Les défis de l’entrepreneurship Les étapes pour réussir ... · Les étapes pour réussir son projet d’entreprenariat . Gilles Bussières, ing., ... Famille, amis, Crowdfunding

Les défis de l’entrepreneurship Les étapes pour réussir son projet d’entreprenariat

Gilles Bussières, ing., V.P. exécutif, CQVB École d’été, FAST, Summer school

29 mai 2013

Plan

• Context for the presentation • CQVB at a glance • Why starting a business? • Write your business plan • Market your business plan • Some final recommandations

Context for the presentation

• You have just got a postgraduate diploma in sciences or engineering

• You are the inventors of a new technology (product or process)

• You are plannng to start-up a technological company with 1 or 2 associates

• You do not have secured your IP yet SO • I will try to give you some tips

– Based on CQVB experience with start-ups – From an investor perspective (CQVB financial partners)

CQVB at a glance

To enhance the ability of SMEs

to innovate and to foster technology transfer

in Quebec’s bio-industry sector

Our mission

Liaison and Technology Transfer Centre (Non profit organization)

Our clients

Our services

Strategic Information Cutting edge technology, innovative products and processes, forthcoming trends, technology issues and challenges…

Fostering Relationships/ Networking & Events Presentation of project research and industrial innovations (Québec & international experts)

Our services

Support for SMEs / Innovation Projects

Validation studies : to evaluate scientific, technical or commercial feasibility of an innovation project. 80 % of costs assumed by CQVB and CNRC-IRAP (8 000 $ max.)

Expert panels: recommendations, orientations or warnings to help better define an innovation project. 80 % of costs assumed by CQVB and CNRC-IRAP (7 000 $ max. )

Entrepreneurial coaching and financing for a technological project involving a research center and a SME (loan up to 250 000 $)

Improve your technology knowledge

Discover market opportunities and diversify your products

Develop strategic partnerships

Expand your network of technological and business contacts

Enjoy discount on our services

135 organizations 236 members

March 2013

100 start-ups supported since 1996

Therapeutics / medical devices Nutraceuticals/cosmeceuticals Animal health and nutrition Industrial bioproducts /cleantech Marine biotech

Exemples of start-ups

• Asmacure • Advitech • Prophagia • Colarôme • Innovactiv • Prevtec • Medicago • CO2 Solutions • Laboratoire M2 • Emovi • AbBiotech • Biomod

Why starting a company?

Creation of a business

4 key elements: 1. An entrepreneur 2. Who has identified a business opportunity 3. In a sound market 4. And has the essential ressources to succeed

Starting a biotech?

Why?

When?

Why ?

For bad reasons : 1. To be the owner of a business ? 2. To be a CEO? 3. To have funds to support his Research program ? 4. To valorize his technology (technology push)? 5. To become rich quickly?

Why ?

For better reasons : 1. To answer an unmet market need (market pull) 2. To create value for all shareholders 3. Because I am really an entrepreneur 4. Because the technology has such a potential that it could

be the basis of a new business

When?

• Now or after a few years of experience ?

• A personnel (and family) decision: – Important and long term commitment – Request time, money, energy and passion – Could be a wonderful but risky experience

Am I really an entrepreneur ?

?

Frequent false beliefs of technological entrepreneurs

• I did a great technological invention, so the most difficult is done! Not necessarily!

• My technology has many potential applications, so my market is

large!

Not necessarily!

• My technology respond to an unmet need, so commercialization will

be easy!

Not necessarily!

• Investors are looking for great inventions like mine, so funding will be

easy!

Not necessarily!

Writing a Business Plan

Essential tools to communicate

1. A thorough Business Plan 2. A PPT (20-30 slides) 3. An Executive Summary (1-2 pages) 4. An Elevator Pitch (30 seconds/60 words)

Managing of a company is…..

• To plan • To organise • To run • And to control… …the activities essential for the success of the the entreprise

and the entrepreneur Writing a business plan is planning!

Why a business plan?

