Day 3 Morning - Financing The Business


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  • Day 3 Morning - Financing The Business

    1. 1. Lead to Win Financing the Business May 21, 2009 Morning Chuck Colford, CEO – Congruance IT, Inc. Ken Charbonneau, CA, CPA Lead to Win
    2. 2. Module Objectives What You will know about: • Types of instruments for financing • Sources of money Where • Money raising process • Pitching to investors Who • Deal parameters • Bootstrapping How • Key Financing Principles When You will be able to: • Plan to finance your business • Understand dilution of ownership and control • Anticipate and appeal to investor needs • Know key benefits and pitfalls of various approaches • Better understand and manage your downside risks • Improve your prospects for closing good financing deals Slide 2 Lead to Win
    3. 3. Agenda • Financing sources • Instruments for financing • Equity financing process • Your first equity transaction – Exercise • External Investors • Bootstrapping • Wrap Up Slide 3 Lead to Win
    4. 4. Financing Sources • Founders, Family, Friends • Angel or Private Investors • Commercial Banks • Investment Banks & Boutiques • Governments • Venture Capital Firms (US, CDN, Intl) • Public Markets • Customers Slide 4 Lead to Win
    5. 5. Financing “Surrogates” – The Usual Suspects Be careful – • Factoring Boutiques Not everyone – Payday advance for businesses is what they – Cash now in exchange for discounted receivables appear to be • Agents, Underwriters – Facilitators who will “help” you raise money – in exchange for… • Influence peddlers – Look like agents, but may just waste your time – Some may damage your credibility and impair you • Criminals – Looking for creative ways to launder money – May destroy your credibility and reputation Slide 5 Lead to Win
    6. 6. Financing – Core Principle ALL money comes with strings attached – Know what they are! • Know who they obligate you to • Know your downside (protect if possible) • Understand what you are getting into Slide 6 Lead to Win
    7. 7. Source: Founders, Family, Friends Core group Benefits: Pitfalls • Already known (usually) • Cash may be limited Value of • Aligned interests • There is a difference commitment between losing your shirt often greater • Skin in the game vs. all your shirts plus than money • Significant support given the closet they hang in. • Relatively simple terms • Consider impact if… Instruments: • Easy closing (divorce of a spouse, Equity or founder fails to pull Loans weight, or leaves…) • Easy to protect For better or downside (Shareholders worse… agreement) Chose wisely Don’t forget - Spouses have skin in the game too Slide 7 Lead to Win
    8. 8. Source: Founders, Family, Friends Easiest to find Benefits: Pitfalls • Already known – no hunt • Funds may be limited, Instruments: but possibly sufficient • Relationship to leverage Equity or • Consider their exit – Loans • Aligns with your interests when will they need their – Not cross purpose money back • Simple deal terms • Hard to protect May not be downside the easiest to • Easy closing – Possible severe long live with term consequences – If the company fails or you lose control – they may be hard to face – May cost you family & friends Consider impact of subsequent financings on them Slide 8 Lead to Win
    9. 9. Source: Angel or Private Investors Hard to find Benefits: Pitfalls • Opportunistic – may be • Finite cash - may be Instruments: just the right sized deal insufficient Equity or • If you need many – • Can help with heavy harder to herd eagles Loans lifting – in the business • Activist investors – some and further financing may not be compatible Angels • Similar backgrounds – • Endangered species – deserve their usually they are many ravaged by VCs name – If you go this route successful • Likely will NOT protect them entrepreneurs participate in deals with downstream VC plans downstream • Sources of support and • Lookout for surrogates counsel – not just money (big talkers) Their experience & insight can be BIG help Slide 9 Lead to Win
    10. 10. Example – Why protection is needed A common challenge “Concentration of Debt and Share Ownership: The majority of the Company’s long term debt as well as the issued and outstanding common shares of the Company are held, owned or controlled by funds, subsidiaries or parties associated with Vengrowth Asset Management Inc. and Wellington Financial LP. As a result of this significant position of influence over most elements of the Company’s overall capital structure, these parties have the ability to elect all of the Company’s directors and to determine the outcome of most corporate actions requiring lender and shareholder approval irrespective of how other shareholders of the Company may vote.” - Source: Google (Management’s Discussion & Analysis, Nexient Learning Inc., 2008) Slide 10 Lead to Win
