One of the biggest challenges of starting a company is to maintain a steady cash flow. An entrepreneur's worst nightmare is: "What if I run out of money!" Jo Van Betsbrugge is an Innovation Advisor at the National Research Council’s Innovation Access circa November 2013. He will be sharing his experiences with you on: starting and running a company in Quebec, and will demisify exactly how he successfully raised over $1M without the help of venture capital. He helps entrepreneurs and small and medium-sized businesses navigate through the multitude of available innovation support programs offered by provincial and federal governments.

1. Jo Van Betsbrugge, PhD - Innovation Advisor
Jo.vanbetsbrugge@cnrc-nrc.gc.ca
District 3 Innovation Center
February 12 2015
Raising $1M Without VC Money
Bootstrapping Your Way to the Top

2. About NRC Concierge Service
Provides personalized, expert advise
Guide small businesses and start-ups on funding programs and
resources
Provide general advise to support growth
Referrals to 75+ federal, regional, provincial and local programs
and industry partners
A Government Service – no cost or obligations
Contact an Innovation Advisor
In-person Consultation
Follow up e-mail & Referrals

3. o Not all *SMEs are Ventures
o Not all SMEs require VC funding
o There are 1 million SMEs in Canada
o Most SMEs will never need or receive
VC funding
*Small and medium-sized business: 500 employees or less
Raising $1M without VC Money

4. #VC Deals and $ by Province - 2014
Source: Canadian Venture Capital & Private Equity Association

5. Bootstrapping a company with
non-dilutive funding
“Bootstrapping a company with non-dilutive funding, i.e. from private
foundations or public sources, is a way to create initial value and focus
on the minimum viable product. Some also successfully sell their
consulting or other activity related services such as clinical trial design
to generate cash inflow while establishing at the same time contacts
with future customers.
Although not conventional for every business, bootstrapping does build
great companies!”
Faris Sabeti, Vice President at Comission for Technology Innovation,
Switzerland
Ref: “About the Gaps in Early Stage Financing”, by Eugène Schön
http://www.ctistartup.ch/en/networks/cti-picks/2012/10/02/about-gaps-early-stage-financing/

6. Funding
sources
Start-Up
Grants/
Competitions
Research
Grants
Debt
financing
Hiring
grants
Tax
Refunds
Clients
Crowd
funding
How to
obtain
public
funding?
Alternatives to VC Money

7. Government
funding
Incorporated?
Innovation?
Full
Time
Employees?
Business
Plan?
Investment?
Sales?
- Cost sharing
- Risk sharing
Basic Table Stakes for Public Funding

8. Step 1 : Read a few books about your industry, get inspired….
… and learn from past successes and mistakes.
Case study: Steps to starting a company
and raising $1M (non-VC) funding.

9. Step 3 : Start a company
Find a suitable name
Incorporate
Create a logo, website,…
Put skin in the game!
Step 4 : Get noticed
Start networking
Get in the news…
Get letters of support
Start a funding road show (be selective)
Step 2 : Develop a business plan
Team, technology, total market
How you’re going to make money?
Identify funding requirements & sources of funding
Get help!

10. Funding Case Study
$1M total
financing
$720,000
public $$
$216K
CLD
$125K
IQ
$150K
CSBFP
$50K
SIJ
$30K
grants
(IRAP,
EQ)
$50K
SR&ED
$150K
CED
$150K
seed
Pre-
revenue
First
revenues
Working
capital
Equipment
loans
R&D Marketing
$1M
$130K
1st clients
5 months
7 months
YEAR 1 YEAR 2
(non-dilutive,
24 months)

11. Funding Case Study
$216
CLD
$50K
SIJ
YEAR 1
$125K
IQ
$150K
CSBFP
$541,000
$16,000
Young Promoter
grant, CLD
CLD
BMO/SIJ
BMO/IQ
BMO/IC
$525,000
debt
$200K, CLD, unsecured
24 month moratorium
$50K, BMO, personal loan
Loan guaranteed by SIJ
$125K, BMO loan
Loan guaranteed by IQ
$150K, BMO equipment loan
Loan guaranteed by Industry Canada
DEBT financing
CLD: Centre local de développement
SIJ: Société d’investissement jeunesse
IQ: Investissement Québec
IC: Industry Canada

