New fund available for getting to market faster!

The Precarn Industrial T-GAP
Precarn has just released a call for applications to its reinvigorated T-GAP Program. Like its predecessor, the program focuses on the gap between technology innovation and commercialization. The program is designed for very small and start-up companies. This is an open competition with no specific deadline date. Applications are accepted on a first-come first-served basis.

Precarn is seeking immediate applications to this program. $500,000 has been allocated for projects costing up to a maximum $60,000 in Precarn contribution. Precarn funding will be up to 75% of the total eligible project costs. The average Precarn contribution is expected to be about $40,000. Once a project is approved, 75% of the Precarn funds will be made available upon contract signing and the remaining 25% will be paid upon project completion and delivery of a final report.

Full details can be found on Precarn’s web site at:
http://www.precarn.ca/ProgramsFunding/COREFundingPrograms/TGAP/index.html

First Angel Network’s Wild Hog Ride

Though Angel investors are often serial entrepreneurs, mentors, and shrewd business people, they also can let their hair down and have a good time.  The Wild Hog Ride of the First Angel Network on July 18th was proof positive of this as these photos illustrate!

Members came from as far away as Fredericton, the Annapolis Valley and Musquodoboit to meet in Amherst, Nova Scotia, and then travel the back roads to Parrsboro, lunching at the Glooscap restaurant before completing their journey along the Minas Basin shoreline through Five Islands and Bass River; ending up in Masstown.  It was a great ride and a beautiful day, and these leather-clad Hog Riders looked way cool -after all, nobody ever rode a bike to disco music!

Revised submission to the House of Commons Industry Committee

As previously mentioned in this blog, our Chairman, Andrew Wilkes, and our President, Dan Mothersill, were called to testify before the House of Commons Standing Committee on Industry, Science and Technology in mid-May, making several crucial points to Canada’s parliamentarians (illustrated on the evidence page) and receiving perceptive questioning in return.

As part of that process, a written submission was placed before the members of that committee.  And now, we are pleased to provide the members (as per many a request), and our loyal readership here, a revised and updated version of that submission!  Learn how our governments can help close the capital availability gap and increase the success rate of Canada’s greatest employer – small and medium size enterprises!

Seven Steps for Precluding Profitable Exits (aka “Worst Practices”)

John Huston of the Ohio TechAngels recently published the following short article about the worst things Angels and Angel groups can do that can preclude them receiving a good return on their investments upon exit. This irreverent article, written quite tongue in cheek, really highlights some of the common mistakes first-time (and even veteran) Angels make and should avoid at all costs. Thank you, John, for this great article. I am sure we will add to this list in the future.

1. Acquiesce to the entrepreneur’s requested stratospheric valuation in the first round (because you can’t build a partnership if you start by being disagreeable).
2. Don’t bother to estimate how much additional dilutive capital will be needed to orchestrate a lucrative exit (because crafting a Capital Access Plan involves too much imprecision to be worth the effort).
3. Base your potential return calculations on an IPO exit versus a company sale (because the enterprise is less likely to re-locate post-IPO, so let’s assume that’s our exit vehicle).
4. Disregard the historic data about M & A exit proceeds for VC-backed enterprises in the same industry (because today’s market is obviously in flux, so historic evidence is not applicable right now.)
5. Base your investment decision solely on who has already invested in the deal (because you can conveniently avoid wasting time on boring due diligence which they’ve probably already performed).
6. After making your initial investment move to the “mute money mode” (because by spurning opportunities to assist the entrepreneur you can be sure to retain your objectivity).
7. Only participate in the first round (because by being “Willie One Check” you not only invest all your money at the lowest valuation, but also need not haggle over contentious term sheet provisions like Pay to Play and Pre-emptive Rights).

Note: The efficacy of these seven steps can be vastly enhanced if angels will simply make the following trifling assumptions when reviewing business plans:

1. The founder/inventor deserves to remain CEO until the exit (besides, this horse is such a winner any jockey can ride it to the finish line).
2. It is unlikely this enterprise will encounter any challenges not covered in the business plan (since it is so lengthy and thorough).
3. If new investors are needed they will surely appreciate the value angels have provided the company to date (so they will gladly respect our existing terms).
4. The level of detail in financial forecasts is highly correlated with accuracy (so the more complex the financial model, the higher the likelihood the forecasts will be achieved).
5. There are still some transformational ideas which truly do “sell themselves” once they are made available to the marketplace (and fortunately this is one of them because “great science can always trump any sales and marketing wisdom or strategy”).
6. If cash flow break-even can be achieved with just a tiny market capture percentage, then sales success will not be a daunting task (especially if the conservative forecasts haven’t even considered penetrating international markets, which could be gargantuan).
7. And, for medical devices: So long as a device improves patient outcomes the medical community will eagerly embrace it (since physicians are solely concerned about enhancing patient experience, even if they do not personally benefit).

For more information on some of the BEST practices for Angels and Angel groups, both entrepreners and Angels can refer to the National Angel Organization’s Best Practices Guide for Angel Groups and Investors.

8th Annual Who’s Who in IT event – hosted by ITAC

8th Annual Who's Who in IT - hosted by ITAC

The 2008 Partnering Forum will take place on Tuesday, September 23, 2008 from 7:30am to 12:10 pm at the Metro Toronto Convention Centre (South Building), Salon 701, with additional events afterwards until 3 pm.

ITAC’s Who’s Who partnering forum is a gathering of small and medium companies in an open environment designed to encourage collaboration, partnership and provides an opportunity to network with peers. Through table-top exhibits and one-minute pitches, exhibitors can showcase their company’s products and services.

Click through the image above for further details, including a complete agenda, and to register online!

Congratulations to the Australian Association of Angel Investors!

Two years ago I met John Mactaggart when he came across the Pacific to North America to visit our Angel Community here. Since then, along with Stewart Gow, and Jordan Green, John Ballard, Vivian Stewart, and David Malloch, John established the Australian Association of Angel Investors (AAAI).

The AAAI, similar to the National Angel Organization, is the not for profit national industry association representing Australian business angels networks, individual business angel investors and organizations that support the growth of business angel investment in Australia. Incorporated in 2007, their mission is to:

• Promote ethical and efficient angel investment and angel syndication in Australia.
• Promote the growth of angel investment in Australia, including encouraging and informing the establishment of new angel groups.
• Define best practice for angel investor members in an Australian context.
• Disseminate information on and access to formally recognized syndication models.
• Be a source and channel for information and education of angel investors and entrepreneurs seeking angel investment.
• Represent the interests of angel investor members in Australia as a peak body in dialogues with governments, peers and industry.
• Act as a channel for information and opinion from members to form the basis of advice to Government.
• Assist with, and direct, research into Australian angel investment activities.
• Organise and hold an annual summit conference on topics relevant to members.

Today, this association takes another major step into the international Angel community, publishing Volume 1, Issue 1 of their first Newsletter (aaai-newsletter-vol1iss1-july-2008).

As part of the NAO’s mission to engage the international Angel community across the I am pleased to congradulate AAAI on this next step in their development!

The NAO certainly looks forward to working with you on co-investment opportunities in the future.