`   Different Forms of   Entrepreneurship   Presented by:   Tony Redpath   Business Advisor, MaRS Discovery District   15 ...
Three basic questions:        What   does my business look like ?        What   resources do I need?        How   do I ...
Overview        Different   types of business        Where   do they fit into the rest of the world        How   do you...
Technology Commercialization                                        KNOWLEDGE                                    Universit...
Business types - Consulting        You           provide advice, based on your specialized        knowledge              ...
Technology Commercialization                                        KNOWLEDGE                                    Universit...
Consulting …. Cont’d        Can   start as a one-person business        Mayhave a technical, management, or        marke...
Business types - Consulting        Q:   How much should I charge?       * A: What is the client’s alternative cost?      ...
Business types: Service        You   provide a service to existing businesses                                            ...
Technology Commercialization                                        KNOWLEDGE                                    Universit...
Service business…. Cont’d        Technical service businesses often provide        analytical services        May   prov...
Business types: Product        Youhave real article ( pharmaceutical        compound, medical device, consumer        pro...
Technology Commercialization                                        KNOWLEDGE                                    Universit...
Product …. Cont’d        Examples range from cottage industry craft        producers up to General Motors        Capital...
Types of Financing          Debt            You borrow from someone, using some asset as             security, an amount...
The Lemonade Stand Example       Assume you’re 8 years old and you need        $20 to set up a lemonade stand             ...
Sources of Debt Financing        You   – your mortgage        You   – your credit cards        The   3 F’s – Friends, F...
Sources of Equity Financing   The   3F’s again – Friends, Family and Fools   Angels   (aka high net worth individuals)  ...
Special Financing Sources    Proof   of Principle / Idea to Innovation        http://www.researchnet-         recherchen...
The Financing Life Cycle                                                          Public Markets                          ...
The Financing Life Cycle                                                          Public Markets                          ...
The Financing Life Cycle           R is k                                               a n t:                            ...
What do Financing Sources Look       For ?                 Technology Risk                 • Stage of Development         ...
Technology Risks   Stageof Development (concept ? proof of concept ?   prototype of product)   Product   development pat...
Due Diligence and Valuation       Criteria                                  Technology Risk                               ...
Intellectual Property Risks   Nature    of the invention   Scope    of the invention   IP   form: Patent, know-how, sof...
Market Risks        Market   size, dynamics and growth potential        Route   to market, access, scalability        U...
Execution Risk    Management     vision for the company    Management     leadership ability    Commitment     and driv...
Forms of entrepreneruships
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Forms of entrepreneruships