12. Funding Case Study
YEAR 1
CLD
BMO
BMO
BMO
$525,000
debt
$200K, CLD
$50K, BMO/SIJ
$125K, BMO/IQ
$150K, BMO/IC
Advantages of DEBT financing
Non-dilutive, you maintain company ownership
Often comes with moratorium on repayment of
principal amount
Limited personal guarantees (gov.guaranteed
loans!)
Pressure from banks to perform, to generate
revenues, and respect financial ratio’s keeps you on
track with your business plan
Relatively inexpensive to obtain, quick decision
turnaround from financial institutions
Many solutions exist (incl. government)
‘Too often, young entrepreneurs dismiss debt financing as an option to fund their
business, thereby missing excellent opportunities to capitalize their business’

13. Funding Case Study: The First Year
$525,000 in loans
in year 1
How did I convince financial institutions and
banks to lend money to my start-up?

14. Pre-revenue First revenues
First
investments
YEAR 1
Maximized every seed $ (bootstrapping), diligent $$ management
Create early successes (first products & services on the market,
profit)
First products distributed by world-wide distributor (Traction!)
Leveraged in-house technical expertise and equipment to offer
value-added services to SMEs that were in need of those services
Hybrid business model: products and services – a winning combination
Key success drivers:
A year of intense bootstrapping…
that validated the B2B business model
Funding Case Study: The First Year

15. Bootstrapping Tips
Generate revenues (sales)
Maximize SR&ED
Conserve cash (there will be rainy days…)
Spend wisely (beware of success)
Keep retained earnings in the company to pay for R&D
Negotiate favorable payment terms (30, 60 days) with suppliers
Make sure you get paid in time by your customers
“No matter what your industry, going it alone can be a huge challenge. But when the struggle is
over and the business is running smoothly, you'll have the incomparable pleasure of knowing that
you did it yourself. Those feelings of control, ownership and accomplishment are often worth more
than all the VC dollars in the world”, Bootstrapping your Startup; http://www.entrepreneur.com/article/55776

16. • Shnarped is a social media platform that connects athletes to their
fans
• Funding history:
• 2011 - $35,000 co-founder cash and “sweat equity”
• 2012 - $120,000 family&friends equity
• 2012 - $50,000 IRAP financial contribution
• 2013 - $5,800 Get Youth Working grant
• 2013 - $380,000 additional equity from family, friends, angels
• 2014 - $352,000 Recoupable Investment Canada Media Fund
• 2014 - $80,000 SR&ED tax credit
• $1,022,800 total financing to date, with $487,800 from government
funding programs
Funding Case
Study

17. Where to find $$ for a company?
Grants, Loans , Loan guarantees, Tax credits, purchases by Fed.Gov,…
Crowd Funding

18. Start-Up Resources in Montreal
Help with business planning, coaching, mentoring, securing investment

19. A Closer Look at a Few Programs
Programs that fund R&D
NRC IRAP
SR&ED (R&D tax credits)
NSERC (college/univ. partnerships)
Mitacs (internships)
Programs that fund pre-commercialization
Build in Canada Innovation Program
Programs that fund marketing
Canada Economic Development Program
for Qc regions
Programs for start-ups
Futurpreneur
Société d’investissement Jeunesse
Fondation Montréal Inc
BDC Start-Up Loans

20. o Loans for up to $15,000 to start a
business. An additional $30,000 is
available through the Futurpreneur/
BDC Loan Program.
o Business planning support and
mentorship along with the loan.
o Loans are based on good character,
credit rating, and business plan
Futurpreneur

