Jo Van Betsbrugge, PhD
Conseiller en Innovation - Innovation Advisor
DES SOLUTIONS EFFICACES ET RENTABLES POUR VOTRE START-UP INTELLIGENT AND COST-EFFECTIVE SOLUTIONS FOR YOUR START-UP CEIM, 27 FÉVRIER 2015
About NRC Concierge Service
Intelligent and Cost-Effective
Solutions for Your Start-Up
Overview of Funding
Programs for Tech Companies
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About the NRC
Concierge Service
Launched in December 2013
Offered by NRC – Industrial Research Assistance program
Free personalized guidance and advice on government
innovation support programs
13 Innovation Advisors across Canada (3 in Qc)
700 client engagements in Quebec since launch
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Marketable Products
IDEA
Which support programs to
use to turn a novel idea into a
marketable product?
FEDERAL PROVINCIAL REGIONAL
Partnership Model: 40+ partners, 100+ programs & resources
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Our Client Base
Innovative* companies with less than 500
employees (SMEs)
Any stage of the company life cycle (start-
up, pre-revenue, commercial)
Any stage of technology or product
development (prototype, testing, validation,
manufacturing, < 500 employees)
Seeking funding, advice, expertise, facilities
etc.
*An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations. The minimum requirement for an innovation is that the product, process, marketing method or organizational method must be new (or significantly improved) to the firm. (Oslo Manual definition, 2005)
Helping SMEs grow their business through customized guidance,
advice, and referrals to the most relevant programs and services.
Client Contact Centre
Innovation Advisors
(13 located across
Canada)
Partner Programs and
Resources (40+ federal and
provincial partners)
How Concierge Service Works
1-855-53
GUIDE
Concierge
Website • Summary Program
Information
• Contact Information
http://concierge.portal.gc.ca
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Service de guide-expert
NRC Concierge Service Success Story
o Facilis Inc, Montreal: $400,000 in financing obtained through Concierge Service
o "Thanks to the funding we obtained after working with the Concierge Service, we not
only avoided wasting our time searching for support, but we also maximized our
efforts to meet our business objectives and continue to grow through innovation.“
Alain Néron, President Facilis Inc.
http://www.nrc-cnrc.gc.ca/eng/irap/success/2015/facilis.html
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Case Studies on How to raise $1M in
Non-Dilutive Funding for Your Start-Up.
Intelligent and Cost-Effective
Solutions for Your Start-Up
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Founders, friends, family, crowd funding, angels
Government programs
Banks
VCs
Funding Options for Start-Ups
$1,000-$50,000
$1,000-$500,000
$50,000-$M
$1M+
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Founders, friends, family, crowd funding
Government programs
Banks
VCs
Funding Options for StartUps
Non-dilutive
Dilutive
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o There are 1 million SMEs in Canada
o Not all *SMEs are Ventures
o Most SMEs will never need or receive
VC funding
*Small and medium-sized business: 500 employees or less
Raising $1M without VC Money
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#VC Deals and $ by Province - 2014
Source: Canadian Venture Capital & Private Equity Association
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Funding
sources
Start-Up Grants/
Competitions
Research Grants
Debt
financing
Hiring
grants
Tax
Refunds
Clients
Crowd
funding
Alternatives to VC Money
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Diagnosis
Why companies don’t get funding
No fundable idea
No execution on idea
Lack of innovation
Services without added value
Lack of commitment
Lack of determination
Marginal niche
No business plan
Single founder
No employment created
Running out of cash
Typical
pain
points
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Diagnosis
Why companies do get funding
No fundable idea
No execution on idea
Lack of innovation
Services without added value
Lack of commitment
Lack of determination
Marginal niche
No business plan
Single founder
No employment created
Running out of cash
Fundable idea
Prototype built
Innovation
Prof/sci services
Full time employed
Execution
Sizeable market
Business plan
Dedicated team
Employment creation
Revenues
Why companies don’t get funding
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Minimal Viable Product (MVP)
Clear monetization plan
Team : tech + business ICT Industry
Funding
Challenges
Funding Case Study #1
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• 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 public
funding programs
Funding Case
Study #1
Founders demonstrated commitment, determination
and executed on their idea Slide 18 of 49
Life-Sciences
Industry Funding
Challenges
R&D intensive
High risk
Requires vast amount of $$
Time-to-market 10+ yrs
VCs come in at Phase II
No funding for early R&D
Very few funders in Canada
New funding models have
been established in Quebec
collaborative partnerships
CRO/CMO: revenue-
generating service providers
Funding Case Study #2
Step 1 : Read a few books about your industry, get inspired….
… and learn from past successes and mistakes.
Funding case study #2: Ten steps to raising $1M in non-dilutive funding.
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Funding Case Study #2
$216K ?
$125K
?
$150K
? $50K
?
$30K
? $50K
?
$150K
?
$150K
?
$1M
$130K
?
(non-dilutive,
24 months)
Steps 2-10
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Funding Case Study #2
$216K CLD
$125K
IQ
$150K
CSBFP $50K
SIJ
$30K
grants
(IRAP,
EQ)
$50K
SR&ED
$150K
CED
$150K
equity
Pre-revenue
First revenues
Working capital
Equipment loans
R&D Marketing
5 months
boot-
strapping
YEAR 1 YEAR 2
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$1M total financing
$720,000 public $$
$216K CLD
$125K
IQ
$150K
CSBFP $50K
SIJ
$30K
grants
(IRAP,
EQ)
$50K
SR&ED
$150K
CED
$150K
equity
$1M
$130K
1st clients
YEAR 1 YEAR 2
(non-dilutive,
24 months)
Initial
value
created
Funding Case Study #2 Pre-
revenue First
revenues Working capital
Equipment loans
R&D Marketing
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Banks
Gov’t
1st
partner
FFF
Funding works like a gear
You want to have enough
money at each gear to
reach the speed required
to get into the next one
FFF
$
$$
$$$ $$$$
equity
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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 Commission 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/
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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
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
Often comes with moratorium on
repayment of principal amount
Limited personal guarantees (gov’t loans)
Pressure from banks to perform 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’
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Funding Case Study: The First Year
$525,000 in loans
in year 1
Reasons why this start-up could
borrow $500K in Year1?