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Forms of entrepreneruships

  1. 1. ` Different Forms of Entrepreneurship Presented by: Tony Redpath Business Advisor, MaRS Discovery District 15 November 2007 Slide 2MaRS
  2. 2. Three basic questions:  What does my business look like ?  What resources do I need?  How do I fit into the rest of the world? Slide 3MaRS
  3. 3. Overview  Different types of business  Where do they fit into the rest of the world  How do you finance your business  What factors do investors look at Slide 4MaRS
  4. 4. Technology Commercialization KNOWLEDGE Universities / Hospitals Government Labs PATENTS (Novel, Useful, Non-Obvious) Company II R & D Project Engineering Project Concept Production Sales Lab Prototype Engineering Prototype Marketplace R & D Project Engineering Project Concept Production Sales Lab Prototype Engineering Prototype Company I Slide 5MaRS
  5. 5. Business types - Consulting  You provide advice, based on your specialized knowledge Slide 6MaRS
  6. 6. Technology Commercialization KNOWLEDGE Universities / Hospitals Government Labs PATENTS (Novel, Useful, Non-Obvious) Company II R & D Project Engineering Project Concept Production Sales Lab Prototype Engineering Prototype Marketplace R & D Project Engineering Project Concept Production Sales Lab Prototype Engineering Prototype Company I Slide 7MaRS
  7. 7. Consulting …. Cont’d  Can start as a one-person business  Mayhave a technical, management, or marketing focus  Oftenstay small, but consulting engineering firms can be large (e.g Hatch Associates)  Oftenoperate via a virtual network of consultants  Need liability insurance  Capital costs low Slide 8MaRS
  8. 8. Business types - Consulting  Q: How much should I charge? * A: What is the client’s alternative cost? Slide 9MaRS
  9. 9. Business types: Service  You provide a service to existing businesses Slide 10MaRS
  10. 10. Technology Commercialization KNOWLEDGE Universities / Hospitals Government Labs PATENTS (Novel, Useful, Non-Obvious) Company II R & D Project Engineering Project Concept Production Sales Lab Prototype Engineering Prototype Marketplace R & D Project Engineering Project Concept Production Sales Lab Prototype Engineering Prototype Company I Slide 11MaRS
  11. 11. Service business…. Cont’d  Technical service businesses often provide analytical services  May provide custom clinical trials  Classic IT service providers  Can be very small or very large  Capital costs can be quite high Slide 12MaRS
  12. 12. Business types: Product  Youhave real article ( pharmaceutical compound, medical device, consumer product….) that you wish to take to the market Slide 13MaRS
  13. 13. Technology Commercialization KNOWLEDGE Universities / Hospitals Government Labs PATENTS (Novel, Useful, Non-Obvious) Company II R & D Project Engineering Project Concept Production Sales Lab Prototype Engineering Prototype Marketplace R & D Project Engineering Project Concept Production Sales Lab Prototype Engineering Prototype Company I Slide 14MaRS
  14. 14. Product …. Cont’d  Examples range from cottage industry craft producers up to General Motors  Capital needs vary widely, but there will usually be a need for at least working capital  “Mercedes in the driveway” vs. high growth Slide 15MaRS
  15. 15. Types of Financing  Debt  You borrow from someone, using some asset as security, an amount that will have to be repaid  Equity  You sell a piece of your venture to someone in exchange for an investment in the venture  Bootstrap  You self-fund by using the profits of your business to grow the business Slide 16MaRS
  16. 16. 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 Slide 17MaRS
  17. 17. Sources of Debt Financing  You – your mortgage  You – your credit cards  The 3 F’s – Friends, Family and Fools  Banks  Can lend to you (e.g. line of credit) or to your venture  Lend against assets or receivables  Venture Debt funds Slide 18MaRS
  18. 18. 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 19MaRS
  19. 19. Special Financing Sources  Proof of Principle / Idea to Innovation  http://www.researchnet- recherchenet.ca/rnr16/viewOpportunityDetails.do?pro g=205&view=search&terms=proof+of+principle&org= CIHR&type=AND&resultCount=25NSERC Idea to Innovation (I2I) Program  http://www.nserc.ca/professors_e.asp?nav=profnav&l bi=b4  NRC - IRAP  http://irap-pari.nrc-cnrc.gc.ca/main_e.html Slide 20MaRS
  20. 20. The Financing Life Cycle Public Markets Venture Capital Seed Funds t en Angels m st ve Grants s In le Sa R is k Concept Start-up Growth Expansion Slide 21MaRS
  21. 21. The Financing Life Cycle Public Markets Venture Capital Seed Funds t en Angels m st ve Grants In R is k s le Sa Concept Start-up Growth Expansion Slide 22MaRS
  22. 22. The Financing Life Cycle R is k a n t: f in e n ce lf - t m Se ves In s Grants le Sa Concept Start-up Growth Expansion Slide 23MaRS
  23. 23. What do Financing Sources Look For ? Technology Risk • Stage of Development • Impact & Application • Sustainable Advantage Slide 24MaRS
  24. 24. Technology Risks  Stageof Development (concept ? proof of concept ? prototype of product)  Product development path (costs and “risks”)  Technology impact  Scope of application  Competitive technologies  Disruptive technologies  Reliance on infrastructure  Ease of scale-up, technology transfer, copy  Manufacturability and costs Slide 25MaRS
  25. 25. Due Diligence and Valuation Criteria Technology Risk • Stage of Development • Impact & Application • Sustainable Advantage IP Risk Market Risk • Nature and Scope • Size and Growth • IP Form • Dynamics • Ownership • Competition • Enforceability • Customers • IP Building • Distribution Channels • Freedom to Operate Execution Risk • Reputation / Leadership • Commitment • Market Knowledge • Experience Slide 26MaRS
  26. 26. Intellectual Property Risks  Nature of the invention  Scope of the invention  IP form: Patent, know-how, software  Ownership of IP - Lingering rights of funding agencies or students  Level of IP protection – NA, worldwide  Competitive research activity, patent activity, availability of Licensees  Prior disclosure - publications or conferences  Enforceability Slide 27MaRS
  27. 27. Market Risks  Market size, dynamics and growth potential  Route to market, access, scalability  USPs of the products or services  Nature of the customers  Lead customers  Market or industry drivers  Competitive landscape and profit margins  Regulatory barriers or opportunities Slide 28MaRS
  28. 28. Execution Risk  Management vision for the company  Management leadership ability  Commitment and drive  Recognized technology expertise  Knowledge of the market, networks  Skills required to move the technology through all stages of development and product launch  Reputation in the marketplace Slide 29MaRS

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