Looking over several of the new inventions featured at the Western Canada Farm Progress Show in Regina, Chris Selness spots a couple he expects will solve problems for farmers.
That’s key, he said.
Any new product has to have a market and add value to farming operations.
When Selness looks at some of the products, he wonders about that.
“I applaud their efforts,” he said of the 45 companies that displayed new products at the show.
After all, earlier inventors developed all the equipment on display outside the building in much the same way.
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But inventors will find it difficult to break into the market against the original equipment manufacturers with huge research budgets unless their products are patentable and far ahead of anything else on the market, said Selness, a farmer who is also vice-president of investments for SaskWorks Venture Fund Inc.
“In terms of broad-based appeal and real market value, there are only about three winners here,” he said after viewing about half of the inventions.
Selness was one of several speakers at the first AgriCapital Marketplace program held during the show last week.
His goal was to provide information about how entrepreneurs and established businesses can access venture capital to kick-start or accelerate their businesses.
Venture capital is money provided by investors to start up companies or small businesses that don’t have access to capital markets.
Selness identified three keys entrepreneurs should think about if they want to pursue this type of financing:
- There needs to be some level of market validation, he said. That’s where broad-based appeal of a new invention comes in.
- Those trying to secure financing must have completed a business plan.
“You have to give evidence to us that you’ve actually taken the time to research your market and identified your competitors and how you’re going to gain market share or take market share away from them,” he said.
- It’s not sufficient to have a good idea and a business plan. The inventor has to be willing to take a financial stake because the risk can’t be all one-sided, he said.
“We’re not the bank. We’re second or third behind the senior lender and the operating lender.”
The business needs good financial controls and reporting systems, and the management team is “everything,” Selness said.
He said few entrepreneurs understand venture capital and what it can do for them.
Most inventions are financed with what Selness calls “love money” from family and friends or cash flow diverted from the farm.
He said he keeps his eyes open for potential investments, especially in the agricultural sector.
During his tour of the new inventions building, he hoped some of the exhibitors would ask for his advice, but none did.
“We have work to do to increase awareness of and interest in venture capital,” he said.