21. Société d’Investissement
Jeunesse
• Personal Loan Guarantee (up to $75K/promoter, $225K/company) to
start or buy a business, or to acquire a significant share of of a
company’s common stock
• Age limit: 18-40
• The personal loan must be fully invested in the company
• Recent businesses supported: Tactus, Frank & Oak, BiogeniQ, Lito
Green Motion
Fondation Montreal Inc
• Startup grants: $5,000 to $30,000 and support services
• Age limit: 18-35
• Over $400,000 in grants, and a value of $250,000 in support
services per year
• Application: 2 entrepreneurship contests (Feb, Sept)
• Recent laureats: ReelyActive, BiogeniQ, Heddoko,
Idénergie, Tactus Scientific, Beeye, LightSpeed,…

22. National Research Council– IRAP
INDUSTRIAL RESEARCH ASSISTANCE PROGRAM (IRAP)
o Type: Financial Contribution (non-repayable)
o Application Period: Open
o Competitive, based on level of technological innovation,
market potential, and management team
YOUTH EMPLOYMENT PROGRAM
o Type: Grant towards first year salary (up to $20,000)
o Application Period: Open
o Based on qualified candidates
BUSINESS INNOVATION ACCESS PROGRAM (BIAP)
o Type: Financial Contribution (non-repayable)
o 75%, up to $50,000
o Application Period: Open
o Technical or Business Services, offered by public labs
and certain Not-For-Profit organizations

23. Scientific Research & Experimental
Development Tax Credits
Revenue Canada & Revenu Québec
o Type: Refundable tax credit (35% fed, 30% prov)
o Application Period: Open
o Free pre-project eligibility reviews for first time
SR&ED users (pre-claim service) available
o R&D projects are assessed for eligibility based on
documentation and time tracking
o Really not that complicated to obtain

24. Research Grants - NSERC
NATURAL SCIENCE AND ENGINEERING RESEARCH
COUNCIL - ENGAGE GRANT
o Type: Grant ($25,000)
o Application Period: Open
o Research Project to solve an identified technical
challenge
o Based on technical challenge match with prof
IUSRA GRANT (Industrial Undergraduate Student
Research Award)
oType: Coop hiring grant ($4,500)
oApplication Period: Open
oHire an undergraduate science/engineering
student for 16 weeks
Minimum eligibility requirements for Start-Ups: 2 years in
existence, or 2 FTEs

25. Research Grants - Mitacs
MITACS ACCELERATE PROGRAM
o Type: 50% matching grant ($7,500)
o Application Period: open
o Scalable 4 months research internship by a
graduate/PhD student
o Based on project interest by prof/student
o Any (publishable) research topic/department
MITACS ELEVATION PROGRAM
o Industrial Post-Doc, up to 2 years
o Application: next call: Spring 2015
o $25,000 industry partner contribution
o Post-doc fellows receive stipend of at least $50K

26. Public Works and Government Services
Canada – BCIP
BUILD IN CANADA INNOVATION PROGRAM (BCIP)
o Type: Purchase of product/service (up to
$500,000)
o Aim: bridge the pre-commercialization gap
o Next application period: Summer 2015
o Competitive proposal process based on
level of innovation
o Technology Readiness Level: 7-9 (late-
stage innovative goods and services)

27. Canada Economic Development for
Quebec Regions Program
IMPROVE BUSINESS PRODUCTIVITY, INNOVATE,
MARKET OR EXPORT
– Up to 50% of authorized costs for SMEs
– Type: Repayable loan (SMEs)
• Usually unsecured
• Interest-free
• Possibility of moratorium (18-24 months)
– Application period: open
– Average project size: $250K (marketing), $300K
(business productivity)

28. Business Development Bank of Canada
BDC START-UP LOAN
SMEs in start-up or first 12 months of sales
To qualify for financing, you must:
– Demonstrate realistic market and sales potential
– Provide a solid business plan
– Have experience or expertise in your chosen field
– Demonstrate key personal characteristics of a successful
entrepreneur
– Have a competent management team
– Have a reasonable financial investment in the enterprise
– Provide personal and credit references

29. Jo Van Betsbrugge, PhD
Twitter: @jovbetsbr
Email:Jo.vanbetsbrugge@cnrc-nrc.gc.ca
Phone (514) 283-3040
National Research Council
Concierge Service
6100 Royalmount Avenue
Montreal H4P 2R2