Blogs

  • 05 May 2018 by Info Vantec

    VANCOUVER, May 1st, 2018 – Angel investor network VANTEC and online investment platform FrontFundr are pleased to announce a partnership. The two organizations will collaborate in the areas of deal syndication, due diligence, and the mobilization of a diverse investor community across Canada.

    Thealzel Lee, Co-Manager at VANTEC: “We support promising BC-based entrepreneurs in technology ventures with angel investment, advice and connections. Our collaboration with FrontFundr enables these entrepreneurs to present themselves to a diverse pool of investors.”

    Registered as an Exempt Market Dealer (EMD), FrontFundr can distribute securities to not only accredited investors, but non-accredited investors too, enabling the public to invest alongside VANTEC members.

    This partnership will enable VANTEC members who are accredited investors, and the public across Canada to invest in companies that have presented at VANTEC meetings, through an online, streamlined process in as little as 12 minutes, and at lower investment minimums.

     “We are extremely excited to partner with VANTEC to increase access to capital for companies”, says Peter-Paul Van Hoeken, Founder & CEO of FrontFundr. “The partnership with VANTEC provides companies an online channel to efficiently access angel investors and the public across Canada.”

    About FrontFundr

    FrontFundr is Canada’s leading online investment platform providing investors access to investment opportunities in vetted companies. FrontFundr uses technology to assist companies in raising capital efficiently from both seasoned investors and the wider public through a streamlined online investment process. FrontFundr is a nationally registered Exempt Market Dealer.

    About VANTEC Angel Network

    We are angel investors who support promising entrepreneurs with investment, advice and connections. Each month, 12-15 start-ups pitch and present their investor package. Since 1999, VANTEC has presented 2,000+ companies to investors and helped them to raise seed funding.

    Companies can  apply to pitch at the monthly investor meetings free of charge. VANTEC presents about 150 vetted companies per year to accredited investors for a $500 annual membership fee.

  • 26 Mar 2018 by Info Vantec

    Technology companies can be started, grown and exited faster than ever. The market for selling companies has never been stronger. Your chances for a successful exit multiply if you put the pieces in place early. Planning your exit can start as soon as you found the company, and before you talk to investors, and it should be a regularly reviewed activity after you've taken your first seed round.

     

    Many of the things that help you to be prepared for an exit will also help you to fill your round, so it pays to be prepared early. 

     

    We have created a short Exit Preparedness Self Assessment to give you a sense for what prospective investors are looking for. Being prepared will help you to dedicate more time on the exit opportunity and stay on top of the day to day business rather than scramble to collect the requested information

     

    In this workshop you will learn:

    • How to build alignment of all stakeholders around your exit strategy
    • How to prepare your business and your team for an exit
    • What information to prepare for your digital data room and how to manage it
    • How to be ready for due diligence and minimize distraction of your core team

     

    Join David Rowat, Basil Peters and a panel of experienced investors, exited entrepreneurs and advisors from 3-6 PM on April 19 , 2018

     

    TICKETS & MORE INFORMATION

  • 21 Mar 2018 by Pieter Dorsman

     

    Over the past few years I have been taking my ‘Deal Structuring and Term Sheets’ workshop all over Canada, and even a few times to the Caribbean. In the presentation there are a few slides on valuation and I usually spend around five to ten minutes talking about the subject. Attendees, be they investors or entrepreneurs or professionals that service the ecosystem, invariably get excited over valuation. It is an emotional subject for many and very often they lose sight over what founders and investors can achieve together if they do not get stuck on valuation.  There is an old joke that where the investors says to a founder “you can set your own valuation, as long as you will let me set all the other terms …” In other words, valuation is not nearly as important as some think it is.

    Still, there are lots of questions around valuation. Between investors and founders the valuation debate often leads to difficult, protracted and totally unnecessary negotiations and conflict. The need to simplify and demystify this issue became very apparent over the years and I have thus put together a stand-alone workshop that focuses entirely on the issue of valuation. The goal is to get founders and investors over the hurdle quickly and do a deal so that a company can grow for the benefit of all.

