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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 2020 - 2021 Edition



This 2020/2021 edition has undergone revisions 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) and the effects of Covid-19 on the market. It covers the exchanges and Alternative Trading Systems. 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 covers the advantages and disadvantages of being publicly listed.

There are chapters on venture capital and informal angel investors. The chapter on equity crowdfunding has been updated to reflect 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 two 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 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: 2020-2021 Edition;  245 pages; Softcover; ISBN 978-1-55270-838-5; published in November 2020; Canadian $74.95. 



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Chapter 1
Giving Up Part of the Ownership In Return for Financing

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-Investment 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)
Financial Services Regulatory Authority of Ontario (FSRA)
Establishing the Cooperative Capital Markets Regulatory (CCMR) 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 and Alternative Trading Systems
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
Alpha Exchange (TSXA)
NEX: A Separate Board of TSX Venture Exchange
Canadian Securities Exchange (CSE)
Alternative Trading Systems (ATSs)
Equity ATSs
Debt Alternative Trading Systems (ATSs)
Securities Lending Alternative Trading Systems (ATSs)
ICE Futures Canada
Nodal Exchange
Bourse de Montréal Inc
The London Stock Exchange (LSE)
AIM (Alternative Investment Market)
Over-the-Counter (OTC) Markets
Inter-listed Stocks

Chapter 5
Listing Requirements for the Toronto Exchanges

Tier Structure
Preparations for Listing Application
Listing Requirements for the Canadian Securities Exchange (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?
Private Equity
Labour Sponsored Venture Capital Corporations (LSVCCs)
Nova Scotia Venture Capital Personal and Corporate Tax Credit
Nova Scotia Innovation Equity Tax Credit
Nova Scotia Equity Tax Credit
New Brunswick - Small Business Investor Tax Credit
New Brunswick Labour Sponsored Venture Capital (LSVC) Tax Credit
GrowthWorks Atlantic Venture Fund
Québec Solidarity Fund (QFL)
iNovia Capital
Québec Enterprise Transfer Fund
Réal Ventures
Ontario: Labour Sponsored Investment Funds (LSIFs)
Manitoba: Labour-Sponsored Investment Funds
Golden Opportunities Fund Inc.
Manitoba Innovation Growth Sidecar Fund
Métis Economic Development Fund
Saskatchewan Labour-sponsored Venture Capital Corporations Amendment Act, 2017
SaskWorks Venture Fund (SWVF)
Saskatchewan Entrepreneurial Fund (SEF)
Prairie Ventures Fund Limited Partnership (PVLP)
APEX Investment Fund
British Columbia: Investment Capital Programs
BC Immigrant Investment Fund (BCIIF)
The Concept of Fund of Funds
Canada Accelerator and Incubator Program (CAIP)
Venture Capital Catalyst Initiative (VCCI)
Ontario Capital Growth Corporation (OCGC)
Québec’s FIER Partners
Teralys Capital
Anges Québec (AQ)
Alberta Enterprise Corporation
B.C. Renaissance Capital Fund Ltd. (BCRCF)
How Much Money is Being Invested?
What is the Money Being Invested In?
Where is the Money Being Invested?
Size of the Deals
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
Deal Flow
Show Persistence!
Harsh Reality
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

Chapter 11
Equity Crowdfunding
What is Crowdfunding?
Size of the Crowdfunding Market
Where Equity Crowdfunding Fits into the Big Picture
Establish Presence on the Internet: Set up a Website and Add a Video
Crowdfunding by “Micro-Angels”
The Basic Concept Behind the Rewards Model or Perks-Based Crowdfunding
A KickIn Crowd
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)
Lending Loop
National Crowdfunding & Fintech Association of Canada
The Canada Revenue Agency (CRA) Position With Respect to Crowdfunding
Canada’s Draconian Anti-Spam Laws Could be a Crowdfunding Killer
The Desperate Need for Access to Equity Crowdfunding in Canada
Tax Credits Could Boost Interest in Crowdfunding
Caveat: Small Business Failure Rates
Crowdfunding Investors are at Risk
Crowdfunding is Being Suffocated to Death by Overzealous Regulators

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
Advisory Board
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 9
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
Planning 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
Final Observations on the Impact of Covid-19









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