Pre-Commercial
Development
Commercial Scale-up, Start-up and Growth
SR&ED IRAPWEDCanadian
Agricultural Partnership
AFSCBDCChartered BanksFCC Venture Capital
“Death Valley”
LIFE CYCLE OF A COMPANY
Mature Business
(Sales,
Profitable,
Diverse
Product Line)
Idea
Angels
Copyright – Keith & Associates - 2019
Congratulations!!!n You just won a $10 Million Dollar Lottery!!!!!
Copyright – Keith & Associates - 2019
Loan or Equity? n Bioprocessing Companyn Have a Business Plan (only)n Need $1 Million Dollarsn Give them a Loan?n Buy Shares?
Copyright – Keith & Associates - 2019
SOURCING CAPITALGOVERNMENT GRANTS
§ Free money! But….....§ Have to fit mandate§ Need matching funding§ Can take time to obtain
Copyright – Keith & Associates - 2019
SOURCING CAPITALCROWDFUNDING
§ A hot trend§ Can help raise awareness of
products§ Not always about raising money§ Amounts raised typically not huge
Copyright – Keith & Associates - 2019
SOURCING CAPITALANGEL INVESTORS
n Invest own moneyn Different types of angelsn Earlier stage investmentn May invest from the heartn Expertise can be invaluable
Copyright – Keith & Associates - 2019
Pre-Commercial
Development
Commercial Scale-up, Start-up and Growth
SR&ED IRAPWEDCanadian
Agricultural Partnership
AFSCBDCChartered BanksFCC Venture Capital
“Death Valley”
LIFE CYCLE OF A COMPANY
Mature Business
(Sales,
Profitable,
Diverse
Product Line)
Idea
Angels
Copyright – Keith & Associates - 2019
Loan or Equity? n Need $10 Million n Ready to build the facilityn Want you to provide $1 millionn Give them a Loan or Buy Shares?
Copyright – Keith & Associates - 2019
SOURCING CAPITALVENTURE CAPITAL
n Professionally managed pool of $n Invest to certain criterian Board representationn Exit strategy – in alignment?n $2 Million and upn Bonuses based on performance
Copyright – Keith & Associates - 2019
SOURCING CAPITALTRADITIONAL DEBT
n No Shareholder Dilutionn Need Cash Flown Need Securityn Personal Guaranteesn Covenants
Copyright – Keith & Associates - 2019
Loan or Equity? n Facility up and runningn Have sales and are making modest
profitsn Need $2 Million for operating capitaln Give them a Loan or Buy Shares?
Copyright – Keith & Associates - 2019
Pre-Commercial
Development
Commercial Scale-up, Start-up and Growth
SR&ED IRAPWEDCanadian
Agricultural Partnership
AFSCBDCChartered BanksFCC Venture Capital
“Death Valley”
LIFE CYCLE OF A COMPANY
Mature Business
(Sales,
Profitable,
Diverse
Product Line)
Idea
Angels
Copyright – Keith & Associates - 2019
SOURCING CAPITALINITIAL PUBLIC OFFERINGn “Sexy”, but expensiven Reporting requirementsn Exposure to competitorsn Investor Relationsn Locked in Value
Copyright – Keith & Associates - 2019
SOURCING CAPITAL
SELF FINANCING ORINTERNALLY GENERATED
FUNDSn Lowest Risk
n Very hard to achieve
n May restrict growth or ability to
take advantage of opportunities
Copyright – Keith & Associates - 2019
SOURCING CAPITALMORE THAN ANY OTHER FACTOR:
LACK OF CASH FLOW KILLS COMPANIES
Copyright – Keith & Associates - 2019
Copyright - Keith & Associates - 2019
A Lenders Perspective is Different than an Investor’sq No upsideq Huge downsideq High volume,
low margin business
Copyright – Keith & Associates -2012
An Investors Perspective is Different than a Bank’s.
- Potential upside
- Huge downside
- Little control
- No quick exit
- No liquidity
- May like to “Play”
- Better than interest?
NUMBER 10HAVE A THREE C’s “VISION”-CLEAR, CONCISE, COMPELLING.
q If you don’t know where you want to go, it is difficult to get there.
q Meeting in Springside.q Where are you going? How will you get
there?
Copyright - Keith & Associates - 2019
NUMBER 9KNOW WHO TO APPROACH.
q Don’t go to Burger King to buy a car.
q Targeted approachesare most effective
Copyright - Keith & Associates - 2019
NUMBER 8PLACE THE ORDER.
q Clearly describe what you are looking for.
q Funders need to know what you want.
Copyright - Keith & Associates - 2019
NUMBER 7DEMONSTRATE SHAREHOLDER
COMMITMENT.
q If someone else puts in all the money, they might as well own the company.
q Who is taking the most risk?
Copyright - Keith & Associates - 2019
NUMBER 6USE A COLLABORATIVE APPROACH.
q An adversarial relationship is bad for everyone and reduces the chance of getting what you need.
Copyright - Keith & Associates - 2019
HAVE YOUR “ELEVATOR PITCH” READY.
q Rehearse it. q Fine tune it. q You never know when you might
need it.
Copyright - Keith & Associates - 2019
NUMBER 5
NUMBER 4BE REALISTIC.
q Provide a worst case scenario.q Identify any potential risks and address
them. q Show that the loan can still be repaid.q Demonstrate management skill.
Copyright - Keith & Associates - 2019
NUMBER 3HAVE A DETAILED UNDERSTANDING OF YOUR MARKET.
q There is always competition. Always.Copyright - Keith & Associates - 2019
NUMBER 2RECOGNIZE THAT A TECHNOLOGY
OR PRODUCT IS ONLY ONE PIECE OF THE PUZZLE.
A balanced approach wins.
Copyright - Keith & Associates - 2019
HAVE AN OUTSTANDING MANAGEMENT TEAM!
Management DrivesEVERYTHING.
Copyright - Keith & Associates - 2019