sources of capital...title sources of capital - ppaa fractionation 101 workshops (handout) author...

SOURCES OF CAPITAL

Presented by:

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


SOURCING CAPITALINDIVIDUAL INVESTMENT


SOURCING CAPITAL

LOVE MONEY


Congratulations!!!n You just won a $10 Million Dollar Lottery!!!!!


Loan or Equity? n Bioprocessing Companyn Have a Business Plan (only)n Need $1 Million Dollarsn Give them a Loan?n Buy Shares?


SOURCING CAPITALGOVERNMENT GRANTS


SOURCING CAPITALGOVERNMENT GRANTS

§ Free money! But….....§ Have to fit mandate§ Need matching funding§ Can take time to obtain


SOURCING CAPITALCROWDFUNDING


SOURCING CAPITALCROWDFUNDING

§ A hot trend§ Can help raise awareness of

products§ Not always about raising money§ Amounts raised typically not huge


SOURCING CAPITALANGEL INVESTORS


SOURCING CAPITALANGEL INVESTORS

n Invest own moneyn Different types of angelsn Earlier stage investmentn May invest from the heartn Expertise can be invaluable


Pre-Commercial

Development





“Death Valley”


Mature Business

(Sales,

Profitable,

Diverse

Product Line)

Idea

Angels


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?


SOURCING CAPITALVENTURE CAPITAL


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


SOURCING CAPITALTRADITIONAL DEBT


SOURCING CAPITALTRADITIONAL DEBT

n No Shareholder Dilutionn Need Cash Flown Need Securityn Personal Guaranteesn Covenants


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?


Pre-Commercial

Development





“Death Valley”


Mature Business

(Sales,

Profitable,

Diverse

Product Line)

Idea

Angels


SOURCING CAPITALINITIAL PUBLIC OFFERING

(IPO)


SOURCING CAPITALINITIAL PUBLIC OFFERINGn “Sexy”, but expensiven Reporting requirementsn Exposure to competitorsn Investor Relationsn Locked in Value


SOURCING CAPITALSELF FINANCING OR

INTERNALLY GENERATED FUNDS


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


Rational Perseverance

SOURCING CAPITALMORE THAN ANY OTHER FACTOR:

LACK OF CASH FLOW KILLS COMPANIES


THE TOP TEN WAYS TO GET MONEY FROM A

BANK OR INVESTOR!

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?


Know Where You Are Going!!!

NUMBER 9KNOW WHO TO APPROACH.

q Don’t go to Burger King to buy a car.

q Targeted approachesare most effective


NUMBER 8PLACE THE ORDER.

q Clearly describe what you are looking for.

q Funders need to know what you want.


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?


NUMBER 6USE A COLLABORATIVE APPROACH.

q An adversarial relationship is bad for everyone and reduces the chance of getting what you need.


HAVE YOUR “ELEVATOR PITCH” READY.

q Rehearse it. q Fine tune it. q You never know when you might

need it.


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.


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.


AND THE NUMBER 1 WAY TO GET MONEY FROM A

BANK OR INVESTOR…….


HAVE AN OUTSTANDING MANAGEMENT TEAM!

Management DrivesEVERYTHING.


THANK YOU!

Corey Keith780 988 6552

[email protected]


sources of capital...title sources of capital - ppaa fractionation 101 workshops (handout) author...

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