    11. 11. Source: Commercial Banks “A banker is Benefits: Pitfalls someone who • Easy to find • Hard to get will loan you • Lots of cash • Risk averse - Need money – collateral to offset their when you no • Simple terms on deals risk longer need • Good lines of credit as it” – Anon – Receivables your business ramps – Assets purchased – Your business builds • Loans can be called in Instruments: credibility Debt – Money gets easier A good banker can provide valuable referrals Slide 11 Lead to Win
    12. 12. Source: Financial Companies, Boutiques Instruments: Benefits: Pitfalls Debt, Equity • Specialize in specific • As specialists, they may or hybrids be running the table types of transactions – well suited in certain – terms may heavily Factoring circumstances favour their side • Often complex Terms • May have high costs Preferential and Conditions – relative to the risk they Debt (e.g. assume bridge loans) – Can prey on desperation Consider each on its own merit – with counsel Slide 12 Lead to Win
    13. 13. Source: Governments Instruments: Benefits: Pitfalls Cash, Tax • Significant capital to • Each process takes time Credits, Low and has reporting deploy (or No) demands interest loans • No dilution – May be at odds with • Limited obligation to normal business goals IRAP, SRED repay grants – Look closely at strings EDC, NSERC • Low cost of cash • A 50 cent dollar is still R&D, GOA • Everything from not free (PEMD), CED- feasibility studies to • So many programs… CFCD, CLD, … commercialization & – Must manage the beyond may qualify distractions and time demands on small team • Transparent Need to stay on target (Can’t chase everything) Hire help to manage processes as required. Slide 13 Lead to Win
    14. 14. Source: Venture Capital Firms Canadian, US, Benefits: Pitfalls and Int’l have • Good ones can help you • Want to exit, not own differences win - Go Big plays • Huge demands on time • Onerous Terms • Some have vast capital • Tranches Instruments: reserves to deploy • Poison follow-on deals Equity, Convertible • Can help you go IPO • Cram downs Debt • Can help you secure • Tinkering (experience mismatch, favours) loans • Burn & Churn - Founder • May have experience in rollover, high burn rates the space • May panic prematurely • Some have winning • They may also be in jeopardy track records – that repeat All VCs are not equal - Is your Partner a partner? Slide 14 Lead to Win
    15. 15. Source: Equity Markets IPO, TSX, Benefits: Pitfalls NASDAQ, • Lots of cash out there • Too daunting for early OTC, Pink stage companies Sheets • Recipes are known • Prospectus and underwriting are complex Capital Pool • Reporting burden Company (SarbOx, (CPC) - • Harsh audit, compliance Reverse & legal costs takeover • Many players – many transaction middle men to feed • CPC can put you in a fishbowl with little cash • Surrogates abound Mismatched for early stage companies Slide 15 Lead to Win
    16. 16. Source: Customers Instruments: Benefits: Pitfalls Income • Pay as you go • Pacing of growth less (Invoices), • Validate business model than equity financings Equity • Innovators Dilemma risk • Endorsements – Hostage to established Bootstrapping • Retained earnings solution – vs disruptive – May pay dividends solutions • May be able to make – Getting off plan too far strategic investments • Scalability • Referrals to more – Services ramp slower than product customers – Yes Virginia – There is • Retention of IP a Santa Clause ownership May be ideal – If your solution can get early wins Slide 16 Lead to Win
    17. 17. Source: Criminals You are Benefits: Pitfalls judged by the • Seemingly unlimited • Prey on your need company you supply of money • Often very well keep. – Unfortunately - it is disguised NOT good money. – Easy to fall victim • May irreparably damage – the business and – your reputation • Downside protection: – Trust “spider senses” – Reverse due-diligence – Quality legal counsel, solid paperwork Don’t be naïve – Don’t get burned Slide 17 Lead to Win
    18. 18. Agenda • Financing sources • Instruments for financing • Equity financing process • Your first equity transaction – Exercise • External Investors • Bootstrapping • Wrap Up Slide 18 Lead to Win
    19. 19. Instruments for Financing Your Business Raising Cash • Pure forms – Equity (Common and Preferred Shares) • Money raised by selling a portion of ownership – Debt (Loans) • Money raised by borrowing – obligation to repay – Gifts (Grants, Incentives, Awards) • Seemingly “free” money – Income (Revenue, Investment) • Sales, Investment Returns and Interest • Hybrid forms – Convertible debentures – Factoring receivables or credits – Any blend of the above… • (Barter – In lieu of Cash) Slide 19 Lead to Win
