With an economic crisis looming, pitching new ideas and finding investors for new innovations might be difficult – but not impossible, the president of the Toronto-based mutual fund Criterion Investments says.
Ian McPherson said clean energy and agricultural sustainability are perfect business ventures for forward-looking investors.
He said one of the biggest problems facing investors today is the lack of knowledge.
“There are people who think they can make money but financial advisers are overwhelmed by information,” he said.
While the interest is there, it is just not possible for all investors to be experts in everything.
Most banks are lending very cautiously these days, so lower-risk solutions quickly rise to the top of the “desirable” businesses to fund.
For bigger ideas, a funding institution might even require project insurance.
McPherson was outlining the challenges for innovation at the Biofibe 08 conference in Winnipeg on Nov. 14.
His message was cautiously optimistic as he prepared potential innovators for “the Dragon’s Den.”
He warned public policy debates like the “food versus fuel” arguments will hold the biofibre and biofuel industries back.
And he said the effect Barack Obama’s presidency will have on the industry is an unknown factor right now.
To weather the trying times, McPherson had some sensible advice. “Focus on survival, not growth,” he recommended, adding, “stay in the game.”
He advised entrepreneurs to build relationships with multiple financiers.
Where applicable, he said lobbying government is a useful tool, and he stressed strengthening sustainability. “The long-term trend is outstanding, but the short term is poor,” he said.
Will Wiebe manager, business development for the Composites Innovation Centre echoed McPherson’s message to approach businesses cautiously.
The idea is to take a low-value material and turn it into a high-value end product. But he warned the “build it and they will come” marketing strategy is poor. “Make your product market driven,” he said. “Don’t count on extra premiums for ‘green.’”
In the production of biofibres, it is often possible to put “scraps” to use. That is a plus for the business and the environment, but Wiebe said while the “scrap factor” should be considered, it should not be counted on as a revenue stream.
He said the product should add superior value.
Products and projects can take a minimum of four to five years to commercialize, so Wiebe recommended that innovators know their “kill point.”