silicon peel meetup16 slidedeck
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WELCOME
Mike VanderleeMeetup #16 Facilitator
Silicon Peel
‘Lean Ventures & Alternative Funding’
• Welcome• Silicon Peel Programs• Lean Ventures & Alternative
Funding• Steven Cox (Strategic Innovation
Works)• Ken Mair (JPM Capital)• Richard Kun (RDP Associates)
• Speaker Q&A• Break • Demo Me: DUBGEAR
– Jansen White (Founder, DUBGEAR)
• Internship Programs– Bjoern Froehlecke (Visiting Faculty, George
Brown College)
• Startup Success Funnel– Steven Cox
• Closing Remarks & Networking
Agenda
TechEntrepreneurs
Business Professionals
Tech Enthusiasts
Industry Leaders
YOU
Community
www.SiliconPeel.comLinkedIN/SiliconPeel (http://linkd.in/spligroup)@SiliconPeel
www.SiliconPeel.com
The Starting Lineup…
Steven Cox Founder & Managing DirectorStrategic Innovation Works
Ken MairPartnerJPM Capital Inc.
Richard KunBusiness Development ManagerRDP Associates
Lean Ventures“Do What Really Matters”
Steven CoxManaging Director
Strategic Innovation Works
Get the book
Summary
Do not assume you know what your customers want.
Use the Build-Measure-Learn cycle to create features and products people really want.
Use small batches to scale the startup, being clear about growth drivers.
Origins of Lean Startup
Inspired by Lean Manufacturing practices.– Minimize waste– Maximize flow
Lean Startup: a set of methods focused on creating a successful startup.
How are they different?– Lean: suited to repetitive processes– Lean Startup: methods which factor the high level of
unknowns present in startups
Do not assume you know what your customers want!
Use the Build-Measure-Learn feedback loop to navigate toward a winning product.
Pivot or persevere along the current path?– Use meaningful customer feedback to decide.
Build-Measure-Learn
Build a minimum viable product (MVP) and put in front of customers.
Build as quickly as possible to Learn whether customers are willing at all to pay for the product (Measure).
Repeat to refine your product.
Use small batches
A small batch for a startup = one full Build-Measure-Learn cycle.
B-M-L cycle should be as short as possible.
Build new features, split-test and further develop if customer reaction is good.
Metrics
Measure Customer reaction with Action Metrics. Measure actions that you want customers to take
Opposite of Action metrics is "Vanity metrics" e.g. Total number of users or accounts.
Using Vanity metrics is an excellent way to deceive yourself and others!
Customers
We must learn what customers really want. Not what they say they want Or, what we think they should want
Customers often don't know what they want.
Let them try an MVP and measure their reaction.
Conduct an experiment, offer customers something new, then measuring their behavior
Early Adopters and Mainstream
Two key types of customers.
– Early Adopters• Like MVP’s.• Tolerant of faults and errors
– Mainstream• Much more demanding• Need proof
Mainstream is where the money is!
Early Adopters and MainstreamThe transition to mainstream customers requires
tremendous additional work.
AssumptionsTreat a new product launch like a series of experiments.
– Question before building: ”Should this product be built?”– Identify assumptions and figure out ways to test them
Two most important assumptions.– Value hypothesis: Does a product really deliver value to
customers? A good indicator is repeat usage– Growth hypothesis: How will new customers discover the
product?
Validate assumptions as early and as quickly as possible
Takeaway
Un-validated assumptions are dangerous.Lean Startup methods help to:
Find a product that people actually want to use and pay for
Build a sustainable business once you have found the right product
The book is good, but you’ll need others too.
Alternative Funding
Ken MairJune 26, 2014
Ken Mair - Background• Senior Sales and Marketing Executive• Expert in tactical planning• Helped a wide range of companies raise over $500M• Spent the past 13 years as an independent consultant working with
SME’s• Services provided include;
• Tactical plan development• Sales forecasting training• Creating and developing Investor Plans• Presenting to investors and funders at every level
• Currently President and Sole Owner of The 180 Perspective – continuing to work with SME’s to build Tactical Plans and Investor Presentations
• Through The 180 Perspective a partner in JPM Trade Capital Inc. (an asset backed lender) and Awesome Online Ventures (an owner of several Ecommerce properties)
Today’s Objective
• The three objectives;
1. Provide some insight on what investors and funders
look for in initial funding presentations.