    20. 20. Equity - All equity is not equal A permanent • Common Shares represent form of – Proportional ownership of a company financing – A residual claim to the earnings and assets of the company – Entitlement of dividends – Voting rights • Preferred Shares represent – Voting rights – Proportional ownership of a company – Priority claim on dissolution up to par value – Priority claim to dividends at a fixed rate – No voting rights unless otherwise specified • VC’s typically vote preferred shares “on an as converted basis” Slide 20 Lead to Win
    21. 21. Debt - comes in many shapes & forms Unlike equity, Debentures repayment is • Bond or promissory note to pay a fixed sum required! • Not secured by a mortgage or a claim on a specific asset • Supported by the general creditworthiness of the borrower Asset backed loans • Secured by a mortgage or claim on a specific asset • Capital and operating Leases Revolving credit bank loans • An agreement to extend credit up to a predetermined maximum Slide 21 Lead to Win
    22. 22. Shares and debt are often convertible Converting shares and Preferred shares debt to • Risk reduction – priority claim common shares • Improved ROI – fixed dividend • Vehicle for valuation ratchets Debentures • Vehicle for bridge financing • Dodges valuation considerations Slide 22 Lead to Win
    23. 23. Other equity vehicles Options & Warrants Options & • Convey the right to buy common shares at a warrants - a specified price on or until a specified date right but not Can be used to an obligation • Incent employees and management • Provide “Sweeteners” to investors • Dilute founders Equity may not be permanent when it is • Redeemable Equity may – Can be repurchased and cancelled for cash or not be other consideration at the option of the issuer (i.e. permanent the company) and look like • Retractable debt – Can be tendered for repayment and cancellation at the option of the investor Slide 23 Lead to Win
    24. 24. Agenda • Financing sources • Instruments for financing • Equity financing process • Your first equity transaction – Exercise • External Investors • Bootstrapping • Wrap Up Slide 24 Lead to Win
    25. 25. Process is Important – Prepare & Plan One size does • Before you try to raise money: not fit all - 1. Founders need to align on approach Figure out what fits your 2. Corporate structure matches the approach above business. 3. Phases are distinct and may be financed differently • How much money do you need? Now? Later on? Don’t misfire 4. Need a Business Plan summary – Usually get 5. Need a Financing Plan only 1 chance per prospect. 6. Create a Pitch (elevator speech + presentation) • Iterate as you learn 7. Sort out how to divide and conquer the work • Warning: – Failure to properly address steps 1 & 2 above can be severely debilitating, or even fatal – Yet it is often overlooked… Slide 25 Lead to Win
    26. 26. Your Corporate Structure is Important Getting • Enables how you inject money into business money out • Enables how money (and profits) get paid out Calling the • Enables who controls the business shots – Voting rights – Board seats • “The CEO serves at the pleasure of the Board” – Captures and discloses any special rights • Determines how boundary conditions will be resolved – Disputes – Departures – Changes of control Slide 26 Lead to Win
    27. 27. Corporate Structure - Examples • Taking the VC Route One size – CCPC Federal + US subsidiary (Delaware) does not – Enables Cdn VC to invest fit all – Allows US VC to invest later and flip parent – Careful – VCs will want control as early as possible – Board will be more complex – multiple interests • Taking a bootstrapping route – Can start with sole proprietorship early and flip – Incorporate federally or provincially – Different classes of shares for different players • e.g. Founders, Spouses, Family Trusts – Enables good use of dividend tax advantages and income splitting – Small board (even sole Director) OK Slide 27 Lead to Win
    28. 28. Process is Important – “The Deal” • After you have planned Repeat as – execute the financing plan required • Raise Money: 1. Make connections 2. Work the pipeline 3. Ask for money 4. Discuss the deal terms $$$ Leads 5. Due diligence (Reverse due diligence) 6. Paper the agreement – Ts and Cs 7. Closing 8. Deposit the proceeds 9. Celebrate $ Slide 28 Lead to Win
    29. 29. Your First Financing Get off to a Recall the process: Founders inject capital good start • Make connections • Who will be the founders • Work the pipeline • Maybe only $10 Many • Pure equity – can be founders • Ask for money various classes forget this • Discuss the deal terms round – and it • Founders agreement • Due diligence (Reverse haunts them • Incorporation due diligence) later! • Shareholders register • Paper the agreement – and Cap Table Ts and Cs • Open bank account • Closing • Your first bank deposit • Deposit the proceeds • Celebrate • Celebrate What Ts & Cs to consider? Slide 29 Lead to Win