    In preparing for the workshop I did an inventory and found not less that 13 approaches to valuation for early stage technology companies. I am sure there are more. During the workshop I will discuss each of them in detail and combine them with some case studies. At the same time the workshop will look at the broader impact valuation has on a company, the relationship with its investors as well as the many plusses and minuses of high and low valuations. We also get to discuss how founders often get it wrong when determining how much money needs to be raised and which ultimately has an impact on determining the value of a company at the outset of a financing. An overview of the Canadian and US markets will give attendees a good handle once they go out and try and close deals.

    Above all the goal is to ensure that investors and entrepreneurs get to work together and are able to map out a plan for the company that is served by the best possible financing structure. And that begins with setting the valuation such that there is no time wasted and that each party feels they have given up a bit, which is the general definition of a good compromise.

    I hope you can join me, investors and founders on April 19, 2018 from 12-3 PM for an engaging workshop and conversation.

    You can register here and save $50 with promocode vantec$50off 

     

    Pieter

     

  • 20 Feb 2018 by Info Vantec

     VANTEC’s mission is to grow the Angel investor community in BC and to help investors find more investment opportunities they want to invest in. Entrepreneurial programs, incubators and accelerators provide valuable support to budding entrepreneurs and their companies and help them on their journey to become a thriving business.

    The February 7th VANTEC meeting focused on Investing in Food & Ag Tech has brought 4 great organizations together that each provide unique and valuable services to entrepreneurs by supporting them in the journey to become investment ready.

     

     

    What is your organizations’s mission?  

    Bioenterprise’s official mission statement is to become the leading commercialization organization in Canada for companies engaged in agri-technology, but there’s more to it than that. We want to see the agri-technology and food sectors grow and increase in both level of innovation and competitiveness on a global scale. Bioenterprise aims to empower entrepreneurs and provide the resources to create sustainable, profitable businesses.

     

    What excites you about the investment opportunities in Food and Ag Tech today and looking ahead.

    There is a global push towards innovation and adaptations in the Food and Ag Tech industries. The global population is growing, our arable land is decreasing, fresh water is becoming scarcer, climate change is impacting crop yields, and the population is becoming more educated about their food sources and looking for sustainable, nutritious options. All of these factors are contributing to a growing food and agri tech sector and causing larger organizations, not traditionally focused on agriculture, to look for sustainable alternatives to traditional materials, such as plastics.  

     

    What do you see as some of the biggest challenges that new entrepreneurs have to overcome on their journey to become investment ready? How does your organization help them with that?

    Many of the entrepreneurs that we see entering the market understand their niche and technology, but often haven’t spent enough time analyzing their market and understanding their customer and that customer’s needs. These entrepreneurs need to learn how to identify their target market and how to ask the questions required to refine their product for commercial success. Another big challenge for the entrepreneurs we meet is understanding how to grow their business strategically. Bioenterprise can help companies identify their target market, facilitate strategic connections/partnerships, and coach entrepreneurs through customer discovery. We also work with the entrepreneurs to develop and implement a strategic growth plan including a review of their investment materials, creation of an appropriate strategy and introductions to investors when the time is right.

     

    What proof are you seeing that entrepreneurs benefit from working with you and from being part of your community?

    Over the last 10 years, the companies we have worked with have successfully launched more than 1,000 new products, services and technologies; created thousands of new jobs; and generated over $268 million in revenues. Bioenterprise has also worked closely with 30 companies in helping them secure more than $120 million in investment.

     

    What is the best way for an entrepreneur to learn more about what you can do for them?

    Talk to us! (And check out our website: www.bioenterprise.ca) Fill out our short online application or drop us a line and we’d be happy to walk you through our process. The more background information you can provide the better. This allows us to make sure we have the right experts at the table during our conversation and can customize a project for your unique needs. 

     

    We are seeing rapid changes in how people can invest in Food and Ag. What opportunities do you see for seed stage investors to benefit from these opportunities? How can they add value to the local eco-system?

