Posts Tagged ‘venture capital’

The Startup Revolution

At an age when the technology sector is growing twice as fast as the global economy, startup ecosystems provide a vital means for individuals and regions to not only take advantage of technological change, but to also steer it in a direction that will improve humanity.

Read more about Startup Financing in Canada including Canada’s Startup EcosystemFund RaisingWriting A Convincing Business Plan and Canada’s Brain Gain.  

 

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NorthBridge is involved with a broad array of emerging industries throughout Canada. The Principals of NorthBridge are angel investors themselves with extensive experience in raising both debt and equity. This, coupled with NorthBridge’s expertise in various government funding programs, provides an unparalleled combination for assisting Canadian technology companies to raise funding for growth.

Contact us today to arrange for a free, no obligation consultation to determine your eligibility of receiving government funding.

Free December 5 Waterloo Workshop- Government Funding for Start-ups

When funding growth, start-ups should always look towards non-dilutive funding sources to preserve a larger share of control over the company.

One of the main advantages of situating your start-up in Canada is the plethora of federal and provincial funding programs accessible to start-ups that can total over $20 billion each year.

This workshop will address the SR&ED tax credits, non-repayable grants, and interest-free loans available to early-stage companies, as well as how to structure your company and operations to take advantage of multiple funding opportunities.

Topics covered will include:

  • Introduction to non-dilutive government funding
  • SR&ED Tax Credits
  • Government grants and loans
  • Overlap between funding programs
  • Structuring to take advantage of funding

This educational workshop will preceed GTAN|RAW, a monthly event held by the Golden Triangle Angel Network (GTAN), where entrepreneurs that are considering raising funds from Angels and Venture Capitalists have an opportunity to present their pitch to several members of GTAN, who will offer feedback and suggestions.

Event details:

Speaker:
Gerry Fung, CPA CMA, P.Eng.
VP of Business Services at NorthBridge Consultants

Date & Time:
Tuesday, December 5 2017 from
3:00 PM to 5.00 PM  (Just before GTAN|RAW)

Location:
Accelerator Centre
295 Hagey Blvd – 1st Floor, West Entrance
Waterloo, Ontario N2L 6R5
Canada (MAP LINK)

Register Online 

For more information please contact us at 1-519-623-2486  

 

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IRAP Announces Support for Early Stage Firms

Accelerators and incubators based in Canada that support the development and growth of start-up companies can receive funding from the Industrial Research Assistance Program (IRAP).  The Canadian Accelerator and Incubator Program (CAIP) will provide non-repayable funding over a five year period to a limited number of qualified applicants.  To ensure that the funding is allocated to the appropriate sector needs, the program will be assisted by a Venture Capital Expert Panel, which will be  assembled by the Minister of Finance.  The National Research Council of Canada (NRC-IRAP) is accepting proposals until October 30, 2013.

The National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP) is Canada’s first-class innovation program that supports small to medium sized enterprises (SMEs). IRAP is integral to the NRC and has been recognized world-wide for its contributions to innovation in Canada.

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Why Venture Capital is so Important

Greg Smith, president of Canada’s Venture Capital and Private Equity Association (CVCA), described the current landscape of Canadian entrepreneurship:

“Canada has an historic opportunity to become an innovation leader by making major investments that enable our best technology businesses to realize optimal growth and compete on a global stage,” he said in a statement. “However, in order to act decisively on this opportunity, we must first overcome challenges to supplying VC funds that, in turn, supply entrepreneurs.”

Without VC initiatives, small companies with big ideas are being caged by cash crunch – running low enough on cash so that it has a significant impact on operations. Exponential growth can also cause a company to be short on working capital. Business growth requires a steady cash flow, enabling the acquisition of equipment and personnel. Lacking VC, companies may be forced to unload assets or sell a part of the business to raise crucial funds.

The cheapest forms of financing are the sources taken for granted:

-Cash in bank account
-Revenue from sales
-Financing from tangible assets (accounts receivable factoring, purchase order factoring).

Aside from borrowing from friends and family, the next funding options come from cost-heavy debt or equity financing. Debt financing directs small businesses to traditional institutions, banks and credit unions, and many small businesses run into trouble meeting financing prerequisites. Equity financing or “share capital” – funding through selling common or preferred stock to individual or institutional investors – is dilutive in nature and requires loss of ownership and possibly control of the business.

In order to get to an operable stage, small businesses can also consider bridge financing and financing from intangible assets. Bridge financing is used to gain immediate cash flow while waiting for an expected inflow of cash. Basically bridge financing provides a forwarded payment for future sales or anticipated inflow of cash. Financing on intangible assets, such as SR&ED (Canada’s Scientific Research and Experimental Development credit program), is not often offered by the traditional institutions but is a non-dilutive form of bridge financing. North Innovation Fund (NIF) is one such source of funding, providing accrual SR&ED financing to support small business and entrepreneurs. NIF released their first Fund this month in response to the increasing demand of funding alternatives for start-up companies in Canada. SR&ED financing will bridge the funding gap for companies with R&D initiatives and new ideas to help make the leap to commercialization.

NIF offers a unique opportunity which includes support in identifying SR&ED activities and a friendly approach to funding. Initiatives like NIF will help push Canada to forefront of growth and innovation.

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Options for Early Stage Technology Companies to Finance Growth

The dilutive nature of early stage equity financing (i.e., giving up ownership) makes it the most expensive way to finance growth.  When a start-up does not have enough cash in the bank or cash flow to support their growth (hire more employees, fund working capital, etc.), the company is faced with a significant funding barrier that quite often results in tepid acceleration or worse, either bankruptcy or a fire sale.

When seeking various financing options, it always makes sense to start off with the cheapest form of capital until the threshold is met at which point, you would go to the next tranche of financing – for example (in the order of least to most expensive):

–          Cash on hand and internally generated cash flows;
–          Traditional bank debt;
–          Loans from friends and family;
–          Alternative debt financing (subordinated/mezzanine debt or factoring); and
–          Equity financing.

At the end of the day, all types of financing are based on one of two things: cash flow or hard (tangible) assets.  However, by leveraging its vast knowledge and experience in the SR&ED program, North Innovation Fund (NIF) focuses on an intangible asset – SR&ED accruals.  NIF is a provider of SR&ED accrual debt financing, which is timely, flexible and more importantly non-dilutive. What differentiates NIF’s SR&ED financing from other SR&ED financiers is the fact that NIF advances funds before the SR&ED claim is filed (i.e., beginning of the fiscal year). This type of funding plays a critical role in an early stage company’s capital structure by providing the runway to a future round of equity investment or a bridge to the next level of growth.

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    We offer opinions and insider information that can provide a pulse on government initiatives, the health of the Canadian economy, and firsthand thoughts from Canadian business owners.

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