    30. 30. Financing – Core Principle Good paper is like a good parachute – It may not let you down gently, but it improves survival odds. • Goal: To clearly agree on “what we all agree on” – Easier when everything is friendly and not stressed – Everyone understands their rights and obligations • Know up front what happens in the event of… – Death, Divorce, Failure of commitment, Change of control, Resignations and Terminations – Actually lowers stress when the rules are known • Saves money on lawyers to sort it out later – reduces distractions at the “worst possible times” Slide 30 Lead to Win
    31. 31. Financing - Exercise Review some • How far along are you? typical – Show of hands shareholder agreement – Poll the room terms • 30 minutes - Breakout into groups of 8 or less Group – Handouts – Typical Ts & Cs for founders discussion – Appoint a scribe – Discuss items – Are some more relevant? Why? • 20 minutes – Return & Share – Key findings from each group – Class discussion Slide 31 Lead to Win
    32. 32. Agenda • Financing sources • Instruments for financing • Equity financing process • Your first equity transaction – Exercise • External Investors • Bootstrapping • Wrap Up Slide 32 Lead to Win
    33. 33. Network to find investors • Referrals quot;Referrer – Not Cold-calling Trust Index” – Consider: • Who is active in your space • Who can open doors • Who can assist with execution of the plan • Manage money hunt just like sales – It is a pipeline Sy Bu olio Lea Po dica Fr – Many leads will not pan out ie n rtf te si nd Ass nie ne Com s – Allocate resources as probability increases ss – Requires tracking and follow-up oc s pa d ia – Ask for the money te s Slide 33 Lead to Win
    34. 34. Develop a Simple Pitch – Sample Outline The Team Introduce yourselves – and show depth of team Build interest in first 10 Customer’s Pain Who are they? What is their challenge? minutes or The Market Size and growth of market; window of opportunity risk getting Your Solution How you solve the customer’s pain? cut off. Your IP Your technology or other unfair advantage Business Model Pricing, margins, COGS, sensitivity Experience Go to Market Sales cycle, Value chain, channels or partners shows 12 charts is Competitive Position Incumbent & emerging players; How you differentiate about max! Progress to Date Key achievements and future milestones Financial Plan 1st year monthly, 5 year projection, cash management 7-8 slides = Current Structure Previous deals; Valuation; Ownership (as relevant) 15-20 mins. The Close What you are asking for; Use of Proceeds, Exit strategy. 12 charts = 25-30 mins. You don’t need to tell them everything on first date. Secure interest for a follow-on meeting. Slide 34 Lead to Win
    35. 35. A real deal begins with a Term Sheet • The “Show Me Yours And I’ll Show You Mine” stage – Asking for a Term Sheet vs. presenting one – Deal litmus for both sides • Identifies key deal terms on a broad basis – Allocates risk – Allocates rewards – Allocates control – Establishes valuation expectations • Don’t accept it on the spot – You need to understand it, negotiate, possibly say no Slide 35 Lead to Win
    36. 36. Negotiation is a process of allocating risk & return – On both sides DEAL TERMS Valuing the company Founders’ incentives Investor downside protection Control decision making Slide 36 Lead to Win
    37. 37. All deal terms must be considered Provisions to align founder’s Provisions to protect investor incentives: financial downside: • Performance and forfeiture • Staging capital infusions provisions (tranches) • Stock options/grants • Anti-dilution provisions • Vesting schedules • Liquidation preferences • Put rights Provisions to control decision • Automatic conversion making (veto rights): • Piggyback rights • Board rights • Demand rights • Super-majority rights • Addition of management team Other Provisions • Terms of employment contract • Valuation (e.g. buyback provisions, non- • Who bears legal costs compete clauses etc.) • Timeframes • Corporate Structure Changes Slide 37 Lead to Win
    38. 38. Valuation Building value Striking a valuation (or share price): raises the price – Job #1 • Is much easier before you get too far in – Founders by in cheap – …but pay for it with sweat & risk Unless you get crammed • By proxy down – Whatever is a reasonable value for a similar company in a similar business at a similar stage Or fail to • By negotiation execute – Discounted cash flows, Milestones achieved – Whatever you can agree on with an investor • By 3rd party – Valuation assessment can be expensive • Put off until later – Convertible debenture – flip to equity later on Slide 38 Lead to Win