• Planning exercice very useful for the founders first!! • Objectives:

– To simulate the life of the company over 3-5 years – To demonstrate the project viability – To evaluate and minimize the risks

• Based on a series of assumptions more or less accurate • Internal management tool • Communication tool with third parties: investors, partners,

employees, etc. • Work in progress

Section 1- Mission statements

• What the company will do? • What its product will be? • What is company vision? • Provides useful information! • Does’t sound like an infomercial!!!

Section 2- The opportunity

The reasons for starting the company and…. for believing that it can succeed

• How will the company efficiently generate a profit? • What product are you selling? • What is the market for your product? • Who are your customers? • What is the size and growth rate of this market? • What criteria do customers use to determine which product to

buy? • Why is competition not a significant barrier?

Section 3-The Technology

• Describe the technological aspects of your technology…. • So experts will be able to appreciate how it works and

appreciate your credibilty • Interested investors will most likely require that you disclose

every thing… • Sign a Confidential Disclosure Agreement (CDA) first!!

Section 4-The Business Model

Describes how you expect to make money with your product or service

• How much will the product will be pricing and why? • How and when the customers or partners pay for the

products: up-front, milestones, royalties, sales revenues • How much will development cost? • What will the company need to operate (cash,

ressources,etc.)? • How will the company attract customers/partners • How will manufacturing be handled??

4 «business model » biotech

● Academic Intrapreneurship ● Large capitalisation (> 15 M$)

The therapeutic biotech The medtech biotech « High End »

● Petites et moyenne capitalisation (few M$)

The medtech biotech The lab product biotech The nutra/cosme biotech The agrifood biotech The services biotech

● Pop & Mom Business (few k$)

VC Driven

Entrepreneur Driven

Entrepreneur Driven + Anges - VCs - Capital

de développement

KOL Driven

The entrepreneur model

1. Develop your technology at the university as much as you can

2- Launch the company with Boot strap (Love Money, grants)

3- Have something to sell quickly (R&D services, licence « non-core »).

4- Make a commercial proof with your first clients

5- Fund the company to launch the commercialisation

Section 5-The competition

There is always competition…even the status quo is competition! • Who are your competitors? • How is your product better? • If there are no competitors, why have other companies not

pursued your target market? • Why would a a customer purchase your product? • How will competitors respond to your entering the market and

will you respond in turn?

Exemple of Prophagia inc. Unmet need vs real market

• Hospital Spin-off • Founders: Nutritionists • Technology: texturisation of solid food • Products: 50 ready-to-serve frozen meals • Advantage: excellent quality, no equivalent on the market • Unmet need: response to undernutrition due to disphagia • Real market:

– End user: old persons suffering from disphagia – Customer:

• Public Home Care • Private Home Care • Inviduals living at home

• Challenge: commercialization

Section 6-The Intellectual Property

• What patents protect the technology, to whom do they belong, when do they expire, and how can they be used to block potential competitors?

• What patents exist that may block you from using your own technology, to whom dothey belong, when do they expire, and will you be able to licenses them ( Freedom to operate FTO)?

• If the company does not yet have the IP it needs, what is the licensing/filing strategy?

• If IP is not a critical component of the business, explain why (e.g. sometimes, getting to market first with a non-proprietary product could be a good strategy)

Section 6-IP

• Biotech innovation relies heavily on patents and trade secrets • Patent

– A public disclosure of an invention in exchange for 20 years of protection from the application filing date

– Most common types: • A composition of matter patent • A utility patent

– Criteria for patent issuance • Useful • Novel • Non-obvious • Enablement

– Claims – Prior art

• Trade secret: could be a valuable strategy (mature companies)

Section 6-In-licensing from universities

• Is often the principal asset of a start-up • Typical terms:

– Option (12-18 months) to sign a license – Up-front payment – Milestones payments – Royalties payments on sales – Patent fees – Minimum conditions

• Is an iterative negociation process • Could be long, could be frustrating • Should be a win-win deal • Investors will request it as a pre-funding condition • University will evaluate if its spin-off has the capacity to create

enough value

Section 7-Regulation affairs

• Identify the necessary certifications for your products • Describe the critical path to obtain them • Evaluate carefully the time and the cost • Are more and more complex processes • Do not hesitate to consult experts • Could badly impact your company if not done properly • Could give you a niche market, an edge on your competitors

• Very often underestimated

Section 8-Exit strategy & comparables

• Keep in mind that sooner or later your investors and other shareholders will want to sell their stock in order to profit from their investment.

