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TIE INSTITUTE

HOW TO BUILD DURABLE COMPANIES IN A GLOBAL ECONOMIC REALIGNMENT

• Lean Startup ERIC RIES (buzzwords CONTINUOUS INNOVATION ZERO WASTE)

• Entrepreneurship is a team sport

• Strategic ventures: pick a space (commercialization of smart materials)

• Strategic ventures: build a management team

• Strategic ventures: do the financial engineering

FINANCIAL ENGINEERING IS ABOUT MORE THAN RAISING MONEY

• For a plane to take off, it needs:

• GOOD DESIGN

• A FULL FUEL TANK

• A SKILLED PILOT

• AND A RUNWAY

FINANCIAL ENGINEERING – WHAT VCS DO

• Governance

• Innovation ecosystems

• Corporate ventures (exits are likely acquisitions. What does MONSANTO want? What will CISCO buy?)

• You can always give away equity to build a team.

INC MAGAZINE -11 IDEAS TO WATCH IN 2011 + BEST ENTREPRENEURSHIP TEACHING• http://www.inc.com/ss/11-big-ideas-watch-2011#0

• http://www.cnbc.com/id/44581554/Startup_Lessons_From_a_Pro_Eric_Ries_on_The_Lean_Startup

• http://www.inc.com/magazine/20110401/the-10-best-entrepreneurship-courses-of-2011.html

COMMERCIALIZATION OF KNOWLEDGE

• AGRIFOODS AND NUTRITION BETTER THAN DIGITIAL MEDIA

• COMMERCIALIZING NEW MATERIALS

• FIND SCIENCE THAT NEEDS COMMERCIALIZING

• BUILD THE TEAM (marketing, finance, inventive source, strategist)

• KNOW THE COMPETITIVE ENVIRONMENT

WHAT IS MOST LIKELY TO GO WRONG –WARNING SIGNS

• “we have no competition” EITHER IT IS A DUMB IDEA or YOU LIVE IN A BUBBLE.

• “no one will give us the valuation we want” YOU ARE FOCUSED ON THE SHORT TERM. If it is a $100 million company, it doesn’t matter if the valuation is $5 or $7 million for the first round.

CHALLENGES TO VC IN TORONTO?

• A confusion of incubation / graduate school and commercialization

• An absence of science parks / incubators

• An absenece of collaboration

• A mine in Mali gives more return on investment than technology

• There is not enough CIRQUE DU SOLEILs or QUADRALOGICS or BALLARDs to show us that it works. Ontario has OPENTEXT and RIM.

• Corporate venturing provides exits and strategic guidance (MDS VENTURES becomes LUMIRA)

THIS IS THE ENTREPRENEURIAL MOMENT

• Financial engineering

• Venture capitalists add value more than capital (strategic guidance and networks)

• Conventional categories are shifting: think SMART MATERIALS and AGRIFOOD.

• Understand what else is out there. There are 1000 mini-GROUPONs. Innovation is global. Competitors and collaborators are in Casablanca and Cartagena.

FINANCIAL ENGINEERING IN A SLOW GROWTH ECONOMY

• Ontario needs specialized funds: CREATIVE INDUSTRIES FUND FOR TORONTO, SMART MATERIALS FUND FOR SOUTHWEST ONTARIO, DIGITAL HEALTH FUND, AGRIFOODS FUND, GREEN MINING FUND, MOBILE BANKING FUND.

• Corporate venture ensures commercialization. A SMART MATERIALS fund needs an anchor.

• Financial engineering seeds sophisticated investors to grow a company to scale. Ontario has global reach through its citizens and access to global capital markets through its financial institutions. We need to organize both to finance a start-up economy.

UNIQUE COMPETITIVE ADVANTAGES FOR ONTARIO

• Global teams

• Teams that think globally.

• Waterloo cluster

• University research base for next generation value creation (agriculture, materials, nanotechnology)

HOW TO BUILD A $1 BILLION COMPANY IN ONTARIO

• Consolidate the intellectual property in one area (digital health)

• Find a management team which understands global competition.

• Ensure the financial engineering provides a runway.

• Leverage the global reach of Ontario.