    British Columbia has no shortage of promising agri-tech ideas, technologies and products.  Seed stage investors play a critical role in a growing venture, helping them grow their market, competitive advantage or scale operations.  This growth helps position ventures for follow-on investment and successful exits for the seed investors. 

     

    A great example of this is from DeeBee’s Organics, with certified organic TeaPops, which are free of chemicals, refined sugar and artificial flavours and are made from all-natural fruit purées and juices.  DeeBee’s secured a $1.5 million investment round and their products can be found in more than 2,000 stores across North America, including heavyweights like Loblaw’s, Sobeys, Whole Foods, Safeway and Costco.  DeeBee’s also recently landed an agreement with Walmart USA, and sales are expected to at least double in 2018 to more than $4 million.

  • 02 Feb 2018 by Info Vantec

    VANTEC’s mission is to grow the Angel investor community in BC and to help investors find more investment opportunities they want to invest in. Entrepreneurial programs, incubators and accelerators provide valuable support to budding entrepreneurs and their companies and help them on their journey to become a thriving business.

    The February 7th VANTEC meeting focused on Investing in Food & Ag Tech has brought 4 great organizations together that each provide unique and valuable services to entrepreneurs by supporting them in the journey to become investment ready.

     

     

    Interview with Keith Ippel of Spring

     

    What is your organization's mission?
    Spring is THE global community for purpose-driven leaders. We provide the tools, knowledge, mentorship, and support network to help entrepreneurs to launch, grow and change the world. Through our Leaders Roundtables, Impact Startup Visa Program, workshops and advisory services, we support early stage and growth entrepreneurs leveraging technology to make the world a better place. Spring is making impact mainstream by being action-oriented, connected, open and fiercely entrepreneurial. We believe in changing the world through entrepreneurship.


    What excites you about the investment opportunities in Food and Ag Tech today and looking ahead.

    This is one of the hottest markets right now as we tackle big issues in food sustainability from local to global markets. This need is creating amazing opportunities for solid businesses with effective technology and business models to win big in the coming decade.

    With startups working on exciting new projects like irrigation innovations to beat draught, nut and citrus orchard management software using satellite data, a new oxygen management technique that extends the shelf life of fresh protein and so many more, people are starting to put money into ventures that are actually going to change the world.

    What do you see as some of the biggest challenges that new entrepreneurs have to overcome on their journey to become investment ready? How does your organization help them with that?

    There are a few. First, entrepreneurs need to focus on ideal investments and ignore geography when seeking and engaging investors. Second, Canadian entrepreneurs need to think global from day one in their sizing and pursuit of the market. Lastly, entrepreneurs need to get on their due diligence early to be ready to move quickly when investors start to show interest.

    Spring supports entrepreneurs through the most complete training workshops and programs (in person or online with New Ventures BC), and with funding Roundtables which provide ongoing mentorship, advisory, and introductions all the way to the end of the round.


    What proof are you seeing that entrepreneurs benefit from working with you and from being part of your community?

    Spring has helped companies raise more than $12M in early stage equity in the last three years. Since 2015, we have worked with over 650 alumni, created over 280 companies and 300+ jobs across 13 different industries.


    What is the best way for an entrepreneur to learn more about what you can do for them?
    Check us out online at spring.is or reach out to help@spring.is and set up a time to chat!

    We also have an upcoming Meet and Greet info session on March 6 for those who would like an introduction to Spring and our Leaders Roundtables. At the Meet and Greet, they will get to meet other like-minded entrepreneurs, chat with current members and alumni and meet the Spring team to ask any questions they may have on our programs. We also hold a short panel discussion and Q&A with select members to shed some light on how the whole thing works.

    We are seeing rapid changes in how people can invest in Food and Ag. What opportunities do you see for seed stage investors to benefit from these opportunities? How can they add value to the local eco-system?

    The global food system needs to increase productivity by more than 70% just to feed the population within 20 years.  There is huge pressure on the desire for local and ethically sourced nutrition from both millennials and baby boomers and the economic opportunity of responding to these trends is huge.