• Discuss potential exits: IPO, M&A, Management buy-out, etc. • Project what your company will be worth based on the

valuation of few companies that are currently at the same stage that your company will advance in a few years

• Consider only effective comparable (similar products in similar markets).

• Avoid referring to the exceptional cases.

Section 9-People

• Include short biographies of the management team, scientific

advisors and directors (resume in appendix) • State how each one will contribute to the company’s

operations and success (organigram, functions, etc.) • Keep in mind that people are the primary building block of a

company • Assembling a team which inspire confidence is a big challenge

Section 9-People

• Founders • Management team

– The CEO – The CSO – The CFO

• Scientific Advisary Board (SAB) • Board of directors • Advisors

– Patent agent, Regulatory affairs – Accountant – Lawyer – Mentor, Incubator, Coach

• Business partners

Section 10-Financials

• Are useful to document, justify and convince • Shall be in harmony with the rest of the business plan • Will be carefully examined by the Investors

– will judge if the management is realistic – will determine if an acceptable rate of return on

investment can be achieved • Should include for the first three fiscal years:

– A listing of assumptions – A balance sheet – An income statement and – A statement of cash flows

The Executive Summary

• Saved for last • Non confidential information • Appetizer • All important points of the plan sections

Marketing your business plan

Essential documents

Executive summary To obtain a meeting Power point To create interest Detailed business plan Exp To explain Financial projestions

Financial actors

Venture caps : BDC, CTI, Pappas, FBI, FSTQ, Fondaction,

Cycle Capital, Avrio

Corporative funds : Danone, Nestlé …

Angels - Patrimoine : Chagnon, Power, Beaudier, Picchio…

Angel networks : Anges Québec, Boston Harbor Angels ...

Mixed funds : FIERs, ACQ, Amorchem, CC-C3E , CQDM, NeoMed

Institutionnels : IQ, BDC, Desjardins, FIBEC, CLD, CAE, FDEM, CQVB

Programs : FEQ, PARI, CRSNG, SDTC, MAPAQ…

Fiscal help : CR&DE

« Love Money » : Famille, amis, Crowdfunding

If you could invest 1 M$ yourself...

• Which ROI would you target?

• When would you like to recover your investment?

• How would you use the funds?

• How would you validate your game plan ?

• Which control would you do?

Investors will raise the same questions!

The real question !

If it would be my money, would I invest it in this project?

If yes, you have probably a good business

plan! !

Frequent reasons for refusal

• Managerial risk

• Technological risks

• Commercial risks

• Financial risks

Typical mistakes in business plans

• Invalid assumptions

• Unrealistics projections

• Incoherence between the text and the projections

• Too much or not enough details (too much on the technology, not enough on every thing else)

• Under-estimation of financial needs

• Under-estimation of the concurrence

Good practices

• Management excellence

• A good executive summary

• A market study

• A good writer in the team

• Demonstrate the potential gain for the investors

• Demonstrate the exit options

• Use Gant charts

• Use graphs and tables

Some final recommendations

Some advices to the founders

• Take time to learn and develop your competencies • Take care to overselling: stay credible • Take time to understand our innovation ecosystem • Use all available ressources • Do not hesitate to ask for feedback and advices • Find your place in the company. Where are you the most

useful and efficient? • Distinguish your shareholder position from your management

position • Be prepared to be challenged by the investors

Références

• reseaucapital.com

• pwcmoneytree.com

• cvca.ca

• nvca.com

• canadavc.com

For more information

Contact Us: 418 657-3853

Visit our website: cqvb.qc.ca

Thank you!