    39. 39. Valuation – Core Principle In Julius Caesar’s Rome, quot;the fire departmentquot; was a group of slaves, carrying around advanced (at that time) pumps. Roman fires tended to be very violent and widespread, so the slaves were naturally slow to respond, thereby enhancing their own safety. As a result, there was a lack of effective firefighting. One clever businessman, Marcus Licinius Crassus, created a private fire department. He and his slaves would go to a burning house and if he believed the building was worth saving, he would attempt to buy it from the distraught owner at a huge discount. As the building continued to burn, he Marcus L. would offer less and less money. As soon as the owner Crassus – relented to sell to Crassus, his slaves would put out the fire, subsequently repairing and reselling the property. The first VC? Crassus made a fortune with this approach, which has been adapted with success to the present day. Valuations are higher when you are not desperate. Slide 39 Lead to Win
    40. 40. Be prepared for due diligence • Fact checking and so much more • Due diligence begins with the first meeting & never ends • Reverse Due Diligence – Check out your investors – talk to some of their other investees • Rep’s and Warrantee's may be required – Use good counsel Tips • Be prepared with documents and references • Don’t burn out your references – Wait until you are well along with an investor • Push the process, don’t be pulled • Remember buyer behaviour – Cognitive dissonance • Don’t lose credibility – it’s better to tell them than for them to find out Slide 40 Lead to Win
    41. 41. Closing Term Sheet forms basis of definitive agreements: – Subscription Agreement – Shareholders Agreement – Management Contracts – Term Sheet may have evolved/devolved Tips – Ensure professional advisors understand the process – Proactively manage the process until the end Slide 41 Lead to Win
    42. 42. Financing – Core Principle A deal is not done until the money transfers! • Many things can go wrong – some big, some small. – They can go wrong at any time – including at the last moment. • Wait for the cash to hit the bank before considering the deal done. Slide 42 Lead to Win
    43. 43. Investment Landscape and Ecosystem Ecosystem Technology Development Product Market Development now has a & Demonstration Commercialization & & Sales Volume Ramp Market Entry gap – VCs Founders need Angels companies VCs matured to a Banks, Markets stage that $ $$ $$$ angels funded Canadian VC poorest performing asset class – 10 Year returns of entire asset class 2%, since inception 0% Cdn VC fund • Underperformed index: 9.8% for Canadian small cap index; raising down • US VC rate of return is 18.3% over the 10 year period. – Survivorship bias actually shows performance is actually worse; 13 of 20 LSVCC funds no longer active (1998-2007) US VCs much – Labour sponsored funds raised $907M in 2006, but fell to $532 by 2008 more viable Cram Down VC financings have crushed angels – Many private investors will not invest in startups • That need follow-on VC • Fear of technology companies (since VC is typically needed) Slide 43 Lead to Win
    44. 44. Canadian Labour Sponsored VC Performance Source: 2008-02-16 Globe & Mail – “The ugly truth about Labour Sponsored Funds” Slide 44 Lead to Win
    45. 45. Venture Capital in Ottawa • $1.26 Billion in 2000 down to $130 Million last year • Investment bias - mainly to follow on rounds • Ottawa’s investment falloff worse than national results • If you need VC – You should plan to look south for it Slide 45 Lead to Win
    46. 46. Agenda • Financing sources • Instruments for financing • Equity financing process • Your first equity transaction – Exercise • External Investors • Bootstrapping • Wrap Up Slide 46 Lead to Win
    47. 47. What do these companies have in common? Slide 47 Lead to Win
    48. 48. Bootstrap…the definition • A strap that is looped and sewn to a boot for pulling it on • A means of financing a company through the creative acquisition and use of resources without raising cash from independent investors • A process that is self-initiating and self- sustaining Slide 48 Lead to Win
    49. 49. Bootstrap versus Big Money Bootstrap Big Money Cash Earn it Other peoples Initial focus Customer Exit Product Incremental Fully featured Markets Niche $1B Structure Fluid Rigid Time horizon Near term Long term Media Low High Personal sacrifice High Low Slide 49 Lead to Win
    50. 50. Advantages • It forces you to concentrate on selling to bring cash into the business • Lessens the need for cash, minimizes expenses • Avoid the problems of raising too much money • Founders retain greater authority, control and flexibility • Equity is expensive especially at startup • Positions the company for external financing in the future Slide 50 Lead to Win
    51. 51. Disadvantages • May not generate enough cash to grow at the desired rate • Limits potential sales, market share and overall competitive position • Provides insufficient support for high growth and capital intensive businesses Slide 51 Lead to Win
    52. 52. Strategies for success • Get operational quickly • Go find a customer • Forget about the crack team • Keep growth in check • Focus on cash • Form alliances Slide 52 Lead to Win
