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Your Guide to Raising Venture Capital 

for Your Own Business in Canada

 

Revised 2016 - 2017 Edition

 

By: Iain Williamson

 

 

Published Aug. 2016

 

 

ABOUT THIS BOOK

This book is a GOLD MINE of information for anyone who is raising equity financing in Canada. It shows you how to do it yourself. It has been completely updated and revised for 2016/2017 to reflect the many changes that have taken place since the last edition was published in 2015.

This Guide discusses the structure of the venture capital industry; what venturists are looking for and how they evaluate deals. It tells you how to contact them and provides 508 addresses. It reviews 99 upcoming venture capital and angel conferences as well as networks. It supplies you with the necessary contact information.

Find out what informal investors or "angels" can offer and how to find them. Learn about the characteristics of angls and angel clusters. See if corporate angels, immigrant investors and intermediaries can be of assistance.

The chapter on equity crowdfunding has been completely revised to reflect the most recent developments. You will find that this is a very exciting new area and could offer you an inexpensive way of raising equity financing for your business.

You are given hints on negotiating with investors and some words of caution in dealing with angels and crowdfunding investors.

This book is essential reading if you are seeking equity financing for your business or start-up.

 

ABOUT THE AUTHOR

Iain Williamson is an entrepreneur, business consultant and seminar leader. His views have appeared in many newspaper articles. He has also been a guest on radio and 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 and knows what makes business tick. 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. He has successfully raised venture capital and writes from firsthand experience, which he shares with you.

 

Your Guide to Raising Venture Capital for Your Own Business in Canada: 2016-2017 Edition; by Iain Williamson: 260 pages; Softcover; ISBN 978-1-55270-745-6; ISSN 1191-0534; published in Aug. 2016; Canadian $84.95.   

 

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DETAILED CONTENTS

 

Chapter 1 - Introduction

The Need for Capital

A Message from the Trenches

 

Chapter 2 - Some Background on 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

 

Chapter 3 - Labour Sponsored Venture Capital Corporations

Labour Sponsored Venture Capital Corporations (LSVCCs)

Nova Scotia Equity Tax Credit Act

New Brunswick - Labour Sponsored Venture Capital (LSVC) Tax Credit

Newfoundland & Labrador - Labour-Sponsored Venture Capital Corporation Tax Credits

GrowthWorks Atlantic Venture Fund

Québec Solidarity Fund (QFL)

Labour-Sponsored Fund of the Confederation of National Trade Unions called "Fondaction"

Ontario: Labour Sponsored Investment Funds (LSIFs)

Manitoba: Labour-Sponsored Investment Funds

SaskWorks Venture Fund (SWVF)

British Columbia: Labour Sponsored Funds (also known as Employee Venture Capital Corporations)

 

Chapter 4 - The Fund of Funds Approach

The Concept

Ontario Capital Growth Corporation (OCGC)

Québec's FIER Partners

Cycle Capital Fund III

Anges Québec (AQ)

Teralys Capital

Alberta Enterprise Corporation

B.C. Renaissance Capital Fund Ltd. (BCRCF)

 

Chapter 5 - Government Assistance to Facilitate Venture Capital & Direct Investments

Provincial Assistance

Newfoundland and Labrador: Direct Equity Tax Credit Program (DETC)

Nova Scotia Equity Tax Credits (ETC)

New Brunswick Small Business Investor Tax Credit

Ontario: Community Small Business Investment Funds (CSBIF)

Manitoba: Small Business Venture Capital Tax Credit

BC Investment Capital Programs

Yukon Small Business Investment Tax Credit (YSBITC)

 

Chapter 6 - Government Participation in Venture Capital

Business Development Bank of Canada (BDC)

InNOVAcorp

New Brunswick Innovation Foundation (NBIF)

Investissement Québec Venture Capital

Immigrants Investor Program

Desjardins Venture Capital

MaRS Investment Accelerator Fund (IAF)

Manitoba: Metis Economic Development Fund

First Peoples Economic Growth Fund Inc. (FPEGF)

Saskatchewan Entrepreneurial Fund (SEF)

Prairie Ventures Fund Limited Partnership (PVLP)

APEX Investment Fund

N.W.T. Business Development & Investment Corporation (BDIC)

Nunavut Development Corporation (NDC)

Baffin Business Development Corporation (BBDC)

 

Chapter 7 - Venturist's Preferences

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?

 

Chapter 8 - How to Meet Canadian Venture Capitalists

How to Contact Them

A Word of Caution

Canadian Venture Capital Conferences

List of Some Canadian Venture Capital Companies

 

Chapter 9 - How to Meet American Venture Capitalists

Listings of U.S. Venture Capitalists

American Venture Capital Conferences

 

Chapter 10 - Overseas Venture Capitalist Conferences

How to Meet Overseas Venture Capitalists

 

Chapter 11 - Courting 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

Liquidity

Syndication

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

 

Chapter 12 - Chances of Concluding a Deal

Realism of the Venture Capital Market From the Perspective of Small Business Financing

Deal Flow

Show Persistence!

Some Advice for "Venturists"

 

Chapter 13 - Informal Investors or "Angels"

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?

 

Chapter 14 - The Preferences of Angels

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?

 

Chapter 15 - The Corporate Angel

Another Business as an Angel

Distributors

Suppliers

Customers

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 16 - How to Meet Angels in Canada

How to Meet Angels in Canada

Investment Clubs

Deal Makers and Middlemen

How to Meet Middlemen

 

Chapter 17 - How to Meet American Angels

American Angel Networks

American Angel Organizations

Internet Sites to locate venture capitalists and angels

 

Chapter 18 - Equity Crowdfunding from "Micro Angels"

What is Crowdfunding?

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

CircleUp

Funders Club

SeedInvest

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

Shorcan Brokers Limited

National Crowdfunding Association of Canada (NCFA Canada)

The Canada Revenue Agency (CRA) Makes its Position Known With Respect to Crowdfunding

Canada's Draconian Anti-Spam Laws Could be a Crowdfunding Killer

The UK's Regulatory Framework

The Brits Drop the Ball

Equity Based Crowdfunding is Growing

CrowdCube

Seedrs.com

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

Small Business Failure Rates

Crowdfunding Investors Are at Risk

 

Chapter 19 - Hints on Negotiating

The Degree of Sophistication Varies

The Goal of Negotiations

The "Due Diligence" Process

Who Conducts Due Diligence for Equity Crowdfunders and Who Pays For It?

Valuation

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

Dilution

Management and Other Fees

Control

Restrictive Covenants

Affirmative Covenants

Management From the Venture Capitalist's Viewpoint

The Term Sheet

The Legal Agreement

Directorships

Director's Liability

 

Chapter 20 - A Word of Caution!

Rules of the Angel and Angel Investor Games

Check Out That Angel!

Rules of the Crowdfunding Game

 

Chapter 21 - Planning and Financing From the Public & Private Sectors

Self-Financing and Preparations

You Have to Prepare Yourself

Ways to Raise Debt Financing for Your Business

Ways to Finance Your Business By Giving Up Some of Your Ownership

Government Financing

Export Financing

Further Information

 

 

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