incubator half5

Vancouver’s Advantages and Challenges: 

Vancouver’s Advantages and Challenges Advantages High quality of life Excellent universities Skilled technical staff and project managers , low development costs Few leaders competing for new markets with new product concepts. Threats Brain Drain impacts design, marketing, and business resources. Many investors are unfamiliar with technology opportunities. Conservative business culture limits risk-taking Challenges Effective investment and business strategy requires insider understanding of markets and competitors Business plan execution requires rapid user-centred design and risk reduction software engineering know-how

Understanding Tech Markets and Competitors: 

Understanding Tech Markets and Competitors Supporting the business plan competition and evaluation process Market briefs and competitive analysis research for judges and competitors bring them up-to-date on latest market trends, new technologies, competitive environment Technical feasibility analysis and estimates of development cost and time-to-market will identify the most cost-effective opportunities Helping new companies to create a unique selling proposition Understanding the customer opportunity and building a competitive strategy Identification of critical success factors and needed assets Merging and partnering companies, ideas, and teams for best opportunities

Business Plan Execution: 

Business Plan Execution Create a process for building new technology solutions for customer needs Refining the business plan with marketing analyses, business modeling and earnings forecasts Design plans and prototypes, independent and accurate timelines and cost estimates, risk-reduction development models Project management support Overcoming investor reluctance Solid market, strategy, and design models build investor confidence Facilitating potential business partners and customer contacts Search for financial partners Facilitation of IPO Alternative commercialization models Auctioning of the idea and business plan on the Internet Merger with new or existing project/company

Core Capabilities of Support Organization: 

Core Capabilities of Support Organization Ongoing customer research to anticipate market opportunities Expertise in customer-centred design and user experience assessment targets opportunities with solutions State-of-the-art risk reduction and rapid development software engineering methods gives: TIMELINESS: First mover advantage WIDE CHANCES: platform to combine ideas, recycle old ideas, technology, and market information WHOLE_PRODUCT DESIGNS: Design for evolving markets Competitive Intelligence and flexible design/execution models synergize for rapid response to competitors

Support Process: 

Support Process New Companies Business Model Competition Ideas from University staff and students Inputs Matching Ideas with Entrepreneurs, Design Professionals Project Management and MBA staff and student support Ideas and Business Plans for Sale through Internet Auction Execution Research spin-offs from companies University labs and faculty experts Financial partners and sponsors Back-office and legal services providers Entrepreneurs and Business Gurus University staff and students University industry liaison offices Outputs

Focus Areas: 

Focus Areas Initially Telelearning, Internet, New media and entertainment products and services Expand or clone for new opportunities Information appliance software and hardware New energy products and services New Bio-pharmacy and Medical offerings The -BC business plan competition will be open to all kind of ideas, however the support organization will initially be focused on internet and related technology-based offerings.

Key Aspects of Entrepreneur Support Inc.: 

Key Aspects of Entrepreneur Support Inc. Time-sharing experts spreads the expertise over may startups Create business and design documents that can be implemented offline by local talent “Checkups” and “booster shots” for young companies as needed Processes, knowledge assets build over time to further enhance effectiveness Stable teams of experts outperform consultants, new groups Efficiency of model enables ESI to hire, incent, and retain top talent. Challenging work and diversification of share options retains them University links give access to business, design, customer understanding and technology talent and IP

Impact of User Experience Research: 

Impact of User Experience Research "Usability is critical for any application, but for mass-market software, usability spells success or failure more clearly than any other feature." Dr. Jerold M. Grochow, Chief Technology Officer, American Management Systems “ Industry data show that each dollar spent on user studies during product design saves $10 on problem fixes during product development, or $100 or more in rework after product release... It's estimated that 80% of maintenance costs are spent on unforeseen user requirements, while only 20% are due to bugs. “ IBM Web Site “Massive, new effort is needed in HCI education, research, and practice... Universities should be encouraged to perceive HCI as a ‘critical technology’ and the accompanying skills and knowledge as fundamental to a student's education and preparation for jobs in the information age.” 1994 report of the US National Science Foundation Interactive Systems and Applications of Advanced Technology Program, in collaboration with the Software and Intelligent Systems Technology Office, Advanced Research Projects Agency

Impact of Risk-reduction Development: 

