A Business Chef Specialized in Startup Cuisine

http://venturehype.com/a-business-chef-specialized-in-startup-cuisine/

Earlier this year, a startup incubator based in the second-smallest province in Canada was shortlisted as one of the two finalists for NBIA’s (National Business Incubation Association) international award, which honors the world’s best incubation methods that help startups launch, commercialize innovations and everything in between.

Get this — NBIA has 1,900 members in over 60 countries. To be recognized by the association as one of the crème de la crème in the incubation industry is no small feat. CABI (Canadian Association of Business Incubation) has also selected this incubator as the association’s 2009 Business Incubator of Year Award winner in our favorite category — Technology.

InNOVAcorp – it might be based in a small province called Nova Scotia but the effects it has on startups are anything but small. Put another way — InNOVAcorp is a business chef specialized in startup cuisine. It adds flavors to startups and helps them achieve mouth-watering growth. Their secret recipe includes 50 pounds of rock-solid incubation infrastructure, 9 full cups of serious mentoring, and 7 gallons of appetizing cash. Yum!

As with any first-rated chefs, InNOVAcorp only selects great ingredients. Venture Hype got in touch with President and CEO Dan MacDonald (aka “Big Mac”) to find out what kind of startups they’re hungry for.

VH: You were the vice president of global marketing for Nokia prior to joining InNOVAcorp. How did you get involved with the incubator?

DM: The division of Nokia I belonged to was establishing its new world headquarters. Rather than moving my family from Silicon Valley, California to New York, I decided to return to Eastern Canada. I continued my role at Nokia out of Halifax during a transition period, and was recruited to the role at InNOVAcorp in May 2005. My experience in business-building, mergers and acquisitions, and global go-to-market strategies has come in handy for my current role.

VH: Given your previous position with Nokia, do you favor mobile startups?
DM: After 6 years of being dipped in “mobility” at Nokia, I’m definitely on the lookout for mobile startups, but I’m also very sober about the complexity of the market, especially in North America.

VH: What are the key elements that make a mobile startup successful?
DM: 2009 is a much better environment for mobile startups due to the momentum of the iPhone, BlackBerry, 3G networks, etc. That being said, the mobile startups that attract our attention are those that have more than a cool mobile game, widget, or ad-based business model. They have a compelling B2C and/or B2B offering that can be monetized and is scalable to millions of users.

VH: What other market segments excite you and what advice would you give to those who wish to invest in these segments?DM: The market segments, and more specifically the opportunities, that excite us are those that are:
highly scalable led by a competent person
sold through a simple sales cycle
armed with an unfair competitive advantage
targeted at a large, high-growth marketplace
able to deliver a rapid (3 to 6 months) return on investment

VH: You recently participated on Globe and Mail’s business incubator expert panel and provided advice to an entrepreneur who was facing go-to-market struggles. What are the common go-to-market struggles startups encounter that investors should be aware of?
DM: In my opinion, the go-to-market strategy and execution is what it’s all about. Thousands of compelling technologies, products, and services have failed to capture the market due to go-to-market misfires.
Investors must challenge the startup to share how they’ve validated their market assumptions, not by purchasing reports or research but by speaking directly to target customers and calibrating their approach through interacting with the target market.
Startups need highly relevant go-to-market expertise just as much as, if not more than, they need technical expertise. Many fail to understand this.

VH: Finally, what are the pros and cons of investing in knowledge-based startups in Nova Scotia?
DM: Unlike those in many other innovative places, startups in Nova Scotia benefit from their geographical closeness and familiarity to the large US and European markets.
In addition, they have -
access to world class expertise and highly-skilled personnel from our 11 universities and associated research institutions
the “grit and toughness” required to build a startup company
access to supportive organizations like InNOVAcorp, the First Angel Network, and NRC IRAP
Like other underserved private capital areas, knowledge-based startups in Nova Scotia can fall into the undercapitalized category.
Just For Fun

VH: McDonald’s or Burger King?
DM: McDonald’s of course. Although, if I had a dollar for every time someone asked me if I was called Big Mac or related to Ronald McDonald, I’d be a very rich man

(VH: Can we grill you?)

