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Your Guide to Financing Business  

Growth by Selling a Piece of the Pie


What's involved in going public; crowdfunding;

employee share ownership plans 

and franchising in Canada


Revised 2018-2019 Edition


By: Iain Williamson










This 2018/2019 edition has undergone a major revision and will be invaluable if you are prepared to sell a portion of the ownership in your business in return for money.

This book shows you how to finance business growth by selling a piece of the pie. Find out what’s involved in selling shares to the public in an Initial Public Offering (IPO). It covers the types of shares that are publicly traded and the preparations for going public.

This book reviews all the Canadian exchanges. It covers the listing requirements for the Toronto Stock Exchange (TSX), the Toronto Venture Exchange (TSXV) and the Canadian Stock Exchange (CSE). It includes a section on private placements and on stock options as they relate to the Toronto Venture Exchange. It also covers London’s Alternative Investment Market (AIM) and listing on the NASDAQ exchange in the U.S. It also points out the advantages together with the disadvantages of being publicly listed.

There are new chapters on venture capital and informal angel investors. The chapter on equity crowdfunding has been completely updated to reflect many recent developments together with some of the challenges that face this method of raising money. Another chapter helps you when negotiating with venture capitalists, angel investors and crowdfunders,

Learn how employee share ownership plans work and how they can be used to raise capital; together with the advantages and disadvantages. Find out how some of the provincial governments can help.

Take a look at franchising as a method for financing growth. Consider some of the factors that you will need to take into account.

This book is essential reading if you are an entrepreneur or business owner who wants your company to grow by giving up part of the ownership.



Iain Williamson is an entrepreneur, business consultant and seminar leader. His views have appeared in many newspaper articles. He has also been the guest speaker on a recent CBC Radio phone-in show on starting a business in a recession. In addition, he has appeared on television shows such as: CBC TV’s Venture; TVO’s MoneysWorth, and Canada Tonight of BCTV and CHCH Television.

Iain spent five years as a financial analyst in the stockbrokerage business and knows the underwriting process. For fourteen years he operated his own businesses in importing, high technology and manufacturing. He now operates Entrepreneurial Business Consultants of Canada and also owns a book publishing business. He holds degrees from Oxford University and from St. Andrew’s, Scotland.



Your Guide to Financing Business Growth by Selling a Piece of the Pie: What's involved in going public; crowdfunding; employee share ownership plans and franchising in Canada: 2018-2019 Edition; by Iain Williamson; 228 pages; softcover; ISBN 978-1-55270-800-2; ISSN 1191-0488; published in August 2018; Canadian $74.95.  


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CHAPTER 1 Introduction
The Concept of Equity
The Importance of Limited Liability
The Publicly Traded Company
Giving up a Piece of the Pie

CHAPTER 2 Going Public: The Initial Public Offering (IPO)
The Meaning of "Going Public"
How Large Does A Company Have to Be to Go Public?
Keen Competition Among the Exchanges

CHAPTER 3 Types of Shares and the Payouts
Common Shares
Board Lots
Splits and Consolidations
What is Going Short?
Unlimited Risk
If Shares are "Called"
Short Covering Rallies and a "Short Squeeze"
Are Shares Available to be Borrowed?
Abandonment of the "Uptick" Rule
Banning Short Sales in Parts of Europe
Short Selling by Hedge Funds
Matching Pairs
Net Long/Net Short
Dividend Tax Credits
Dividend Payout Ratio
Preferred Shares
Cumulative Preferred Shares
Dividend Re-Investments Plans (DRIPS)
Preferred Shares with "Re-sets"
Income Unit Trusts
Real Estate Investment Trusts (REITs)
American Depositary Receipts (ADRs)
Master Limited Partnerships (MLPs)
Share Buy-Backs

CHAPTER 4 The Rules of the Game
The Gatekeepers
A Decentralized System of Governance in Canada
The Provincial Securities Commissions
Canadian Securities Administrators (CSA)
The Investment Industry Regulatory Organization of Canada (IIROC)
Quotation and Trade Reporting System (QTRS)
Creating the Financial Services Regulatory Authority (FSRA) of Ontario
Establishing the Cooperative Capital Markets Regulatory System
Regulating Financial Planners
Modernizing the Legislative Framework for Co-Operative Corporations
Updating Capital Markets Law
The U.S. Securities and Exchange Commission (SEC)
The UK Financial Services Authority (FSA)

