Tag Archives: investors

Real Ventures Office Hours in Ottawa this Thursday

realventures

Real Ventures, the hot new investment group from Montreal (previously Montreal Startup) will be in Ottawa this Thursday (November 4th) and are holding office hours at the Mercury Grove Office at 738A Bank Street from 3:30pm to 5:30pm before DemoCamp.

I’ve spent quite some time with some of the partners, Mark MacLeod, JS Cournoyer, and Austin Hill, who are all accomplished startup entrepreneurs, advisors and advocates and you’d be lucky to work with such a strong team.

According to Mark MacLeod, Real Ventures is focusing on first-time startups in various fields:

As a seed stage investor, we typically provide a company’s first outside capital and are comfortable investing in first time entrepreneurs and concept stage, pre-revenue companies.We invest in internet, software, mobile, digital media, social and casual gaming startups. We are looking for companies that can get a 1st product in market and validated with less than $ 500K.

It’s worth coming by to talk to them and build a relationship with these guys.

By Scott Annan

Financing Term Sheet Basics

Posted by Shane McLean.  Hi all.  I recently posted this on my blog and thought it might be of interest to the StartupOttawa readers:

If you are part of a growing business that requires a source of outside funding, chances are that you will at some point have to review a “term sheet”.  What is a term sheet?  Basically it is a high level summary of the terms on which someone is willing to invest in or lend money to your business.  In this post I am going to discuss financing term sheets only.  There are other circumstances in which you may be on the receiving end of a term sheet — a sale of your company, for example — but those will be left to be discussed in future posts.

Financing term sheets can vary widely in their terms and structure, but there are generally a few areas that are common (or should be common) to most:

Who:  Who is the party (or parties) who will be investing, lending etc.?

What:  What are they receiving in return for their investment?  This might be preferred shares, common shares (if you’re lucky), convertible debt, non-convertible debt or a host of other possibilities.  To give two examples, with high tech startups you’re often talking about preferred shares and with publicly listed companies you are often going to dealing with common shares and maybe warrants.  If your term sheet contemplates preferred shares, debt or other complex securities the term sheet will also include a fairly detailed breakdown of the terms of those shares, debt etc.

How Much:  How much $ will the investor(s) be putting up?

Price:  The term sheet has to include a price per share (or a price per whatever you’re selling).  With private companies this is typically the investor’s best guess (or best offer) of the value of your company.  This could be stated in the form of a “pre-money valuation” which attaches a value to the company before the investment.  If you know the  number of shares you have outstanding prior to the investment you can use this number to determine the value per share.  That’s what the investor hopes to pay.  Less frequently, the price might also be expressed as a post-money valuation.  Just take the aggregate amount to be invested away from this number to reach the “pre-money valuation” and do the math as described above to determine a per share price.  Sometimes the investor will do the math for you and just give a per share price in the term sheet. If you are dealing with a public company the price is probably based on the most recent market price, a discount to the market price or some average of the market price over a recent period of time.  The price or valuation can also tell you how much of the company is being purchased for the aggregate investment amount.  For example, if your pre money valuation is $2,000,000 and the investor is investing $2,000,000 the investor will own 1/2 of the equity in the company post investment.

Timing:  When do the parties hope to close the financing?

Other Closing Deliverables/Conditions:  There will typically be a laundry list of other deliverables and conditions to the closing possibly including: a shareholder agreement, board of director seats, delivery of certain information, amendment to the articles of incorporation etc.  This is where the investor will tell you what, if any, controls they expect to have over the operation of the business on a post closing basis.

Expenses:  Typically the term sheet will describe who is responsible for the expenses incurred by the investor and the company as part of the transaction.  Here’s a hint: It’s almost always the company.  As a company, if you are stuck paying the fees your goal should be to negotiate a cap on investor legal fees.

Exclusivity: Sometimes there will be a commitment to exclusivity — i.e. once you sign the term sheet you won’t talk to other potential investors for some defined period of time.