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Pre-revenue First revenues First
investments YEAR 1
Maximized every seed $ (bootstrapping), diligent $$ management
Create early successes (first products & 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
Funding Case Study #2 - Summary
Traction (sales)
Create initial value
Equity
Innovate
Government funding
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Start-Up Resources in Montreal
Help with business planning, coaching, mentoring, securing investment
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A High-Level Overview of
Some Funding Programs
for (Tech) Companies
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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
o Need prototype
o Age limit: 18-39
Futurpreneur
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o CLD-CDEC network reorganized into a new model
o 9 CLDs and 9 CDECs in Montreal to merge into 6 organizations
o Montreal budget for support to entrepreneurship: $7.5M (down from $16M)
CLD - CDEC
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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 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,…
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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 Age limit: 30
o Based on qualified candidates
BUSINESS INNOVATION ACCESS PROGRAM (BIAP)
o Type: Financial Contribution (non-repayable)
o 75%, up to $50,000
o Technical or Business Services, offered by publicly funded research organizations and certain not-for-profit organizations (e.g CEIM, CRIM)
o Application Period: Open
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Scientific Research & Experimental
Development Tax Credits
Canada Revenue Agency & 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 SR&ED tax credits can be financed
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Investissement QC Financing of Refundable Tax Credits
Up to 75% of total anticipated amount of
refundable tax credits
Minimum financing of $50,000 for SR&ED and
$20,000 for other tax credits
UNIQ Financing Starting at $50,000
Loan, loan guarantee or quasi-equity financing
Up to 100% of project cost
Financing of Capital Assets or Working Capital
NEW: Créativité Québec – for innovation projects (IQ/MEIE) Budget: $150M over 3 years
Loans or loan guarantees ($50K to $5M)
Projects: technology acquisition, process improvement, product/process
development
The program favors partnerships between universities, research centers & SMEs
Project requires investment from private sources (20% min) of project cost
Repayment of capital potentially deferred for 3 yrs
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Research Grants - NSERC
NATURAL SCIENCES 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)
o Type: Coop hiring grant ($4,500)
o Application Period: Open
o Hire an undergraduate science/engineering student
for 16 weeks
Minimum eligibility requirements for Start-Ups: 2 years in
existence, or 2 FTEs
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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 Open to all disciplines and all industry sectors, projects :
manufacturing, technical innovation, business processes, IT,
social sciences, design, and more
MITACS ELEVATION PROGRAM
o Industrial Post-Doc, up to 2 years
o Application: next call: Spring 2015
o $25,000/yr industry partner contribution
o Post-doc fellows receive stipend of at least $50K
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ICTC CareerConnect – Connex’Carrière
• Program funded by the GoC Youth Employment
Strategy
• Wage subsidy of $18,000
• Eligible unemployed or underemployed graduates
• 3-month minimum term
• All funds for CareerConnect 2014-2015 have been
allocated and ICTC is currently not accepting new
applications. To receive information on future
programs please subscribe to the ICTC mailing list
http://www.ictc-ctic.ca/?page_id=1699
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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)
Example: Idénergie –Portable water turbine
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Public Works and Government Services
Canada – BCIP
PRIORITY AREAS OF BCIP PROGRAM
o Standard Component
o Environment
o Safety and security
o Health
o Enabling technologies
o Military Component
o Artic and maritime security
o Command & support
o In-service support
o Protecting the soldier
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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), $500K
(business productivity)
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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
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Industry Canada
Canada Small Business
Financing Program - Loan-loss sharing program between
federal government and private lenders
- Asset-based financing, up to 90% of cost
- Up to $350K (equipment, leasehold
improvements)
- Up to $500K (real property)
- Limited personal guarantees
142,000 businesses supported since 1999
$1 billion in loans each year
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Canada Media Fund
This is a $34 million dollar fund to support digital content and application
software (no hardware) that is innovative, leading-edge and interactive.
Goal: Support innovation in content, technology and/or business models.
Examples of types of projects supported : Interactive content (websites,
portals, e-books, interactive web series), games (console, web, mobile),
apps, software and enabling technologies.
There are 3 phases: Production, Development and Marketing
• Development phase applies up until you have released a public beta.
• Production phase is to take the product to full production and release.
• Marketing phase is to fully market the product.
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Canada Media Fund
o The Funding - In development: repayable advance. In production:
recoupable investment. In marketing: recoupable advance.
o Max contribution per production project: 75% of eligible costs or $1 million,
whichever is less (max: $400K in development and marketing programs). A
minimum of 75% of costs must be Canadian. Read through: http://www.cmf-fmc.ca/documents/files/programs/2014-
15/guidelines/2014-15_exp_guidelines.pdf
o The Decisions are made through a selection process, with a national and
international jury of experts, and according to an Evaluation Matrix. It is
important to understand the process and requirements well: http://www.cmf-
fmc.ca/funding-programs/experimental-stream/
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Jo Van Betsbrugge, PhD
Twitter: @jovbetsbr
Email:[email protected]
Phone (514) 283-3040
National Research Council
Concierge Service
6100 Royalmount Avenue
Montreal H4P 2R2
Questions regarding government support programs?
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