CHAPTER 5 The Underwriting Process
The Sale of Shares
The Underwriter
Selecting an Underwriter
The "Due Diligence" Process for the Public Equity Markets
Management Time Commitment
The Prospectus
The Bought Deal
All or Nothing
Best Efforts Basis
Timing of the Issue
The Aftermarket
Time Required to Underwrite an Issue
The Cost of Going Public
Proceeds From the Issue

CHAPTER 6 Stock Exchanges
Restructuring of the Canadian Exchanges
The Toronto Stock Exchange (TSX)
The TSX Venture Exchange (TSXV)
Ways to List on the TSX Venture Exchange (TSXV)
Private Placements on the TSX Venture Exchange
Policy 4.1
Challenges Presented by Policy 4.1
Stock Options on the TSX Venture Exchange
NEX: A Separate Board of TSX Venture Exchange
Canadian Securities Exchange (CSE)
Alternative Trading Systems (ATSs)
Chi-X Canada
Omega ATS
TriAct Canada Marketplace
Liquidnet Canada
Lynx ATS
Aequitas NEO Exchange
Instinet Canada Cross (ICX)
CFID/Perimeter Markets Inc.
ICE Futures Canada
Nodal Exchange
EquiLend Canada
Bourse de Montréal Inc
The London Stock Exchange (LSE)
AIM (Alternative Investment Market)
Over-the-Counter (OTC) Markets
Inter-listed Stocks

CHAPTER 7 Listing Requirements For the Toronto Exchanges
Listing Requirements for the Toronto Stock Exchange
Listing Requirements for the TSX Venture Exchange
Ways to Become Listed on the CSE

CHAPTER 8 Other Considerations in Going Public
Other Factors
Advantages of Going Public
Disadvantages of Going Public
Costs Associated with Maintaining a Listing
The Need for a National Stock Savings Plan

CHAPTER 9 Venture Capital
What is Venture Capital?
How Did This Venture Capital Game Start?
Typical Structure of Canadian Venture Capital Companies
Who Are the Players in Canada?
Fund of Funds
Private Equity
Labour Sponsored Venture Capital Corporations (LSVCCs)
The Concept of Fund of Funds
How Much Money is Being Raised?
Where is the Money Being Invested?
What is the Money Being Invested In?
Harsh Reality
What are the Preferred Forms of Investment?
What's in it for the Venture Capitalist?
Five Methods of Approach
Length of Time Required to Close a Deal
A View From the Venture Capitalist's Side of the Desk
Criteria Used by Venture Capitalists in Evaluating Deals
Scepticism of Venturists
Management Participation
Product Positioning in the Market
Accountability to Investors
A Big Cut of the Pie
What the Venturist Needs
Realism of the Venture Capital Market From the Perspective of Small Business Financing
Deal Flow
Show Persistence!
Some Advice for "Venturists"

CHAPTER 10 Informal Angel Investors
The Funding Gap
What is Meant by the Term "Angel?”
The American Experience
Characteristics of Angels
Angels as Risk Takers
Angels in Canada
The Importance of Angels
Profiles of Canadian Angels
How Many Angels Are There in Canada?
Size of Investments
Where do Angels Like to Invest?
What do Angels Like to Invest In?
What Form Does their Investment Take?
How Long Does the Average Angel Stay on Board?
How Successful Are the Marriages?
Why Don't Some Marriages Make it to the Alter?
How Do Small Business Owners Use the Money?
Another Business as an Angel
Joint Venturing
Other Methods of Corporate Angel Financing
Potential Conflicts with Corporate Angels
Clusters of Angels
Syndication in Clusters
Incubators and Accelerators
The "Seedcamp" Model
How to Meet Angels

