Jo Van Betsbrugge, PhD

Conseiller en Innovation - Innovation Advisor

Jo.vanbetsbrugge@cnrc-nrc.gc.ca

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:Jo.vanbetsbrugge@cnrc-nrc.gc.ca

Phone (514) 283-3040

National Research Council

Concierge Service

6100 Royalmount Avenue

Montreal H4P 2R2

Questions regarding government support programs?

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