* Interviews are edited for clarity and readability
Join Venture Hype tomorrow as MacDonald acquaints us with InNOVAcorp’s established business model and where you’d learn about forming and running a successful incubation program.Link:
Profile of InNOVAcorp’s Big Mac

If you’re an active angel investor who frequently brings more than just money to the table, founding a business incubator to add more structure in mentoring and growing startup ventures could be your thing.
Why? According to National Business Incubation Association (NBIA), incubators might reduce the risk of small business failures, which means you’d have a better chance getting your investment back and then some, not to mention the psychological reward of giving back to the community and seeing your portfolio companies succeed.

Historically, NBIA member incubators have reported that 87 percent of all firms that have graduated from their incubators are still in business. In the general population, 66 percent of new firms survive at least two years, and 44 percent survive at least four years. It is important to note that these figures are not directly comparable, due to differences in survey methodology, time frame and other factors. However, looking at them side by side does strongly suggest that business incubation reduces the risk of small business failure and offers a valuable comparison.

In A Business Chef Specialized in Startup Cuisine, we briefly introduced InNOVAcorp, a business incubator whose incubation model has been recognized by NBIA as one of the crème de la crème in the incubation industry. We also asked President and CEO Dan MacDonald (aka “Big Mac”) to tell us more about the type of startups that would make them drool. In part 2, Big Mac gives us a quick overview of InNOVAcorp’s industry-recognized business model as a start for you to understand how a successful incubation program is run and determine whether starting one is right for you.

VH: What advice would you give to those who wish to start and run a successful incubation program to stimulate innovation and entrepreneurial spirits?
DM: I’d suggest they look into the expertise offered by the National Business Incubation Association (NBIA) and the Canadian Association of Business Incubation (CABI). These organizations have pulled together best practices from over 1,800 organizations around the world. Also take a look at InNOVAcorp’s model and approach at www.innovacorp.ca.

VH: InNOVAcorp’s High Performance Incubation (HPi) business model is recognized internationally as a best practice technology commercialization approach. What makes InNOVAcorp stand out from other incubation programs in terms of helping startups commercialize their technologies?
DM: InNOVAcorp has been recognized internationally by the NBIA, which has 1,900 members from over 60 countries. In May 2009, InNOVAcorp was recognized as one of the two best incubation business models in the world.
What makes InNOVAcorp unique is our combination of traditional incubation infrastructure, an international network of business mentors, and especially, the manager of an early seed and venture capital fund.
Our approach to attracting deal flow and our credibility in the business community helps make our model highly effective.

Dan MacDonald ("Big Mac") of InNOVAcorp

VH: Regarding deal flow, what can you tell us about the recent I-3 Technology Startup Competition?
DM: For InNOVAcorp to identify the “next great opportunity,” like most VCs, we need to review a relatively large number of opportunities. We have several approaches to maximizing the quantity and quality of our opportunity pipeline, including the I-3 Technology Startup Competition.
I-3 Technology Startup Competition has a proven track record in identifying high-potential opportunities and helping the business community to understand ways to support startup companies.
Through this competition, more than C$700,000 worth of seed investment and business building services, e.g. legal, accounting, marketing, and printing, will be awarded to 10 startup companies.
The competition took place in 5 geographical zones across the province. The award package for zone winners includes seed capital and in-kind contributions for the development of startup ventures:
Each 1st-place zone winner will receive a C$100,000 award package
Each 2nd-place zone winner will receive a C$40,000 award package
One provincial winner will be selected from the 5 zone winners and awarded a C$100,000 seed investment from InNOVAcorp’s HPi Microfund

VH: What kind of deals does InNOVAcorp prefer? Why?
DM: InNOVAcorp prefers syndicated deals. While we may not be the largest investor measured in monetary amount, we’re able to bring our expertise to coordinate the round.
The structured approach is directly related to the:
risk profile
syndicate at the table
context of the specific deal
realistic potential and timing of upside

VH: How much does InNOVAcorp typically invest in a startup?
DM: InNOVAcorp invests between C$50,000 and C$250,000 of pre-seed capital through its HPi Microfund, and invests between C$250,000 and C$3,000,000 of seed and venture capital through its Nova Scotia First Fund.

* Interviews are edited for clarity and readability.
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