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Next Phase Partnership coaches small companies to be 'venture capital ready'

Last fall, Shawn Carver and Toon Nagtegaal set out on a five-year mission to change the face of entrepreneurship on Canada's East Coast.

Carver, 32, lives in his hometown of Riverview. Nagtegaal, 54, moved from the Netherlands to a rural community near Lunenburg, N.S., in 2003.

In November they formed The Next Phase partnership to coach small companies to make themselves "venture capital ready" to pitch a reasonable proposal to potential investors from Toronto, Boston, or wherever, to take their enterprises to the next phase of commercialization.

They formed the partnership after Carver and his team won the silver medal, along with a $25,000 equity investment and $9,000 worth of in-kind services, for their entry Mass Rule in the New Brunswick Innovation Foundation's Breakthru business plan competition.

Mass Rule helps businesses, politicians and others find out what people are saying about them in the Internet - an "Internet polling solution" or "opinion mining," Carver called it in an interview on Friday. He and two partners run this enterprise.

Carver sought Nagtegaal's advice on the Breakthru entry. "Well before that I had met Shawn," Nagtegaal said on Friday.

"We sat together after that occasion and I explained to him what I was doing," Nagtegaal said, referring to the Breakthru competition.

Operating under the business name Hill House, Nagtegaal provided consulting services to businesses seeking venture capital.

Carver's started another business, THINK Technology, around 2002 to help technology companies with marketing.

As Nagtegaal explained what he was up to, Carver interjected that they should get together. Hill House and THINK Technology formed their partnership.

"He brings deep experience and knowledge, research in the IT market. He's one of the deepest researchers I've ever met," Nagtegaal said of his younger partner.

"I'm just a straight forward venture capitalist," Nagtegaal said - but a venture capitalists with 30 years of experience analyzing and coaching companies.

"We see our skill sets as extremely complementary," Carver said.

They take clients through five points, or questions to which would-be investors want answers. They start with "pain in the market," an un-met need that an entrepreneur might fill. Next comes the "value proposition-" the entrepreneur's solution to the need. Then comes the significance of the pain. Then, "posturing," why a customer should accept this particular solution. Execution is the fifth stage - "Can you deliver?"

They negotiate how much time they spend with each company, but they feel they can deal with no more than six clients at a time.

Nagtegaal left the GrowthWorks Atlantic Venture Fund in June 2006 intending to establish a new venture capital fund.

"I'm still working on that; basically, everything is in place other than the money," he said.

He hopes to convince Nova Scotia and Newfoundland and Labrador to allow pension funds to place part of their capital with venture capital funds, the way New Brunswick does.

Carver graduated from Riverview High School in 1994, then completed the learning technology program at the New Brunswick Community College in Miramichi where he and a dozen other students created a computer based training program for emergency preparedness.

He enrolled in an English program at St. Mary's University, but left after three years to start a company, an Internet portal for university students. Another company eventually bought him out.

Nagtegaal describes the venture capital market in Atlantic Canada as "imature," forcing start-up companies to look outside the region if they need $5 million or more take their products to market.