Growth Times

My friend Fred Sweeney of VG Partners pointed me to this interesting call for help by the biotech industry in Canada, whose start-ups are finding it difficult to raise money to survive, let alone thrive. In these times of hardships, the ventures with the least obvious path to commercialization and revenue are the ones who suffer first and most. Given the lengthy development cycles and uncertain payout, biotech ventures evidently stand at the frontline of the crisis.

What all that shows is that a start-up should at all times be able to articulate the revenue model it is proposing to pursue. It should tie all its current efforts to this model, or “reverse-engineer revenue” as per the expression I coined at GrowthRoute. Doing just that provide three benefits: one, you stand in first row against competing start-ups when comes the time for VCs to hand out cash; two, keeping your eyes on the prize helps you identify where to focus your efforts today, and better allocate your current resources; three, spending some time thinking about how you will make money could point to nearer-term sources of revenue you may not have thought of.

Without a destination and a map to get there, you can have a tight ship and yet run it in circles. Better to never count on the government to get you back on track.

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Jacqui Murphy of Tech Capital wrote a fascinating blog post today, listing the top resources any venture in Canada should be aware and possibly take advantage of in this downturn economy. Quote:

1. There is amazing talent on the street right now. Many of these folks have received severance packages and are approaching the job market with “flexibility” in mind. Reach out to these people and engage with them as advisors, employees who are interested in working for equity, and/or potential co-founders/partners.
2. Map your industry ecosystem, identify strategic partners and customers, prioritize them, and use FREE social media tools (LinkedIn, Twitter) to reach out, ask for introductions, and ask for help — shorten your path to market any way you can.
3. Attend the “unconferences” (StartupCamp, BarCamp, DemoCamp, mesh) to meet people like you who are wanting to roll up their sleeves and help others (and themselves) build companies with limited resources. These entrepreneurs are not waiting around for venture capital, they are building in the absence of financing with customers, value propositions, revenue and profits in mind.
4. Look to existing government programs for support. Make sure you are filing for SR&ED Credits and applying for the Ontario Interactive Digital Media Tax Credit. Introduce yourself to your local IRAP and OCE representatives to see if they have any programs you might qualify for.
5. Reach out to MaRS, Communitech, and OCRI and hook in to their Entrepreneur-In-Residence programs. These organizations are very knowledgeable about tools that are available to entrepreneurs and they know how to efficiently access a number of government programs.
6. Check out the Microsoft BizSpark program for free development resources and support.

Tech Capital Partners Blog, Feb 2009

You should read the whole article.

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