Investing in Health Technologies
The Formula for Scaling to World Class
There is a financial formula for scaling to become a world class company and these are the rough parameters of that formula. A company must plan to grow at least 60% a year for 10 to 15 tears to become world class. In order to do that, the company will need to raise about $1.5 of capital for every $1 of revenue and allocate almost twice as much spending on marketing and sales as they do on research and development.
Minimum Annual Growth Rate
Ratio of Capital to Revenue
- Marketing and sales 45%
- Research and development 30%
- General and admin 25%
Allocation of Expenditures
You’re starting out on an exciting journey and we’re here to help you. To grow, you’re going to need capital and that is why we’re here. We’ll be the ones to take the first chance on you. We’ll take the big risk to back you when you’re small and stand by you as you grow.
We’re Entrepreneurs Too
The first thing that makes us different is that we have all been entrepreneurs too. We’ve founded companies, built markets, raised capital and successfully exited. We’ve walked a mile in your shoes and that gives us a unique perspective on what it takes to be successful as a technology entrepreneur.
We’re very curious people, constantly trying to figure out what it takes to find the right product market fit, what it takes to get that first revenue and then tradition from startup to scaleup. To help us understand this better, we partner with the Impact Centre at the University of Toronto to conduct research into best practices in technology commercialization. You can check out our research by clicking on the link.
We don’t just put in money. No, that’s for other VCs. What we like to do is help you develop as a corporation. We’ll help you assess markets, improve leadership and raise capital. We have close ties in the Valley and in China and we’ll work to prepare for fund raising wherever it makes sense. We’ll also make th introductions and guide you through the process.
Recent Research – Physical Technologies
In a prior report on patenting we identified that Canada has a significant problem in that it frequently doesn’t commercialize its own inventions. In this report, we wanted to look at whether part of that problem might be due to a lack of government support particularly in the area of Physical Technologies.
Physical Technologies are distinct from other types of technology because of their long and complex commercialization path. And yet there are no government programs that support the early-stage physical technology commercialization without requiring some external matching of funding.
However without market validation, which you can’t get in Physical Technologies without a significant investment to prove out the value proposition, venture capitalists and other investors will not provide that external funding. Without their support, no matching funds are available so it is often easier just to license the technology to a third party who can afford the investment.
Triggers and Barriers to Innovation
Making sure there is a market for your product or service is the first step in developing a world class company. One of the things that creates a challenge for entrepreneurs is thinking that there is a market for something that they have developed when there really isn’t. This frequently leaves them with a product in search of a market. In 2018 we will be releasing a book that sets out to explore this subject. In the meantime, take a look at the content we have on this site. In it we are looking at the forces that act on buyers; the triggers to innovation, as well as the barriers and forces of competitive differentiation.