2. Agenda:
1. Introduction of the Topic
2. Discussion to determine the type of businesses and outlook for
the future (size of business, adding employees, growth of 10%,
20%, 30%, selling globally)
3. “Where We Fit In”
4. Introduction of the panel
5. Mark Usher, Partner, Wellington Financial LP Covering Debt
6. John Marshall, President / CEO Ontario Capital Growth
Corporation Government Programs
7. Andrew Wilkes, Managing Director, Management Initiatives Inc
Review of Equity
8. Q&A
3. The Panel:
• Mark Usher, Partner, Wellington Financial LP
• John Marshall, President/ CEO at Ontario Capital Growth Corporation
• Andrew Wilkes, Managing Director, Management Initiatives Inc.,
and Co-chair, National Angel Capital Organization (NACO)
4. Where Angels Fit In
Stage of
Research & Prototype Development
Seed Start-up Growth Mature
Developme
nt
Funding
Intensity
Government and Universities (10K-500K)
Friends and Family (2K – 300K)
Sources of
Individual Angels
Capital
(10K – 250K)
Single Angel Groups
(250K – 1M)
Angel Group Syndicate
& Angel Funds (1M – 5M)
Venture Capital
(2M – 12M)
M&A/IPO
(91.5M/ 79.7
for venture
deals)
Commercial
Banks
6. Ontario Emerging Technologies Fund (OETF)
• $250M direct co-investment fund, investing into high-potential Ontario-
based companies chosen by private sector qualified investors in:
► Clean technology;
► Life sciences and advanced health technologies; and
► Digital media and information communication technology companies.
• Ease the lack of risk capital available to Ontario’s most promising
companies
• Qualified Investors source, assess, and negotiate investments based on
market principles
• OETF receives the same equity return as other market based investor
► Not a loan or grant
• Currently 27 Qualified Investors and 4 Angel Syndicates
• As of March 26, 2012 OETF has committed $55M in 35 co-investments
(both initial and follow-on)
• For more information please visit: www.ontario.ca/ocgc
Strategies for Raising Capital and Securing Financing – Government Programs 6
7. OETF in Action – Qualified Investors
Strategies for Raising Capital and Securing Financing – Government Programs 7
8. OETF in Action - Portfolio Companies
Strategies for Raising Capital and Securing Financing – Government Programs 8
9. Investment Accelerator Fund (IAF)
• Helps accelerate the growth of new technology companies being established in
Ontario and positions them for further investment by angels and venture
capitalists
• Invests up to $500,000 in companies that have the potential to be global leaders
in their field and provide sustainable economic benefits to Ontario
• The IAF program is managed by MaRS and delivered through the Ontario
Network of Excellence
• For more information please visit: www.marsdd.com/aboutmars/partners/iaf
Ontario Network of Excellence (ONE)
• ONE is a province-wide team of member organizations with commercialization experts
which include:
►experienced entrepreneurs ►sector-specific
organizations
►tech-savvy advisors ►colleges and universities
• Services and programs:
►Advisory services ►Industry-academic programs
►Financing and investors - ONE can steer ►Customer development
businesses toward financing programs and ►Educational programs
opportunities with potential investors
• For more information please visit: www.oneinnovation.ca
Strategies for Raising Capital and Securing Financing – Government Programs 9
10. FedDev
• Established in August 2009 to help the southern Ontario economy
mitigate and overcome regional and global economic challenges
• FedDev Ontario supports the competitiveness, innovation, and
diversification of southern Ontario's economy by:
► delivering strategic investments to businesses, not-for-profit
organizations and communities;
► establishing and strengthening collaborative partnerships with key
economic stakeholders; and
► representing the region's interests at the national level.
• Offers a number of programs. One of note is the Investing in
Business Innovation - boosts private sector investment in start-up
businesses to accelerate the development of new products,
processes and practices and bring them to market
• For more information please visit: www.feddevontario.gc.ca
Strategies for Raising Capital and Securing Financing – Government Programs 10
11. Executive Summary
Highlights
• Wellington Financial manages a $450
million investment program.
► Canada’s 17th Fastest-Growing company
according to PROFIT Magazine’s 2009
“PROFIT 100” rankings.
► 6 of the 2011 Deloitte Fast 50 – Canada’s
• Highlights:
fastest growing companiesbank;
Senior debt or 2nd charge behind a
– were Wellington
portfolio companies; 10 of 2009/10 Deloitte
Venture debt;
Fast 50 to 4 year term, inc. renewals;companies.
6 months were also Wellington
30 days to close a transaction.
• Cost of Capital:
• Product Offerings:
Up front fee (2%-3%)
► Term loans from $2 - $30 million;
Coupon (12%-13%)
► No principal amortization.
Warrant Coverage
All in cost – high teens
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12. Executive Summary:
Target Customer
Target Customer
$450 • Must have meaningful revenue,
$400
management, external board members,
$350
etc.
$300
► Generally greater than $5 million in trailing revenue.
$250
Millions
$200 • High growth private companies that want
$150
to delay the dilution of an equity offering.
$100
$50 • Existing users of amortizing venture debt
$0 looking to re-fi.
• Public companies needing capital not
available at a suitable price or on an
appropriate timeline.
12
12
• Companies feeling “the pinch” from their
13. Co-investment example
www.PondBioFuels.com
Angel investors $1,260
Commercialization customer 1,300
Commercialization grant 1,930
Commercialization loan 930
Total $5,420
13
14. Types Of Capital Available to Canadian High Growth Companies
14-Apr-09
Cost
Capital Type of Capital Key Features Use of Capital Capital Providers
SR&ED Tax Credits Zero! Up to 41.5% Credit Eligible R&D Gov't of Canada
Refundable Province of Ontario
Claim < 18 Months
Senior Debt P to P+3% First Security Working Capital Chartered Banks
"On Demand" Fixed Asset Finance Asset Based Lenders
Asset Based; Covenants Some Acquisitions
P&I Monthly
Mezz Debt/High Yield 10-15% Junior Secured Acquisitions Hedge Funds
Monthly Interest/some PIK LBO / MBO Specialty Finance
Principal Varies Working Capital Some Chartered Banks
Balloon Pymts
5 year term
Subordinated Debt 10%-17% Junior Secured Working Capital Merchant Banks
Warrants/Success Fee Acquisitions Some Chartered Banks
Cash flow Coverage Fixed Asset Finance Specialty Finance
P & I Monthly LBO/MBO
2-5 year term
Venture Debt 15-20% Junior Secured Typically Event Focused Venture Lenders
Warrants/Success Fee M&A Specialty Capital Firms
Enterprise value Focus Bridge to Higher Valuation
Interest Only Growth Capital
Board Observer
Convertible Debt 25%+ Unsecured Growth Capital Merchant Banks
Convert @ a future date Fund R&D Venture Capitalists
Limited Term/expiry Build out sales force Hedge Funds
Board Seat Working Capital Growth
Interest Capitalized Acquisitions
Preferred Shares 35%+ Liquidation Preferences Business Expansion Venture Capital
Outrank Common Fund R&D Merchant Banks
Typically 5 year term Build out sales force Angels
Redemption/Retraction Working Capital Growth
Board Seat Acquisitions
Interest Capitalized
Forced Sale process
Senior Exec Approval
Annual budget approval
Common Shares 40%+ Board Seat Start Up Costs Angels
Annual budget approval Fund R&D Merchant Banks
Some Venture Capitalists
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