2. Identify alternate sources of funding available to
emerging and growing companies.
3. Show real life examples of companies who have
successfully used alternative funding to grow their
business.
Answering The Ten Questions1. What have you got?
2. Who is going to buy it?
3. Why?
4. Where are you?
5. How did you get there?
6. Where are you going?
7. How are you going to get there?
8. What do you need?
9. When do you need it?
10. What’s in it for me?
Other Sources of Money• Equity funding is the most expensive way to finance your
business, particularly in the early stages.
• Alternate sources of funding protect your equity for future funding rounds.
• Alternate sources for funding include but are not limited to; Receivables Factoring Purchase Order Financing SRED\Tax Credit Financing Bridge Loans Government Funding CrowdFunding
Accounts Receivable FactoringGenerally thought of as extremely expensive with a bad reputation this is actually a very effective way to raise working capital.
A Local Sign Company
• The Challenge – Difficult to bid on large jobs because of the working capital
required to purchase raw materials and pay for installation.
• The Solution – Establish a factoring line that they can use when they win a big
job. Offset the cost of factoring by including a cost of financing in their pricing
model.
• The Result – Recently won a 165K contract to redo the signs on the Torstar
building in downtown Toronto.
Purchase Order FinancingThe ability to finance purchase orders in order to produce finished goods and deliver on an order.
Skincare Company
• The Challenge – Won a major order with a national retailer but didn’t have
the working capital to deliver the finished product.
• The Solution – Establish a PO Financing facility to allow them to build and
purchase products required to fulfill the order. Establish receivables
factoring facility to provide working capital to deliver on the in store training
and marketing requirements in the contract.
• The Result – Grew their business 1000 percent in 24 months and retained
100% ownership.
SRED\Tax Credit Financing
Another form of receivables factoring based on money owed by the government.
Software Company
• The Challenge – Lacked the working capital to effectively launch their
finished product.
• The Solution – Company had never filed for SRED credits. Hired a SRED
consultant and filed an 800K claim. Factored the claim and received a
480K advance.
• The Result – Successfully launched the product, exceeded revenue targets
and didn’t dilute the company.
Bridge LoansShort term funding to re-align the funding for a company.
Call Centre• The Challenge – Required working capital to continue to
grow their business. Bank held security on their receivable but only offered 50% coverage of 60 days receivables.
• The Solution – 60 day bridge loan to allow the company to switch banks. Company secured a 200K line of credit from new bank without receivables security and a 90% 90 days receivables line from an outside source.
• The Result – Grew business 75% in 12 months.
Government FundingGovernment funding takes a long time and is very much hit and miss. However a hit can be very lucrative and if you are in an industry that can create jobs you will get some interest.
Government Grants• Self Cooling Beer Can• The Challenge – needed to redesign their can to meet environmental
requirements. Cost was prohibitive and VC funders wanted most of the company to fund the research.
• The Solution – Ontario Government Research Grant to redesign the can at no cost to the company
• The Result – Environmentally friendly can developed, Company is negotiating launch with three major breweries.
BDC• Quickly developing traditional bank tendencies• Creativity is Account Manager dependant• Wide range of financing and business support options• Worth building a relationship with
CrowdFunding
• Trendy Fundraising.
• With the right fit a great way to raise money without sacrificing equity.
• There are specific rules for Canadian Companies.
• Must include the pre-sale of products.
• Successful fundings have a large social media content.
• Not as easy as it looks but with the right product and approach there
are some amazing success stories.
Conclusion• Business funding is a forever exercise..
• Build a 20 minute presentation that impactfully addresses the 10
questions.
• Hold on to equity for as long as possible.