    Investors can bring industry and business model experience, along with their network, to help these entrepreneurs to launch and grow well.

    Is there an other organization that you’d like investors and entrepreneurs to know about?
    A number of the best food & ag startups will be at the pitch event on the 7th, and we can’t wait to hear from each of them. Feeding Growth is a great community of progressive food entrepreneurs, led by UBC Farm, Fluid Creative, and Vancity.

     

    Keith Ippel, CEO & Cofounder

    With over 15 years experience as a leader in technology centric businesses, Keith has accelerated the growth of both small and large companies, launched new products, and raised over $20m in angel investment and venture capital. He has an unparalleled ability to collaborate with entrepreneurs, employees, and investors to deliver amazing products to the market. Keith is passionate about creating opportunities that previously did not exist for people and co-founded Spring to bring that into the social venture space.

  • 31 Jan 2018 by Info Vantec

    VANTEC’s mission is to grow the Angel investor community in BC and to help investors find more investment opportunities they want to invest in. Entrepreneurial programs, incubators and accelerators provide valuable support to budding entrepreneurs and their companies and help them on their journey to become a thriving business.

    The February 7th VANTEC meeting focused on Investing in Food & Ag Tech has brought 4 great organizations together that each provide unique and valuable services to entrepreneurs by supporting them in the journey to become investment ready.

    Interview with David Gauthier of Natural Products Canada

     

    What is your organization’s mission?

    We want to see Canada become the Silicon Valley of natural products. In other words, we’re trying to foster a connected, vibrant and well-resourced ecosystem that takes natural products to market faster, cheaper and more efficiently.

     

    What excites you about the investment opportunities in Food and Ag Tech today and looking ahead.

    We’re at an incredible spot where consumers want more and more from their food in terms of energy, nutrition and health benefits, yet they have less time to actually prepare meals from raw, fresh ingredients. That’s creating all sorts of opportunities in value-added snacks, beverages, and prepared food, as well as in functional ingredients and natural health products.

     

    What do you see as some of the biggest challenges that new entrepreneurs have to overcome on their journey to become investment ready? How does your organization help them with that?

    There tends to be four main challenge areas: product development, which can include everything from understanding market needs and where your product fits, to research and development and scale-up; business planning; financing; regulatory; and general management and operations. We help by assessing the stage of the company, and helping them identify the most pressing hurdles as well as the potential sources of expertise to tackle them.

     

    What proof are you seeing that entrepreneurs benefit from working with you and from being part of your community?

    Ah, the best part! We see entrepreneurs gaining clarity around their direction, getting the introductions they need to overcome key challenges, and in some cases, like Mazza Innovation, getting the financial backing of a group of smart investors, including NPC.

     

    What is the best way for an entrepreneur to learn more about what you can do for them?

    We have the luxury of being very flexible to accommodate the needs of the ecosystem. The best thing is just to contact me directly. We can set up a time to chat about your business, and then I can determine the best way we can help.

     

    We are seeing rapid changes in how people can invest in Food and Ag. What opportunities do you see for seed stage investors to benefit from these opportunities? How can they add value to the local eco-system?

    Companies in the food and ag space in the US are receiving very high valuations as investors are eager to jump into these opportunities. In contrast, Canadian food and ag companies are typically much more competitively valued, yet still have tremendous potential for growth. That’s a huge opportunity for Canadian investors. The wisdom of investors is crucial for early stage companies. If investors can provide ‘smart money’ that includes experience, mentorship and time, they’ll see those investments grow, which is great for the whole ecosystem.

     

    Is there another organization that you’d like investors and entrepreneurs to know about?

    The Nutrition Capital Network is known around the world for their in-depth industry knowledge and extensive network of corporate leaders and active investors. For over a decade, they've delivered highly-focused and effective investor meetings, introducing promising companies to capital investors. We’ve partnered with them to bring their investor meeting to Canada this June in Toronto. That’s a meeting I’d highly recommend companies and investors check out.

