MONEY FOR GROWING COMPANIES

About you and your company – are you suited for arm’s-length investors?

Part I – SOURCES OF MONEY
PART II – HOW ANGELS VALUE start-ups

PART I

SOURCES OF MONEY

WHO TO GET MONEY FROM?

  1. Customers
  2. Grants and tax incentives
  3. Lenders
  4. Investors

CUSTOMERS ARE YOUR BEST SOURCE

In the end companies have to sell to customers – that’s what it’s all about  ..ties in nicely with the concept of the Minimum Viable Product

BC VCC – http://www.jtst.gov.bc.ca/ICP/VCP/index.htm

IRAP – http://www.nrc-cnrc.gc.ca/eng/irap

SR&ED – http://www.cra-arc.gc.ca/txcrdt/sred-rsde/menu-eng.html

GRANTS & TAX INCENTIVES

  1. Loss of focus (doing what the government wants instead of what makes sense for your business)
  2. Compliance costs
  3. Audit risk

LENDERS

  1. They have to be paid back
  2. They usually want security

INVESTORS

  1. Friends & Family (aka ‘love money’)
  2. They expect to make a (lot of) profit
  3. They have rights
  4. They might not be a goot fit
  5. VCs can make financial reporting tedious

PART II

HOW ANGELS VALUE EALY STAGE COMPANIES

WHY ANGELS INVEST IN START-UPS

  1. High rates of return (22-30% IRR according to one study)
  2. Relive past glory in business
  3. Give back to comunity

WHAT PERCENT GET FUNDED?

National Angel Capital Organization – Toronto Business Plans Reveiewed and Funded

2010 2011
Reviewed 13.9% 14.9%
Funded 4.5% 6.5%
  • business valuations are typically prepared by M&A specialists with the largest, national accounting firms
  • start-up companies aren’t worth enough to justify using CBV from a national firm
  • their methodologies don’t work very well for start-ups anyway

WHAT ARE ANGELS LOOKING FOR IN A COMPANY?

Factor Weight
Management 30%
Size of Opportunity 25%
Product/Technology 15%
Marketing/Sales Channels 10%
Competition 10%
Other Factors 10%

WANT TO LEARN MORE?

Let’s Start WORK
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