• Educate yourself on alternate sources of funding.
• Remember if you build the cost of funding into your pricing
model your customer is paying and the money is in effect free.
• In the end a couple of points of interest is still way cheaper and
way less intrusive than taking on equity partners.
Leveraging Government Funding To Grow Your
BusinessRichard Kun
RDP Associates [email protected]
@richardkrdp
Agenda
Types, Sources and Mandates
Process to Navigate
Notable Programs
Various Forms
• Over 500 Incentive Programs • Tax Credits: Refundable vs. non refundable• Grants• Matched Funding• Repayable Contributions• Forgivable loans
Various Sources
• Federal• Provincial• Municipal• Chamber of Commerce• Trade Associations
Various Mandates
• Specific time periods to apply.• Targeted to Specific Sectors.• Targeted to Different Size of Companies.• Limited funding vs. Unlimited Funding.
What Government Funds
• Job Creation• Training
• On new equipment and technology.
• Export Marketing • Plans, personnel, feasibility studies.
• Business Partnering• Universities, colleges, associations.
What Government Funds
• Investment• Manufacturing equipment
• Energy Saving• Designs, devices
• Innovation• R&D, new environment technologies, agricultural,• Product and process development
Process
• Where do you start ?
• How do you navigate ?
Process
STEP 1: Evaluate your business situation– Knowledge Base– Resources– Company Growth Cycle• Concept• Development• Market entry• Market expansion
Process
STEP 2: Link company needs to various government assistance programs
• Training Assistance• Research• Funding for growth• Expanding to International markets
Process
STEP 3: Develop a Plan• Prioritize - Narrow to top 5 • Leverage - To maximize & complement• Tax efficient
Process STEP 4: Apply
• Various Deadlines• Unique to each program• Typically business plan required• SWOT analysis• Benefits to be generated• Planned growth of company
Tax Credits
• Refundable vs Non refundable• Usually unlimited funds available• Rule orientated criteria for eligibility• Documentation required• Objective vs Subjective
SR&ED Tax Credits
• Refundable Tax incentive program offered by the Federal & Provincial Government to companies which strive to innovate
• Work undertaken for the purpose of achieving technological advancement for the purpose of developing innovative products, processes and services
• Incentive – Recover up to 68% of eligible expenses
Ontario Interactive Digital Media Tax Credit
• The Ontario Government offers a refundable tax credit up to 40% for qualifying Ontario labour and marketing expenditures to create interactive digital media products in Ontario. Some examples;
• Video Games
• Educational Software
• Informational Products
• Online Magazines
• Interactive Web sites
Government Grants
Notable Programs: Innovation R&D IRAP
Total budget $64M in Ontario annually, up to $1M per company for research, development and commercialization of new technology.
Targets projects with the objective to grow and generate profits through development and commerciain Canada.
Contains smaller grants for marketing, 1st patent filing, feasibility studies, youth hiring, digital technology adoption of commercialization of innovative, technology-driven new or improved products, services, or processes.
FedDev (Ontario) Total budget $920M over next 5 years in Southern Ontario, up to $20M per company for innovative
projects. Contains multiple programs to stimulate innovation, job creation and economic growth in Ontario
communities.
Growing Forward 2 Total budget $417M in Ontario, up to $500K per company for innovative projects in the agriculture
industry. Targets initiatives in marketing, environmental impact, productivity enhancement, assurance systems,
animal and plant health, business and leadership development.
Canada Media Fund Total budget $360.7M in Canada annually, up to $1M per company for the creation of innovative and
interactive digital media content or software applications. Supports the creation of Canadian-made videogames, software and mobile apps, curriculum-based
products, film and TV-related interactive content etc.
Notable Programs: Marketing & Exports
Export Market Access (Ontario) Grants up to 50% of eligible project costs for attending international
trade shows/fairs/exhibits, developing promotional material, conducting market research.
Can apply twice a year for total funding up to $150,000 per company per year.
