Riz Kheraj - Stimulus

Stimulus – Creating Cash Flow in a Recession

Rizwan Kheraj – NRC-IRAPMarch 11, 2009VEF Momentum


"This is another fine mess you've gotten me into!"

From startupnorth.ca


• Are you going through……

– Customers slow to close, can’t close, can’t find, traffic not coming

– Investment scarce, low valuations, time’s a-wasting, being jerked around

– Team – smaller, morale not great, fewer pizzas

– F &F – “go get a real job!”


• BUT…entrepreneurs shine in times of trouble – A recession is the best time to start a company

• Total SMEs with potential for R&D ~107,000• B.C. led the nation with 86.7 Small Bizs per 1,000 people (2007)

– The objective is to distill the value of a company• Best time to get great people at reasonable prices

– Also opportunities for companies to band together – share costs• Government programs ready to help you build your technology

and your company• Your customers are looking for good deals and want to partner –

so you can help them make money


• Where’s the money to start? Use multiple sources!

– F & F – raise an internal round• Get a corporate lawyer to help you be investable

– A customer as a development partner • Align consulting with product/service idea• Raising cash is a distraction from creating something to sell

and convincing someone to buy – so do this!– Get a credit line at low rates or low interest loans

• BDC ($350m injection in Jan), Credit Unions, Banks• CYBF & CYBF– BDC start-up loan programs – 15K

http://www.cybf.ca/entrepreneurs/cybfbdc.php


• Where’s the money to start? – Government programs – get an operations person to

fill forms and manage – don’t be lazy about this!

• IRAP – Youth Employment Program – Details being put in place for April ~ May 2009 start– For 2009-2010 & 2010-11– One time $30,000 over 12 months per Youth– Post-graduate between 15 – 30– Canadian, LI; not on UI


• Where’s the money to start? • IRAP – R&D program

– Supporting technology development– Non-repayable contributions – not Grants!– Effective April 09 for 2090-10, 2010-11– 75% of eligible project costs– Support can be up to 100 % of technical salaries and

75% of contractor fees– Amount dependent on factors such as scope, impact,

innovation, jobs created, etc– Also can support market assessments by ext. consultant


• Where’s the money to start? • IRAP – Canadian Association of Management Consultants

– $150 leverages up to 5 working days of a consultant– Services include:

» General business and financing advice» Market feasibility assessment including market size» Marketing and sales planning guidelines» Business planning guidelines» Human resource planning and advice» Market entry recommendations» Qualitative or directional Market research» Operations and systems advice» Coaching


• Where’s the money to start? – The paperwork is LESS than investor’s due

diligence• SR&ED – underutilized program – (get up

to 40% back of eligible costs) - only 15K SMEs used it last year

• Canada New Media Fund (details coming)• MITACS – Grad student for 4 months

(7.5K matching) [some w IRAP]• NSERC I2I – spinning out of University?

Got an industrial partner – use this


• Myths about Government programs1 "It's hard to get Govt funding - bureaucratic,

paperwork, takes too long...."2 "The Govt is not going to give someone as

inexperienced as me this type of money"3 "Applying for Govt programs distracts me from

running my business "4 “You have to wait a long time to get the check”


• Leveraging Example – 5k -> 130K1. You are 18-34, got a great idea – write a business plan –

get the community & mentors to review2. Go to CYBF (BDC?)– get a 15K loan3. Put together technology development plan, put in few $K

into your company from consulting work, start getting a few good people - sweat equity, and develop a POC

4. Go talk to IRAP and go through assessment process for a technology development project, get advice, use the $150 CAMC or library capability, etc – put in proposal for project if IRAP gives green light – lets say it’s a $120K project – you got 3 people working on it for a year to build your beta

5. At the same time you raise a F &F round of $25,0006. Build the beta, do some targeted customer consulting,

validate your technology & business model

• $ 015,000

20,000

(120,000)90000(30000)

~10,000 buffer


• Takeaways– If you don’t need to raise investment – don’t –

bootstrap your business in creative ways first – Get a friendly and very satisfied customer– Leverage government programs – both

funding and advisory services– Manage your cash burn closely – Persistence & tenacity will lead the way


• Contact– NRC-IRAP Pacific

• 604-666-6062• http://www.nrc.ca/irap