federal government.
  • Restrictions:
    • Start-up businesses will be eligible for repayable contributions up to $1 million for no more than one-third (33⅓ percent) of total eligible and supported project costs.
    • An angel and/or venture capital investor(s) must be committed to provide at least two-thirds (66⅔ percent) of the cash contribution toward eligible and supported project costs.
    • In-kind contributions related to mentoring, networking, and other business skills cannot be considered as part of the angel or venture capital investor’s cash contribution.
    • A maximum of one project per eligible start-up SME can be funded under the initiative.
    • Direct eligible costs for start-up businesses may include:
      • Labour, capital and operating expenditures;
      • Materials and supplies;
      • Consulting and/or professional fees (limited to market rate); and,
      • Minor and non-capital acquisitions (e.g., software).
    • All project activities must be completed by March 31, 2014;

Basically there is federal government matching loans up to $1 Million for startups that are raising angel or venture funding in Southern Ontario. This is a fantastic start.

It’s great for startups in Southern Ontario, it’s curious that the program is only available in Southern Ontario. Why not all of Canada? How are the repayment terms set? Is this a zero percent interest loan from the Federal Government? Does the term sheet have to be equity investment? Is convertible debt eligible? How do startups “demonstrate they are using business mentoring, counseling, or related services”?

Reposted from StartUp North

David Crow is an emerging technology and start-up advocate/evangelist. 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 Jeremy Grushcow

Tech startups use social media avidly [rabidly?], but biotech companies? Not so much.  Biotech companies should be blogging, tweeting and linking in like mad, though.  Here’s why:

  1. Your customers (pharma companies) do it. More and more pharma companies are active in social media. Take a look at this article in the December issue of Life Science Leader (h/t @FiercePharma) or read the Dose of Digital blog any day of the week and you’ll be directed to interesting information about how products are being developed, tested and marketed. These are things you need to keep in mind as you move through your own product development process. Also, lots of pharma folks are on LinkedIn, so if you are as well, you’ll maximize your ability to reach out through personal connections when you’re building a constituency for your partnering deals.  Here’s my Twitter list of BioPharma news and analysis.
  2. Your investors do it. Check out this Twitter List of Canadian VCs, Angel investors and other funders.  Look at what they’re talking about, and you’ll see you don’t have to tell people what you ate for lunch (or disclose your latest lab results) to convey that you’re doing something interesting that other people are interested in.  Check out the CVCA’s blog, Capital Rants or the Maple Leaf Angels blog.  In Toronto? Stop in at the MaRS blog or the R.I.C. blog to see where investors will be and what they’re thinking about.
  3. Your peers (other startups) do it. If you’re not participating in online conversations, you’re missing a world of good advice and perspectives.  Click over to Rick Segal’s blog or  StartupCFO, Mark MacLeod’s Blog. It doesn’t really matter that these guys aren’t involved in biotech. Lots of startups are facing similar issues to yours — funding, staffing, etc. and getting out of the biotech bubble from time to time can be a good thing.  Plus, being at a startup is isolating, particularly in biotech with its strong incentives to run a virtual company, so go online to find peers, mentors and other resources.

If this all sounds reasonable, but you’re still skeptical, or not interested, then find someone in your organization who’s excited about it, regardless of their actual job, and set him/her loose.  [Not totally loose, of course. Common sense is critical online because it’s hard to hit “undo” on the web, and appropriate confidentiality remains key to biotech ventures.  But all your people have common sense and discretion, right?]

We’ll be keeping an eye out for biotechs and other bioscience companies that are making good use of social media as part of our Biotech Trends series this coming year.  Other suggestions for 2010 biotech trends?  Let us know.

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 Bryan Watson

As Executive Director of the National Angel Capital Organization, I am constantly asked what business angel investors are looking for by entrepreneurs.

There is no one-size-fits-all answer. Entrepreneurs must always remember that angels, acting alone or in groups, are all individuals, with their own motivations for and interests in investing.

Some angels will only invest in one industry. Some angels will invest in many industries. Some angels will be extremely hands on – even taking senior roles within their investee company – mentoring the company and leveraging their network and expertise to help ensure its success. Some angels will invest in a company and leave it to other investors to help ensure the company’s success. No one size or set of motivations describes all angels.

That said, there are a few things that all investors will look for in their potential investments; or at least should be looking for. I usually sum these things up as the “3 T’s” – being Team, Traction and Technology (Read more about the 3 T’s and their relationship to the failure modes of investee companies here).

The Wall Street Journal in an interview with Susan Preston on April 25th, How to Win Angel Funding, did an excellent job of rounding out the investment criteria of angels. Every entrepreneur seeking capital should review this article to ensure their opportunity, at the very least, meets all of the criteria set out in the article. These include:

  • A solid potential for return
  • A good plan for he cash
  • A winning attitude
  • A seasoned team
  • A competitive edge
  • A well-defined exit strategy

With a market for private investment capital characterised by extreme scarcity, demand far exceeding supply, an entrepreneur cannot afford to approach investors without having satisfied all of these criteria. If you have not met these, I would suggest that you will have an exceptionally hard time securing capital as, in a market such as ours today, even companies that have met and far exceeded these base criteria are having a difficult time securing capital.

Reposted from EP Enterprises

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 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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