Innovate Manitoba’s inaugural Lift’Off event, held June 18, 2014 at the Fort Garry Hotel, wrapped up with an afternoon IQ Forum. The Forum was the perfect finish to the day that saw six Manitoba startups compete for $100,000 in cash and prizes, and an Entrepreneur Power Lunch with an inspiring presentation by keynote speaker Wade Barnes of Farmer’s Edge. See story.
“The IQ Forum added an invaluable new dimension to Lift’Off,” shared Jan Lederman, President of Innovate Manitoba. “It provides a great platform for aspiring entrepreneurs, startups, and growing businesses to learn from the successes as well as the trials and tribulations of entrepreneurs who have come through our programs in the past, or have helped us to advance our mission to catalyze innovation in Manitoba.”
The panelists were engaging and interactive, dishing up plenty of insights and lessons learned for entrepreneurs and startup managers. We’ve captured some of the key points and takeaways – a valuable read for entrepreneurs and startups.
Panel 1: From The Trenches – Raising Capital for Early Stage Businesses
Moderated by Lederman, this panel looked at the challenges and opportunities that three Manitoba-based companies encountered in raising millions in risk capital. Wade Barnes, President, Farmer’s Edge; Kelly Beaulieu, Founder and COO, Canadian Prairie Garden Puree Products; and Todd Habicht, President & CEO, HD Petroleum Inc. have all had to face off with investors to move their operations forward. Randy Thompson, investor, entrepreneur and Innovate Manitoba Launch’Pad coach rounded out the panel.
Beaulieu, an agrologist with a B. Sc. in Agriculture, had a dream and steadfastly refused to take no for an answer as she built her premium vegetable, berry and legume puree company from the ground up.
“I accessed every grant and funding opportunity I could find,” Beaulieu said. “I was relentless. Every time I ran into an objection from a potential investor or funding agency, I’d get my facts together and take another run at it.”
Beaulieu pitched her idea, to the likes of Campbell’s® and others and it was very well received. Still the road wasn’t always easy and she prides herself in becoming “her own expert” and surrounding herself with qualified people who shared her passion.
Her persistence and voracious commitment to quality and continuous learning has helped her raise over $10 million in venture capital and open her own production facility in Portage La Prairie.
While Beaulieu has retained majority equity in the firm, she has relied on her relationships with her investors who she treats like her partners.
She emphasized the importance of choosing investors, as well as business partners, strategically. “In my case the investors were often putting their money on me.” Beaulieu, a member of Sandy Bay First Nations, referred specifically to former Prime Minister Paul Martin, founder of the Capital for Aboriginal and Prosperity Entrepreneurship Fund. “He said ‘aboriginal entrepreneurs don’t get these chances and I’m going to give you that chance.’”
Beaulieu is a protégé of Innovate Manitoba’s entrepreneur mentoring programs, placing third twice before at the Venture’Challenge for Canadian Prairie Garden and PB&C Agri-tech Solutions respectively. PB&C is a cutting edge food processing and production company, still in its early funding stages.
Todd Habicht of HD-Petroleum faced many of the same hurdles as Beaulieu in his pitch to develop a refining technology able to convert used motor oil into a high quality diesel fuel. “I hadn’t realized the full global potential of the technology while I raised the first $2.2 million, which seems naïve now based on the global demand,” he said. He shared how he soon learned the importance of getting in front of those “who would be able to cut the cheques.”
“It’s critical and we’re now almost done, having raised the $15 million in capital we set out to achieve.”
Habicht is also a former winner of Innovate Manitoba’s Venture’Challenge. “This is an amazing event that needs to continue to grow so it can benefit even more startups and entrepreneurs.” He stressed how regulatory requirements have made it increasingly difficult to raise capital in Manitoba.
He pointed to the grueling questions that the Venture’Challenge competitors faced earlier in the day as a key learning opportunity. “That’s exactly what it’s like out there. Your response to those kinds of questions is what motivates an investor to see the potential of your company.”
Like Beaulieu he emphasized the importance of believing in your project and getting the help you need. “You have to take that belief and reach out to the experts who can help you.“
Wade Barnes has raised over $3.5 million in investor capital to keep Farmer’s Edge on the offensive, competing with the likes of John Deer and Monsanto. The accomplished agronomist also stressed the importance of choosing investors well. Part of this, he said, is finding investors who believe in you as much as your product and will allow you to do the work you need to do. “In my opinion if you can’t trust the guy at the wheel, you shouldn’t have put your money in to begin with.”
Beaulieu chimed in on this point. “I pinpointed strategic partners that were aligned with what I wanted and needed in my business. I could have grown faster if I accepted equity loss, but that wasn’t the model for me.”