     

    For more information and a conversation contact David Gauthier at Natural Products Canada

     

    Vice President, Investment

    Dr. David Gauthier has over 20 years’ experience in the commercialization landscape.

    With a PhD in plant biology, David has a passion for science and technology, and its potential to make a difference through innovation in the real world.

    Along with his scientific knowledge, he has a wealth of business, finance, and technology transfer expertise developed through a diverse career in university research, technology commercialization and regulation, venture capital, entrepreneurship, federal government program management, not-for-profit management and governance, economic development, and management consulting.

    In each of his roles, he has been involved in the strategy, implementation, management, and measurement of innovation and commercialization, giving him unparalleled insights into the various programs, policies, and practices that can help companies evolve from start-ups to success.

    He has served as Director of Business Development with Performance Plants Inc. and as Vice-President with Foragen Technologies Management Inc., which managed a national venture capital fund specialized in advanced agricultural technology investments. He was a Regional Director for the National Research Council Canada’s Industrial Research Assistance Program, and was the Chief Executive Officer of the Entrepreneurial Foundation of Saskatchewan. He has also operated a consulting company, advising entrepreneurs on corporate strategy and financing and assistance with various regulatory requirements.

    David has served on a number of boards for both profit and not-for-profit organizations, including AgWest bio Inc. and is currently Chair of the Board of Directors of Genome Prairie. David was educated at Queen’s University where he obtained BSc Honours (Biology), PhD (Biology) and MBA degrees.

  • 30 May 2017 by Info Vantec

    The Cascadia Venture Forum (CVF) kicks off its 2nd Annual Health Innovation Investor Forum at the VANTEC Life Sciences Angel Network (LSAN) Meeting in Vancouver on June 6th

     

    Pre-Screened Seed and Series A companies in the Medical Device, Pharma/Biotech, Digital Health, and Health IT sectors will give a 90 Second preview or Full Presentation Pitch. Companies who are upvoted by the LSAN investors will be invited to participate in the Cascadia Venture Forum to be held Fall 2017.

     

    When:  June 6, 7.30 am - 10.00 am

    Where: Room 7000 SFU Harbour Centre 515 West Hastings.

    Tickets: Free for members and their guests, $50 for non-members

     

    GET A TICKET

     

     

     

     

    To give some background on how The Cascadia Venture came about, we talked with CVF's founder George Aliphtiras and Thealzel Lee.

     

    The Cascadia Venture Forum is an investment forum for early stage (Seed and Series A) Life/Health Sciences companies from the Pacific Northwest region (BC, Oregon, and Washington). This 2nd Annual Forum is organized by the Pacific Northwest life sciences community, angel investor groups, venture capitalists, and private equity investors to showcase the most promising early stage companies and increase their opportunity to raise funding from investors.

     

    Business is about relationships. About building trust. Which is why in today’s fast-moving world of near-instant digital communications, in-person, face-to-face interactions are becoming rare – and yet they are more important than ever.

     

    “No problem,” says George Aliphtiras, an entrepreneur and angel investor and the mastermind behind the Cascadia Venture Forum (CVF). “To build great companies you need great people… and great capital. I saw an opportunity to facilitate a series of networking events that would allow our world-class start-ups to build meaningful relationships with our most successful and experienced investors within the Pacific Northwest and beyond.”

     

    Thealzel Lee, entrepreneur, angel investor, founder of E-Fund (an angel investment fund), and proud organizer and supporter of last year’s CVF also felt that life sciences needed its own platform – its own showcase. When she heard what Mr. Aliphtiras was proposing, she jumped on board:

     

    “I said ‘Let’s do something focussed on life sciences and let’s leverage our geographic proximity: the Cascadia Innovation Corridor has some of the best innovators and investors and collaborating within the region facilitates valuable and necessary person-to-person meetings. As an investor, you can be on the front lines with the emergent companies. Let’s capitalize on all that life sciences has going for it, and build an even stronger community’.”