With the help of good advisers you can often negotiate some of the key points on a term sheet so if you are handed a term sheet you do not necessary have to sign it in the form presented.  If you want to see an example of a financing term sheet you can check out this term sheet generator developed by US law firm Wilson Sonsini, Goodrich and Rosati.  There are a few web based term sheet generators out there similar to this one and they generally get a lot of buzz.  They are definitely neat, but I often wonder whether they have any real life benefit to companies aside from preparing you for the types of things you will see in a term sheet that is handed to you.  Generally speaking the investor is going to present the term sheet to you in the investor’s “standard” form and a sophisticated investor is unlikely to accept or generate a term sheet from an Internet based term sheet generator.

Once everyone is happy with the term sheet, it is signed and the lawyers get to work preparing the definitive documentation to reflect the high level terms agreed on.

Posted by Shane McLean

By James Smith

Announcing Founders and Funders: part deux

After a very successful inaugural Founders and Funders Ottawa event last fall, The Ottawa Network has decided to organize a similar event again this spring. The event is set for May 20th at 6pm.

Founders and Funders is a unique networking event geared specifically for investors of all types (VC, angel, working capital, government) and start-up execs that may at some point try to raise money. The evening includes cocktails and dinner, with plenty of time for networking. There are no demos and no presentations … just tons of elevator pitches from investors trying to convince entrepreneurs to take their money.

The event is restricted to investors and those who want to take their money and multiply it (start-up entrepreneurs).  If you fit the bill, please contact Allan Isfan at allan.isfan [at] favequest [dot] com , and briefly let him know who you are and why you are interested in the event.


Finally note that the event sells out very quickly. We were able to lower the price and there are early bird tickets so don’t delay.

Feel free to tweet about it with hashtags #ton #foundersandfunders or blog about it. You can include my email allan.isfan [at] favequest [dot] com (I don’t feel like getting emails from bots :) .

Cheers,

Allan Isfan on behalf of The Ottawa Network

By Allan Isfan

Founders and Funders dinner: upbeat

Hello Everyone,

Allan Isfan here … I just joined Startup Ottawa and will be blogging here as often as I can in addition to my other blogs (shameless plug) isfanstartup.blogspot.com , connecttheworld.wordpress.com and nastyhockeyshow.wordpress.com/.

My kickoff message to you

"Right now is the best time to do a start-up!"

Am I crazy?? Maybe a little but I’m not alone. Entrepreneurs tend to generally be overly optimistic … we have to be that way or we would never have the courage to take the chances and make the sacrifices we do. Nevertheless, the truth is that some of the best and most successful companies were founded or massively restructured during downturns only to emerge and explode during the boom that followed the bust.

There are many reasons for this such as:

  • less competition for customers and investors
  • laser focus on creating value in the short term
  • more people available to help at a lower cost
  • urgent need to get to revenue causes focus on the business model (millions of $ in the bank somehow makes people forget fundamentals)
  • market disruptions create opportunities

While I believe all this to be true, I also realize raising money is getting tougher overall, especially in Ottawa. Trust me, I know. We could whine about it or do something to shake things up. Several of us teamed up to shake things up and I’m so glad we did. There are investors with money to place in Ottawa based start-ups and many very high quality founders looking for good investors. Many of them came out in large numbers to the invitation only inaugural Ottawa Founders and Funders dinner last week.

The local event sold out very quickly with people coming from Ottawa, Toronto, Montreal and Boston. The mood was very upbeat and the room was full of energy. I received many follow up emails thanking the organizers for having put this together. It seems that some very valuable connections were made and I truly hope some of these lead to success for both founders and funders.

So, if you thought the start-up market in Ottawa was dead and all involved have run for the hills, nothing could be further from the truth. We’re all fighting like hell and you’ll be seeing some amazing companies emerge from this downturn.

We’ll be doing another Founders and Funders dinner in a few months so don’t get left out if you missed this one. Also, keep your ear to the ground and your eyes peeled for more inaugural events to shake things up. TO THE TOP!

Cheers,

Allan Isfan

FaveQuest

@isfan on twitter

By Allan Isfan