    53. 53. Get operational quickly • Get up and running rather than waiting for the home run • Look for cash generating products or services, i.e. sell your brain! • Take on opportunities that might not be part of the “strategic plan” • A business that is making money builds credibility Slide 53 Lead to Win
    54. 54. Go find a customer • Reach out to customers from day one • Get out and sell before the product is ready • Use personal passion and salesmanship to substitute for big marketing budgets • Offer products with tangible advantages over competitors Slide 54 Lead to Win
    55. 55. Forget about the crack team • Reliance on inexperienced people is common • To learn faster, ask for help • Learn from mistakes Slide 55 Lead to Win
    56. 56. Keep growth in check • Expand at a rate that you can control • Manage within your financial means • Facilitates development of management skills under less pressure • First-mover advantages are often short- lived • Keep your finger on the pulse of performance Slide 56 Lead to Win
    57. 57. Focus on cash • Cash is king – not profits, market share or other metrics • Create healthy margins from day one • Say no to loss making strategies to build market share or a customer base • Understand cash flow – cash position, monthly burn, timeline $ Slide 57 Lead to Win
    58. 58. Form alliances for • Market penetration • Sales/marketing channels • Product credibility • Joint bidding on projects • Accelerate time to market • Geographic expansion • Business experience • Enhance company status Slide 58 Lead to Win
    59. 59. Bootstrapping methods have various levels of value potential and application • Customers: • Ask customers to prepay fees or provide advances • Get customers to fund customization work (and let you own the IP) • Deliver invoices with the goods, pay attention to collections • Don’t do business with dead beats and dreamers • Market with no money – website, biz cards, tradeshows, cold calls Slide 59 Lead to Win
    60. 60. Bootstrapping methods have various levels of value potential and application • Suppliers: • Ask for credit • Deal with service providers for low rates • Make use of below market rent space • Barter your products or services • Don’t abuse them Slide 60 Lead to Win
    61. 61. Bootstrapping methods have various levels of value potential and application • Your team: • Forgo, reduce or delay compensation (sweat equity) • Employ relatives and friends at below market salaries • Look for volunteers and co-op students • Hire part-time networks not full-time staff • Pay with stock or stock options • Work from home Slide 61 Lead to Win
    62. 62. Bootstrapping methods have various levels of value potential and application • You: • Use personal savings, credit cards and loans • Forgo, reduce or delay compensation (sweat equity) • Work from home • Develop product at night and weekends while working elsewhere • Wear lots of hats Slide 62 Lead to Win
    63. 63. Financing – Core Principle “Every dollar you save is one less you need to raise” • Actually it is often > $1 per dollar saved – All money does not have equal cost – Valuation changes and dilution multiplies the impact of early savings • Seems obvious, but routinely not practiced. – Especially by so called “Smart money” • Truly Smart money – avoids being wasted. Avoid burning cash unnecessarily Slide 63 Lead to Win
    64. 64. Cash Conserving Tips • Be Thrifty • Capital Expenditures – Compensate with Stock/Options – Borrow from another business – Use Co-op Students – Buy used equipment – Services in kind – Consider leasing capital equipment – Say NO to company credit cards – Use payroll provider • Capital Structure – Share premises with others – Convert debt into equity – – Shop around to minimize cost of debt • Receivables • Leverage Government Programs – Invoice when product is delivered – Elect to file GST monthly – Add late payment penalties – Factoring – Take full advantage of Investment Tax Credits (ITCs) • Payables – Negotiate extended payment to – Exploit government hiring support suppliers initiatives – Make prompt payment only when • Build positive banking relationship meaningful discounts apply – You may need a friend if the cash gets tight Slide 64 Lead to Win
    65. 65. Agenda • Financing sources • Instruments for financing • Equity financing process • Your first equity transaction – Exercise • External Investors • Bootstrapping • Wrap Up Slide 65 Lead to Win
    66. 66. Wrap • We have scratched the surface – You will learn as you go if you pay attention • Don’t be intimidated – Lots of people less skilled have succeeded – Perseverance is the key ingredient – You are in select group – 2002 class beat the odds • Don’t let your assumptions go unchecked – Get help when you need it – Help each other – Call on us • The rules of the game continue to evolve – We are all still learning Good luck – And Thank-you Slide 66 Lead to Win