     

    And so CVF was born: a forum designed to bring carefully curated health innovation start-ups together with potential investors. As Elayne Wandler, Director of Partnerships and Programs for Accel-Rx, explains:

     

    “As Canada’s national health sciences accelerator, we are all too aware of the limited capital in Canada necessary to commercialize our discoveries. Building clusters in regions like Cascadia are important initiatives that help bring investors, companies, and support organizations together in one room to get to know each other, build trust, exchange knowledge, and ultimately do business together.”

     

    In its inaugural year during fall of 2016, Cascadia had a strong reception and boasted several success stories between innovator and investor; however, it was the unexpected successes that came from the event that intrigued Mr. Aliphtiras:

     

    “One of the success stories that came out of last year’s forum was the networking that occurred amongst the investors themselves. You know what you know in your own backyard but you don’t know what’s in the other person’s backyard. Or how to leverage upon different skill sets across the region. CVF helped facilitate a type of network effect. This momentum builds a collaborative synergy amongst the players themselves.”

     

    While last year’s achievements have set a high bar, CVF continues to build upon that foundation for what it believes to be an even more impactful 2nd Annual Forum. As Ms. Lee puts it:

     

    “Investors will get to see the hottest companies in the Cascadia region. So maybe you are an investor from Boise, Idaho and you don’t get exposure to let’s say, Portland, Oregon. Now at the forum you’ll get to see companies not only from Portland, but also Seattle, Washington and Vancouver, British Columbia. The forum optimizes time and distance in an efficient manner that allows for connections to happen in a person-to-person way.”

     

    Those behind CVF know that relationships formed between investors and entrepreneurs are unique. Thus, increasing the likelihood of a successful first introduction that may blossom into a longer-term relationship and potential investment is a key objective of the forum.

     

    To help achieve this, participating start-ups are put through rigorous pre-screening, ensuring investors are seeing high-quality companies who are also provided with constructive feedback throughout the process.  This makes the forum efficient for the investor and valuable for the start-up.

     

    “To make the cut and de-risk the opportunity for investors, start-ups must demonstrate to CVF that they are investable: they need a compelling business model and product that makes sense with strong customer traction. Last but not least, the team must also demonstrate that they have a solid foundation,” says Mr. Aliphtiras in support of helping start-ups put their best foot forward.

     

    For investors and health innovation start-ups, the Cascadia Venture Forum offers a clear value proposition. But its also a compelling opportunity for sponsors of the event.

     

    “As a sponsor, you gain exposure to the whole Cascadia region,” says Ms. Lee. “So maybe your business is only in Portland. At the forum in Vancouver, your exposure suddenly becomes international – but still regional and relevant. Sponsorship also provides the venue to highlight your leading role in building our life sciences community.”

     

    Ms. Wandler concurs: “Accel-Rx is thrilled to support CVF and its vision to enable the Cascadia Innovation Corridor to become a world-leading cluster of health innovation entrepreneurship. And we are proud to be one of its foundational sponsors helping to build that vision.”

     

    “Building” is the key take away from CVF. “What continues to drive us to do this,” says Mr. Aliphtiras, “is seeing the real impact within the community and the next generation of companies that are built and that succeed due to this initiative. The cluster’s continued success and the high-quality deal flow that we have here in the Pacific Northwest is something we are very proud of.”

     

    If you would like to participate in the Cascadia Venture Forum as a start-up to pitch and connect with investors in BC, Oregon and Washington, as a sponsor to join and support the community, or as an investor or other health innovation ecosystem member to see inspiring and investable entrepreneurs with an opportunity to network with like-minded investors, entrepreneurs, and other community members across Cascadia, please visit the website to learn more: www.cascadiaventureform.com.

     

    We invite you to join us for the first round of pre-screened pitches on June 6th, 2017

    GET A TICKET

     

    If you are a start-up and would like to be considered for the pitch session on June 6 or the Cascadia Venture Forum in Vancouver you can apply to pitch now 

  • 29 Mar 2017

    On Thursday, March 16th, a group of angel investors and advisors gathered at the Vancouver Convention Center to take part in a mentoring session and pitch competition for a select group of under-20 entrepreneurs.