Angel investor Thompson pointed out how Beaulieu’s approach is somewhat unique. “To be attractive to investors, you usually have to give up some of that equity.” He added, “Kelly’s been incredibly successful acquiring capital from other sources which works for her business model.”
He went on to say, “But not taking money means you are giving up something else – speed to market. You have to decide whether control is more important than taking on investors and getting there quickly.”
Thompson stressed that all investors are not created equal. “Don’t just take the money. Take the right money and turn down the wrong money.”
Barnes concluded, “Sure you’re trying to get money from them, but they’re also trying to put money on you. It’s important to ask, what are you going to add to my business? How are you going to help me? It has to be about more than money.“
All were excited to see what’s happening in Manitoba. “Startup entrepreneurs now have access to mentors like those found through Innovate Manitoba,” Thompson said. “It’s creating a whole new class of entrepreneurs and investors.”
Panel 2: Startup Sales – A Hard Nut to Crack
The lifeblood of any new business is sales, but many entrepreneurs often fail in their initial sales attempts. Panelists Bob Toews, CEO, TruckDown; Regan Stevenson, Founder, Sunpeak Foods & World Wise Distribution; Terry Davison, Founder and President, Global Office Software; and John Stockton, Venture Advisor at Mayfield, shared their perspectives in a lively panel discussion moderated by Jeff Ryzner, CEO, Endgame Business Strategy.
Panelists shared common stories around focusing on the end customer.
TruckDown launched in 1997 as the first truck specific vendor locator. Toews shared that when they put TruckDown’s directory online as a free searchable tool, they figured it was a no brainer.
“But the trucking industry was new to the Internet and reluctant to give their dispatchers and fleet support personnel access to the web from work.” Toews added that mobile access for drivers was also still a decade away. “After several months of trying to break through head office barriers to the Internet, we took to distributing printed pamphlets to truck stops across Canada and the USA that basically said, ‘Next time you are broken down, tell your dispatcher about TruckDown.com’”. The campaign was the turnaround the company was looking for, resonating with drivers, many of whom earn nothing when their rigs aren’t moving.
“The drivers might not be the decision-makers but they can exert a lot of influence on those who are making the decisions,” Toews said.
TruckDown’s focus has continued to be on locking down customer relationships and getting to market first with solutions that are based on customer needs. Today, they are in the forefront with cutting edge applications and mobile technology that maximizes the opportunity to put the right vendor in front of a fleet in need.
Regan Stevenson used a similar approach to bolster Sunpeak’s sales and distribution. “We determined that our primary customers were busy stay at home moms and the best way to get our products into their hands was to have them become brand advocates for us. Every time we got an inquiry from an interested customer, we gave them a letter that they could bring to their favorite retail store encouraging the store to carry our products. It got us new store listings almost every-time!”
Terry Davison credited much of the success of Global Office Software to the commitment and effort he and his team have put into cold and referral sales calls since day one. “No one can sell your product better than you,” Davison says.
“We write out our pitches, we constantly test them and figure out what works for all of our staff.” He talked about identifying customers’ “pain points” to come up with the answers and sales strategy that will close the sale.
The company is currently achieving an over 80 percent close rate on the demos they conduct for potential customers.
“Taking a strategic approach to sales has really helped,” Davison said. “We look at how many cold calls we have to make to get the meeting, how many demos we have to do to close the sale and are always thinking about what we can do better or more efficiently.”
Another aspect Davison emphasized is the importance of being able to meet the demand when sales happen. “We keep a stable of contractors up to speed on our technology so that we can turn to them if the demand gets to be more than we can handle.”
Davison again emphasized the importance of a sales focus. “Don’t ever let up on the gas. You have to make cold calls everyday.”
When it came to differentiating marketing and sales, Toews surmized that it’s the job of marketing to drive customers to the service or product. “It’s then up to sales to close them.”
And who should you be hiring to do the sales? Davison preferred energy to experience. “We can teach how to sell.”
Stevenson stressed the need to be “personable” and that this might not be someone you would always expect to be a good salesperson. He cautioned about hiring sales people who are just focused on the base salary. “Good sales people want to see commissions, because they’re motivated to go out and sell more products to meet the customers’ needs. Be wary of those who want to talk about retainers, because it means that they’re more focused on ‘what are you going to do for me’.”
Joelle Foster, Director, Manitoba, Saskatchewan, Nunavut and NWT, Futurpreneur Canada, was thrilled with the quality of the startups and panelists. “It’s especially exciting to see that some of the businesses that were on the panel are coming on board to be mentors through our program.”
Foster believes this is a key aspect of keeping promising startups and young people in the province. She congratulated Innovate Manitoba for supporting this outcome.
“If we want our young people to stay in the province, we need to support them, fund them and mentor them.”