CHAPTER 11 Equity Crowdfunding
What is Crowdfunding?
Where Equity Crowdfunding Fits into the Big Picture
Establish Presence on the Internet: Set up a Website and Add a Video
The American Jumpstart Our Business Startups Act (JOBS Act)
Accredited Investors in the U.S.
Dwindling Number of Accredited Angel Investors in the U.S.
Title II: The Removal of the Gag Has Enabled Crowdfunders to Solicit Accredited Investors
Funders Club
Realty Mogul
Prodigy Network
Patch Of Land Real Estate Lending Platform
Title III: The Most Momentous Securities Exemption Since 1933
Title III Regulation Crowdfunding Rules
The Desperate Need for Access to Equity Crowdfunding in Canada
Accredited Investors in Canada
Accredited Investor Exemption
Non-Accredited Investor Exemption
Offering Memorandum Exemption
Saskatchewan was the First Province to Adopt an Equity Crowdfunding Exemption
Six Provinces Agreed to Start-up Crowdfunding Exemption Rules
Alberta and Nunavut Go Their Own Ways
The Ontario Securities Commission (OSC) and Crowdfunding Exemptions
Exempt Market Dealer (EMD)
Funding Portals
TSX Private Markets (TSX PM)
It's Not Clear Whether the Secondary Marketplace is Working in Canada
SeedUps Canada
National Crowdfunding Association of Canada (NCFA Canada)
The Canada Revenue Agency (CRA) Position With Respect to Crowdfunding
Canada's Draconian Anti-Spam Laws Could be a Crowdfunding Killer
The UK's Regulatory Framework Crowdfunding in the UK is Already Providing Badly-Needed Capital for Start-ups and Small Businesses
UK Investment Enterprise Scheme
Tax Credits Could Boost Interest in Crowdfunding
Caveat: Small Business Failure Rates
Crowdfunding Investors Are at Risk

CHAPTER 12 Negotiating With Venture Capitalists Angel Investors and Equity Crowdfunders
The Degree of Sophistication Varies
The Goal of Negotiations
The "Due Diligence" Process Used by Venture Capitalists, Angel Investors and Crowdfunders
Who Conducts Due Diligence for Equity Crowdfunders and Who Pays For It?
Expected Return on Investment
Points Likely to Be Negotiated
Total Financing Required
How Much Money Has The Small Business Owner Invested?
Timing of the Investment
Management and Other Fees
Restrictive Covenants
Affirmative Covenants
Management From the Venture Capitalist's Viewpoint
The Term Sheet
The Legal Agreement
Director's Liability
Rules of the Angel and Angel Investor Games
Check Out That Angel!
Rules of the Crowdfunding Game

CHAPTER 13 Employee Share Ownership Plans
A Dream?
Allowed by Securities Acts
How Can ESOPs Help?
Types of ESOPs
Advantages of an ESOP from the Viewpoint of the Business
Disadvantages of an ESOP from the Viewpoint of the Business
Disadvantages of ESOPs from the Employee's Point of View
Points to Consider When Establishing an ESOP
Improved Performance
The ESOP Association of Canada
The ESOP Association

CHAPTER 14 Government Encouragement for ESOPs
Saskatchewan Employee Investment Program
British Columbia's Employee Share Ownership Program (ESOP)

CHAPTER 15 Franchising as a Method of Financing Growth
What is Franchising?
Franchising as a Method of Financing Growth
Planning for Franchising
Marketing of the Franchise
Selecting Franchisees

CHAPTER 16 Some Factors to Consider in Franchising
Some Factors that Have to be Examined
The Logo and Image
Location and Territory
Equipment and/or Premises
Operating Procedures
Accounting and Business Controls
Quality Control
Tax Considerations
The Franchise Contract
Advisory Councils
Franchising and the Law

CHAPTER 17 Is Franchising for You?
Is Your Business Franchisable?
More Information

CHAPTER 18 Self-Financing and Financing From the Public & Private Sectors
Self-Financing and Preparations
You Have to Prepare Yourself
Ways to Raise Venture Capital
Ways to Raise Debt Financing for Your Business
Government Financing
Export Financing
Further Information









Copyright 2018 Productive Publications