Impact of Risk-reduction Development The Standish Group research shows a staggering 31.1% of (software) projects will be canceled before they ever get completed. Further results indicate 52.7% of projects will cost 189% of their original estimates... The three major reasons that a project will succeed are user involvement, executive management support, and a clear statement of requirements. “The Chaos Report” Standish Group 1995 Some examples of impact on profits and productivity of a focus on improving software development processes (IEEE Computer 1995) Lockheed cut development costs by 75%, reduced time-to-market by 40% and defects by 90% by implementing advanced design methods Raytheon tripled productivity and increased ROI 8 fold Similar results from Hughes, Loral, Motorola, Xerox

Impact of Competitive Intelligence: 

Impact of Competitive Intelligence “Competitive intelligence plays a crucial role in explaining why some companies won 67% of the contracts they went after, compared to the industry average of 18%” Price Waterhouse TQM/100 study, 1993 “For the most part, information services and technology companies dominated the list of businesses that survey respondents believe make good use of business or competitive intelligence…1997 Top Companies: #1 Microsoft, #2Motorola, #3 IBM, #4 Proctor and Gamble, #5 GE, #6 Hewlett-Packard, #7 Coca-cola, #8 Intel” Futures group survey, 1997 “Compared to other countries, Canada scores lower on the percentage of firms conducting world-class CI, training in CI, CI partnerships,, and CI culture.” Industry Canada/Canadian Management Network 1999

Alliances and relationships: 

Alliances and relationships Build alliances with incubators and think-tanks in Canada and US Explore enhanced relationship with familiar collaborators: Philips, HRL, Sun, etc. Seek closer ties to Canadian and US investors Seek off-campus location, perhaps in False Creek tech park

Projected Start-up Budget: 

Projected Start-up Budget October 1999 - April 2000 Staff and Consultants Fees $100,000 Office Supplies/Rentals $ 25,000 Preparatory Expenses $ 50,000 Promotion $ 50,000 Travel and other expenses $ 25,000 TOTAL $250,000 April 2000 - year-end Salaries and board remuneration $1,000,000 Direct support new Entrepreneurs $1,000,000 *) Office Supplies/Rentals $1,000,000 Travel Expenses $ 75,000 Office Rental $ 100,000 Promotion $ 75,000 TOTAL $3,250,000 Ongoing yearly requirements next 2 years > $5,000,000 *) Note: average investment in an incubator-based firm will be $150-500,000, much smaller than a typical venture investment

Goals of Financing Model: 

Goals of Financing Model Share value linked to value of any/all potential startups Shares give seed-level ROI, but distribute risk over a number of companies Share maturation time keeps money in incubator Short-term shares allow rapid buy-in at additional cost Shares provide incentive to attract and retain skilled staff incentives can be issued early, based on overall productivity (not company /project-bound) Share market rates for buyout give an insider index of company prospects for investors Better companies buy out for fewer shares creates an incentive to merger of early-stage ideas Share market rates for buyout gives investors an incentive to spread their money and risk-- reduces cherry picking.

Financing Sequence: 

Financing Sequence First step is to guarantee launching capital from start-up sponsors by late 1999/early 2000 Next, in May 2000, issuing $ 5 million of equity through sale of shares (to Venture Capitalists, Companies, Individuals, Institutions and others) Second wave of ??$ million by year-end 2000/early 2001 New companies must pay their bill in cash from investors through sale of shares and/or with shares as negotiated. Board members, employees and key staff are given stock-options based upon performance as evaluated by colleagues and spin-off companies. For these stock-options a subordinate class of stock will be created. Options from this class will mature within 3 years.

Alternative Financing model: 

Alternative Financing model Company A Incubator Staff Fellows Associates Partners in Business Design Management Investors Investors purchase Convertible shares which can be bid when mature. Long maturation funds are cheap, short term funds more expensive. Shares are also given as incentives to Board, employees and partners Company B Company C Company D Shares New companies must “buy their way out” for an agreed upon number of Incubator shares, procured by trading company shares on the market (or for cash in the case of a auction or sale of an idea) $$$ Company Shares Convertible shares Investors chose companies that fit their strategic interests and bid incubator shares for company shares

Questions: 

Questions Under whose banner should this be launched: Government, Business Council BC, SFU, Vancouver Enterprise Forum, new independent joint initiative? Staffing and board participation? How to deal with intellectual property University Who can help with lobbying for launching sponsors? How to involve UBC and BC-IT? How to involve other local incubators e.g. IdeaPark? How to increase attractiveness for investors - local Venture Capitalists and others? How to attract more capital from elsewhere (Toronto, US, Europe)?