     

    The NACO Mentoring Bootcamp, which took place following this year’s BCTech Summit, was initiated and sponsored by China-based United Capital Investments, and co-sponsored by NACO and VANTEC Angel Network. The event was an effort to introduce Vancouver’s angel investor community to some of B.C.’s most promising young entrepreneurs, many of whom are foreign students.

    “Here in B.C. we are actively building relationships with and welcoming foreign entrepreneurs,” said Yuri Navarro, CEO of NACO.

    “Through Canada’s Startup Visa Program, investors are seeking out foreign entrepreneurs - in some cases foreign students that are studying here and already have businesses. The visa program gives these investors the tools to accelerate the process of getting them a permanent residency once they’ve received investment.”

     

    Foreign talent: enriching Canada’s startup ecosystem

    The Startup Visa Program has been helping foreign entrepreneurs establish themselves in Canada since 2013. The program is intended to give immigrants a healthy startup ecosystem in which to grow their companies, allowing them to gain permanent residency in Canada while also benefitting Canada’s economy by increasing job growth and encouraging an influx of risk capital.

    However foreign investors, particularly those based in the U.S., have in the past been known to invest in Canadian companies only to later remove those companies and their founders from Canada. This has often diminished the anticipated benefits of attracting foreign investment or exiting a business, but Navarro says that this trend is now reversing.

    “What we’ve been seeing more recently – even before Trump – is a trend of American entrepreneurs coming to Canada to establish themselves. We’ve also been seeing Canadian expats that had been establishing themselves in the US coming back to Canada to build businesses here.”

    “Now with the Trump situation, we’re seeing entrepreneurs in the U.S. actively looking to set up offices in Canada in order to have a place to send the foreign talent they can’t bring to the U.S. anymore.”

     

    Building Canadian companies through foreign capital partnerships

    Ultimately, says Navarro, events such as the NACO Mentoring Bootcamp will not only strengthen relationships between Canadian investors and foreign entrepreneurs, but also encourage foreign investment into Canadian companies.

    “United Capital Investments, the sponsor of the event, is an investor group from China that is actively establishing a brand in Canada and investing in Canadian companies.”

     “The opportunity today was to do an exchange - bring some of our investors, connect them with selected entrepreneurs, and have them showcase what they can offer as a community to our community, and vice versa.”

    The winner of the competition, 15-year-old entrepreneur David Sui, was congratulated by investors and mentors for his creation, MyLyfe, an AI calendar that can decipher user-based preferences and generate a personalized schedule that maximizes work efficiency and leisure time.

     

    To find out more about the NACO Mentoring Bootcamp and the competing entrepreneurs, please visit www.nacocanada.com.

  • 28 Mar 2017

    On March 1st, 2017 a group of investors, founders, lawyers and active members of Vancouver’s startup community gathered to discuss the need for widely accessible, Canada-specific term sheets that will better align founders and funders in meeting their goals.

    The speaker session and panel discussion, hosted by VANTEC Angel Network and E-Fund and entitled ‘The Quest for Better Term Sheets to Get Deals Done Faster’, highlighted the pain points of both founders and investors when navigating term sheets. Panelists and speakers agreed that existing American-centric term sheet templates such as SAFE Docs are often not suitable for the Canadian market.

     

    Debt versus equity: which is right for you?

    Startups have traditionally funded their operations through the sale of equity, typically issued via common shares or preferred shares.
    “Common shares are the simplest form of a direct equity investment. Because you’re getting in at the same share class as the entrepreneur, it aligns the investor and entrepreneur. The downside is that it lacks proper investor protection, and it locks in a valuation too early,” Pieter Dorsman, Director and CEO of E-fund explained to the audience.

    “Preferred shares is the dream for investors. It protects investor rights, it locks in certain returns, but in my opinion it does not always create a perfect alignment with entrepreneurs,” he added.