Exporters Fund (Ontario) Grant to subsidize the wages of an export marketing manager hired to
work in Ontario. Covers up to $40,000 in wages per year for up to 2 years.
TECTERRA Various grants to support the commercialization of geomatics
technologies (mapping and surveying, remote sensing, gravimetry, spatial data management, GPS etc.)
Up to $15,000 to attend trade shows, $50,000 for business development training.
Notable Programs: HR & Training Youth Employment Strategy Total budget $330M annually Canada-wide. Programs to promote hiring of Canadian recent post-secondary graduates age 30
or under for summer jobs, internships or full-time positions. Provides up to 50% of eligible hiring costs up to $20,000 per hire.
Ontario Youth Employment Fund Total budget $195M over 2 years in Ontario. Hiring incentive of $7800 to provide work placements for recent post-secondary
graduates age 15 to 29. NSERC Partnerships Programs Total budget $350M annually to support collaboration between industry and
university researchers on innovative projects in the natural sciences and engineering.
Interaction Grants: $5000 over 3 months to cover travel expenses to meet with researchers to identify potential collaborative projects.
Engage Grants: $25,000 over 6 months to collaborate with researchers on short-term R&D projects.
Collaborative R&D Grants: 50% of eligible project costs up to $200,000 to collaborate with researchers on projects.up to 5 years.
Notable Programs: Capital Expenditure
FedDev IBGP (Ontario) Repayable contribution to support innovation and expansion in Southern
Ontario SMEs. Covers 25% of labour, expertise, capital and non-capital costs, up to
$20M per project. FedNor Targeted Manufacturing Initiative (Ontario) Repayable contribution to support innovation and competitiveness in
northern Ontario manufacturers. Up to 33% of capital costs and 50% of non-capital towards upgrading and
improving manufacturing equipment to improve productivity. NOHFC Business Expansion Program (Ontario) Grant of 50% of eligible project costs to grow northern Ontario
businesses. Up to $1M per company for capital construction, leasehold
improvements, new used equipment, training etc.
Notable Programs: “Green” Energy & Environment
Ontario Power Authority Conservation Fund Total budget $5M annually, up to $500K per company for innovative projects to
create electricity conservation technologies or systems. SaveONenergy
Incentives of 50-100% of project costs for businesses to reduce and manage electricity consumption.
Prescriptive incentives to replace or upgrade equipment, $35,000 to conduct energy audits, $10,000 to develop plans for high energy-efficiency buildings.
SD Tech Fund Total budget $325M over 8 years. Up to 50% of eligible costs for business partnerships and consortiums working
on an innovative clean tech project that will address issues of climate change, clean air, water or soil quality.
NextGen Biofuels Fund Total budget $500M over 10 years. Up to $200M for innovative projects developing cellulosic ethanol and
biodiesel technologies.
Break…
Demo Me
Jansen WhiteChief DUB Officer - DUBGEAR
www.DUBGEAR.com
Internship Programs
Bjoern FroehleckeSilicon Peel
Leadership Team
Internship Programs
• Example: triOS College places their students as interns, free of cost, with employers in IT related fields by the end of the students’ formal training.
• Silicon Peel members and their businesses can benefit from access to this pool of well-educated job-starters, many of whom are entering second careers.
• 200 to 400 hour placements, depending on program:Information Technology Professional/Administrator
Enterprise Web & Mobile Developer
Applications Developer
Video Game Technology / Design & Development
Internship Programs
• Trios College• University of Toronto Mississauga• Ontario Centres of Excellence• NSERC• Sheridan College• Centennial College• College Cornerstone
Interested?
Internship Programs
Startup Success Funnel
Steven Cox
Closing Remarks
Mike VanderleeMeetup #16 Facilitator
Silicon Peel
‘Lean Ventures & Alternative Funding’
Next Meetup #17
“Big Data and Open Data”
Date: July 24, 2014 Time: 7:00pm-9:30pm Location: Microsoft Canada Address: 1950 Meadowvale Blvd. Mississauga, ON L5N 8L9 Registration via Eventbrite.com or Meetup.com