2. `
Business Development and
Entrepreneurship Basics
Presented by:
Tony Redpath & Allyson Hewitt
Vice President, Partner Programs
Director, Social Entrepreneurship
MaRS Discovery District
6 October 2010
Slide 2
MaRS
4. Start with the Basics
1) Why do I want to start this business?
• What is my motivation?
• Do I want to make money and make a difference?
2) What resources do I need?
• Basement vs. Corporate Office vs. Shared Spaces
3) How do I fit into the rest of the world?
• Is my service/product unique?
4) What is my business model?
• For profit, non profit, hybrid model
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5. The Organizational Spectrum
Non-profit
that
generates
revenue Social Traditional
Traditional Purpose Corporation
Charity Social Business
Enterprise Corporate
Social
Responsibility
(CSR)
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6. Types of organizations: CONSULTING
Key Characteristics:
Multiple Participants, Diverse focus, Size
Examples
– Hatch Associates
– Aperio
Benefits & Risks of Model
Low Capital Costs & Minimal Input
Liability Insurance; lack of support
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MaRS
8. Types of organizations: SERVICES
Key Characteristics:
Specialty business serving existing businesses
Examples
Benefits & Risks of Model
On-line software as a service
Capital Costs can be high: labs services: servers
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MaRS
13. Show me the Money….
Forms of Financing
Debt - borrow from someone, using an asset as
security; rate & time period to be negotiated
Equity - sell a piece of your venture to someone in
exchange for an investment in the venture
Bootstrap - self-fund and reinvest all profits for
growth
Grants – foundations/government funding
Hybrid Models – important to both enterprise types
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MaRS
14. The Lemonade Stand Example
Assume you’re 8 years old and you need
$20 to set up a lemonade stand
Revenues Debt 50:50 Equity
Rain $10 lender loses $10 partner loses $15
entrepreneur gets $0 entrepreneur gets $5
Cloud $30 lender is even partner loses $5
entrepreneur gets $10 entrepreneur gets $15
Sun $50 lender is even partner makes $5
entrepreneur gets $30 entrepreneur gets $25
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MaRS
15. The Lemonade Stand Example II
Assume you’re 8 years old and you need
$20 to set up a lemonade stand
Revenues Debt 50:50 Equity
Rain $10 lender loses $10 partner loses $15
entrepreneur gets $0 entrepreneur gets $5
Cloud $30 lender is even partner loses $5
entrepreneur gets $10 entrepreneur gets $15
Sun $50 lender is even partner makes $5
entrepreneur gets $30 entrepreneur gets $25
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MaRS
16. Where can I get debt financing?
YOU
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17. Sources of Equity Financing
The 3F’s again – Friends, Family and Fools
Angels (aka high net worth individuals)
Generally like to invest in areas that they have worked
in or are comfortable with
Can add valuable hands-on experience
http://www.angelinvestor.ca/
http://www.mapleleafangels.com/186103_186104.html
Venture Capital Funds
Different funds invest at different stages in the growth
of a company
http://www.cvca.ca/ Slide 17
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18. Special Financing Sources
Proof of Principle / Idea to Innovation
www.ResearchNet.com
www.nserc-crsng.gc.ca/index_eng.asp
NRC - IRAP
http://irap-pari.nrc-cnrc.gc.ca/main_e.html
Foundations:
Trillium Fund - www. TrilliumFoundation.org
Gates Foundation –
www.gatesfoundation.org Slide 18
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19. The Financing Life Cycle
Public Markets
Venture Capital
Seed Funds
Angels
Grants
Risk
Concept Start-up Growth Expansion
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20. The Financing Life Cycle
Public Markets
Venture Capital
Seed Funds
Angels
Grants
Risk
Concept Start-up Growth Expansion
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21. The Financing Life Cycle
Risk
Grants
Concept Start-up Growth Expansion
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22. How do I secure financing/support?
Investors/backers
are concerned about
risk associated with
any start-up
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23. What are the Risks?
Technology Risks
Stage of Development (concept proof of concept
prototype of product)
Product development path (costs and “risks”)
Competitive technologies
IP Risks
Nature of the invention
Scope of the invention
IP form: Patent, know-how, software
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MaRS
24. Risks Continued
Market Risks
Market size, dynamics and growth potential
Route to market, access, scalability
USPs of the products or services
Execution Risk
Knowledge of the market, networks
Skills required to move the enterprise through all stages
of development
Reputation in the marketplace
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MaRS
25. Risks for the Social Venture
Mission Drift
Balancing a Social and Financial Bottom Line
Execution Risk
Knowledge of the market, networks
Skills required to move the enterprise through all stages
of development
Reputation in the marketplace
Lack of Awareness
This is an emergent area and it is tough to get people to
get it Slide 25
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