by Jonathon Narvey, Special to SFU Business
How does a business idea go from start-up to long-term success? The New Venture BC seminar series, hosted at Simon Fraser University’s Segal Graduate School of Business, gives a crash-course in entrepreneurship to the British Columbia business community at large – as well as to SFU Business students and alumni.
SFU Business was a founding sponsor for NVBC, establishing it in 2000 to help encourage entrepreneurship in B.C.’s technology sector. Today, the non-profit BC Ventures Society administers and operates the competition, with more than 100 B.C. business leaders acting as mentors and judges every year.
More than 1,100 aspiring B.C. entrepreneurs have entered the competition. Winners have built companies raising more than $67 million in financing and creating more than 500 jobs for British Columbians.
These include the likes of 2008 winner Saltworks Technologies – founded by two SFU Management of Technology MBA graduates, Ben Sparrow and Joshua Zoshi – which is delivering to the desalination industry a revolutionary, affordable and energy-efficient method for producing fresh water. According to Zoshi, the New Ventures BC competition forced the duo to think about crystallizing their business plan to accompany their breakthrough technology – an idea that The Economist magazine has referred to as “an ingenious way of using the heat of the sun to drive the (desalination) process.”
Presenters this year have included Mike Volker, Director of SFU’s University Industry Liaison Office, Dave Thomas of technology consultancy Rocket Builders, and Tanner Philp of Lions Capital. The seminars have also featured past competition winners such as Elisabeth Maurer of LightIntegra Technology.
One key theme of this year’s seminars was planning to succeed. When you put together your business plan, according to seminar presenters, don’t be skimpy with the details.
“Many companies can describe where they want to be in five years, but less can describe what they’re going to do to achieve this in the next year and a half,” says Rocketbuilders’ Thomas. “To plan well before you go to market, you have to have good market research.”
So what do you focus on? First, “how big is the marketplace?” Thomas says. “Is it growing? What are the trends? How do you divide it into segments?”
Understanding the customer pain that your product will solve is also key. And get a handle on how people normally buy your kind of product.
What about capital? How do you get investors to show you the money?
First of all, maybe you don’t need pesky investors getting their hooks into you after all. “Bootstrap,” says Vancouver-based angel investor Dr. Basil Peters. Dr. Peters was an Adjunct Professor of Engineering Sciences at SFU from 1985 to 2000. “The most spectacular start-up business models started with no capital. Most companies today really don’t need very much capital.”
“Plenty of Fish got started in an apartment,” he points out. “MetroLyrics (the online lyrics database founded by SFU Business EMBA graduate Alan Juristovski and undergraduate Milun Tesovic) started with no capital and is probably worth tens of millions of dollars. The world has changed. You’ve got resources even if you’ve got no money.”
If you do need to raise capital, start with those closest to you – but don’t sugarcoat it, says Philp of Lions Capital. “I’ve been very up front with family and friends. I tell them there’s a very high likelihood you’re going to lose every dollar you give me. Because I’m honest up front, I can talk to grandma after, if the value does indeed go to zero.”
Next, you can start looking for angel investors who can also provide expertise and critical connections. Venture capital companies have significant finances, but they’ll want a big cut of your profits and control of the company.
“Different sources of financing are compatible with different exit strategies,” Peters cautions. “$10 million to $20 million exits are not possible if you get money from VCs… Making a mistake about this can cost you the entire company.” Your exit strategy will guide your market research, business plan and funding process, he notes.
Many firms led by SFU alumni have used these types of lessons to get past the start-up stage to meet real success.
New Ventures BC Finalist Lungpacer Medical has also gone on to win further accolades, including an emerging technology award that came with a cash prize of $25,000.
Lessons learned through the NVBC competition will continue to help entrepreneurs turn their own new ventures into rising stars.
The 2010 winners of the New Ventures BC competition will be announced in September, with an awards ceremony held at the Segal Graduate School on September 23.
Learn more about New Ventures BC and upcoming events at: http://www.newventuresbc.com/