Creativity is thinking up new things. Innovation is doing new things. So said Theodore Levitt, the late American economist (who also popularized the term “globalization”). It’s not enough to have an idea; it must be something that can create and keep a customer. And therein lies this country’s challenge. Canadians are certainly creative, but often have trouble turning ideas into something that will attract the necessary capital.
Banks, venture capital, angel financiers — all bear the brunt of criticism from entrepreneurs who, until recently, often had to find money down south before anyone up here would take them seriously. But Canada’s banks are naturally cautious, particularly since they’re so regulated, and the VC and angel communities are so small that they have only so much mad money lying around. They’re far more interested in second-stage financing, coming in after someone else has taken the big upfront risks. Only $1.3 billion was invested by the VC community in Canada in 2008, the lowest level in 12 years, and down significantly from $2.1 billion in 2007.
Complaining is easy; doing something is more challenging. That’s why Canadian Business is once again teaming up with innovation consulting firm Nytric Ltd. of Mississauga, Ont., to try to get one idea off the drawing board — or cocktail napkin — and into production. The third annual Great Canadian Innovation Competition is now officially open, offering the winning would-be entrepreneur:
¦ Up to $50,000 in engineering services toward developing a prototype of your idea and a free feasibility study (valued at $20,000) from Nytric.
¦ Intellectual property legal services valued at $10,000 from Bereskin & Parr, a law firm in Toronto, that could help ensure your idea doesn’t infringe on existing products.
¦ Business and financial advisory services valued at $10,000 from NBP, a subsidiary of Nytric.
¦ A feature story in a future issue of this magazine.
Aside from an original and disruptive product, the judges are also looking for inventors committed to seeing their ideas all the way through the development life cycle. You’ll need to commit your time and plenty of energy. “We’re looking for somebody who is willing to step forward and in these dire times, as everybody is painting them, put some skin in the game, to take a risk, but to take a risk with a product that is truly innovative,” says Anthony Gussin, Nytric’s director of business development. “A product that has the potential to be disruptive, not just something that is an iteration of something that already exists, but something that changes the way we do things or see things from a product perspective.”
More than 400 people sent in their ideas during the first two competitions, and last year’s winner as selected by the Nytric team of judges was an automated device that breaks down a substance and isolates a certain component. Such extraction systems are used in just about every lab — for example, food testers use them to measure nutritional content — but are not fully automated. Called Certo-Ex, the extraction system developed by Toronto-based Ameer and Ahmed Taha cuts time and costs, and eliminates cross-contamination between samples.
The Taha brothers are still refining their machine, and while every little bit helps, even companies with a prototype and market demand often find other roadblocks. Chief among them: financing. Take Joshua Geist. His company, Geminare Inc., a Toronto-based IT software maker, signed a big deal with giant CA Inc. in November, and is now trying to figure out how to raise the financial backing it needs to grow. Geist’s story (which follows) is not a particularly heartwarming one for entrepreneurs looking to score big.
But there are people out there with money for the right ideas. We take a look at one such financier, Silicon Valley venture capitalist Alan Salzman. The former Torontonian has raised US$4.5 billion and seeded everything from Pure Digital Technologies’ Flip Video camcorder to Tesla Motors’ electric car. This year his fund, VantagePoint Venture Partners, is betting US$1 billion on clean technologies, including a bet on a startup called Better Place that aims to supply the infrastructure needed for electric cars around the world.
We also find out there are innovative ways to raise money. ERA Carbon Offsets Ltd. founder Robert Falls is using something called carbon financing. In return for greening parts of British Columbia, he’s getting the right to sell greenhouse-gas offsets based on the amount of carbon his plantings will remove from the atmosphere. It’s a new way of financing. (And one that has the investing community a bit confused: ERA’s stock has slipped to less than a dime after starting at around 65¢.)
What we’re offering is more straightforward: up to $90,000 worth of business services to help get one idea started in the right direction. But it all begins with you, so make sure you submit your best ideas at www.canadianbusiness.com/greatinnovation before midnight, May 1. Be prepared to submit a two-page outline of your innovation, including a description of what it does, the target market, how it differs from competing products, and how much work you’ve put into it so far. Competition rules and regulations are also available at the same site. The competition is open to all residents of Canada (excluding Quebec). Good luck in your venture, whether you win or not.