    Early-stage considerations

    The problem with selling equity at an early stage is that it’s difficult for founders and investors to agree on the value of a company when it still has very few indicators of true value (customers, sales, and revenue). This creates friction between founders and investors and often causes the deal to fall through.

    This is why convertible debt was introduced. In layman’s terms, money is invested today, and the valuation happens later.

    “Convertible notes are a great instrument that defers the valuation discussion – it’s a relatively simple document, and from the company’s perspective it’s advantageous because you are dealing with lenders, not shareholders… there’s a bit more distance as long as the company is doing well. It usually works better for companies, but for the investor it’s not always a good deal.”

    Convertible debt: founder drawbacks

    While convertible debt solves the issue of having to value a company at the time of initial investment, it is still debt that has to be repaid at a later date – with interest, which is not ideal for founders.

    Furthermore because a convertible note is debt, companies are legally obligated to repay it later. This is an additional pressure for an early-stage startup, because principal and interest repayments will have to be made later despite profits or economic circumstances at that time.

    This has led to the creation of convertible instruments that aren’t debt but have many similarities, such as SAFE Docs.

    What are SAFE (Simple Agreement for Future Equity) Docs?

    Introduced by Y-Combinator in 2009, a SAFE is a contract in which an investor gives money to a company in exchange for equity at a later date. SAFEs are not debt, because there is no interest and no maturity date, and the company is under no legal obligation to repay the investors. SAFE Docs are available online and free for anyone to use. There are several versions, and they are meant to decrease the legal fees and reduce negotiation times.

    “There’s a lot of sex appeal around SAFEs right now,” said Mike Stephens, a Partner at Fasken Martineau who has guided many Canadian startups through the exit process. “Whether or not everyone fully understands the nature of the legal impact of the SAFE and what it does and how it converts is a totally different story.”

    Dorsman said that American-centric SAFE Docs may also be out of place in certain markets, such as Canada. “SAFEs work best in a frothy market. They were released by Y Combinator in the Valley, at a time when there was such a volume of startups and such a demand for investment that it was very easy for companies to get away with the SAFE. It is very regionally dependent. It’s very driven by circumstances, and for investors I think it’s too much of an open-ended deal. As an investor, if a company comes to you with a SAFE I would encourage you to look at it very critically before you jump in,” he warned.

    Keith Ippel, CEO of Spring, pointed out that despite the common perception that SAFEs are founder-friendly, they may actually do entrepreneurs more harm than good if they are not understood properly: “Some investors will slam the door in their face if they mention SAFEs, others will say it’s the only thing they do – so the entrepreneurial community has not been able to get a clear handle on what makes a good SAFE. Creating some common language, I think would go a long way.”

    Creating founder-funder alignment in Canada

    “We have a number of problems in Canada,” said Dorsman. “Most of the term sheets are founder-driven. Many are done via Google search, and finding examples that are far too American to use here.”

    Speaking of the tendency for founders to pull terms sheets from the Internet, Stephens warned that practices such as these could be detrimental to Canada’s startup ecosystem. “Those practices have to stop,” he said. “It means investments don’t close, and quite frankly it can really hurt the growth of local companies and companies across Canada.”

    “The goal is to build a Canadian standard,” said Dorsman. “I’m very pleased that together with Boris Mann and NACO we have started a project called NACO CommonDocs. Our goal is to launch in April a set of standard common, preferred, convertible, and Canadian SAFE term sheets that will be on the NACO portal together with a set of educational documents, that would be for everyone to use: investors as well as companies.”

    “We are trying to incorporate both the investor’s and the entrepreneur’s point of view… so if you’re a newbie investor or entrepreneur you can go through these to get a feel for what’s going on and how to build the best term sheet for your company,” he added.

    Visit VANTEC, E-Fund and NACO at the BCTECH Summit in Vancouver on March 14th and 15th (booth 218), or join the conversation around Canadian-specific term sheets on March 16th at NACO’s panel discussion and Q&A session, “What Term Sheets to use for Different Early Stage Financings” (tickets available here).