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Lead to Win Financing the Business July 30, 2009 Morning Chuck Colford, CEO – Congruance IT, Inc.  Ken Charbonneau, CA, CP...
Module Objectives <ul><li>You will know about: </li></ul><ul><li>Types of instruments for financing </li></ul><ul><li>Sour...
Agenda <ul><li>Financing sources </li></ul><ul><li>Instruments for financing </li></ul><ul><li>Equity financing process </...
Financing Sources <ul><li>Founders, Family, Friends </li></ul><ul><li>Angel or Private Investors </li></ul><ul><li>Commerc...
Financing “Surrogates” – The Usual Suspects <ul><li>Factoring Boutiques </li></ul><ul><ul><li>Payday advance for businesse...
Financing – Core Principle <ul><li>ALL money comes with strings attached – Know what they are! </li></ul><ul><li>Know who ...
Source:  Founders , Family, Friends <ul><li>Pitfalls </li></ul><ul><li>Cash may be limited </li></ul><ul><li>There is a di...
Source:  Founders,   Family, Friends <ul><li>Pitfalls </li></ul><ul><li>Funds may be limited, but possibly sufficient </li...
Source: Angel or Private Investors  <ul><li>Pitfalls </li></ul><ul><li>Finite cash - may be insufficient </li></ul><ul><li...
Example – Why protection is needed  <ul><li>“ Concentration of Debt and Share Ownership: </li></ul><ul><li>The majority of...
Source: Commercial Banks  <ul><li>Pitfalls </li></ul><ul><li>Hard to get </li></ul><ul><li>Risk averse - Need collateral t...
Source: Financial Companies, Boutiques <ul><li>Pitfalls </li></ul><ul><li>As specialists, they may be running the table </...
Source: Governments  <ul><li>Pitfalls </li></ul><ul><li>Each process takes time and has reporting demands </li></ul><ul><u...
Source: Venture Capital Firms <ul><li>Pitfalls </li></ul><ul><li>Want to exit, not own </li></ul><ul><li>Huge demands on t...
Source: Equity Markets <ul><li>Pitfalls </li></ul><ul><li>Too daunting for early stage companies </li></ul><ul><li>Prospec...
Source: Customers  <ul><li>Pitfalls </li></ul><ul><li>Pacing of growth less than equity financings </li></ul><ul><li>Innov...
Source: Criminals  <ul><li>Pitfalls </li></ul><ul><li>Prey on your need </li></ul><ul><li>Often very well disguised </li><...
Agenda <ul><li>Financing sources </li></ul><ul><li>Instruments for financing </li></ul><ul><li>Equity financing process </...
Instruments for Financing Your Business <ul><li>Pure forms </li></ul><ul><ul><li>Equity (Common and Preferred Shares) </li...
Equity - All equity is not equal <ul><li>Common Shares represent </li></ul><ul><ul><li>Proportional ownership of a company...
Debt - comes in many shapes & forms <ul><li>Debentures </li></ul><ul><li>Bond or promissory note to pay a fixed sum </li><...
Shares and debt are often convertible <ul><li>Preferred shares </li></ul><ul><li>Risk reduction – priority claim </li></ul...
Other equity vehicles <ul><li>Options & Warrants </li></ul><ul><li>Convey the right to buy common shares at a specified pr...
Agenda <ul><li>Financing sources </li></ul><ul><li>Instruments for financing </li></ul><ul><li>Equity financing process </...
Process is Important – Prepare & Plan <ul><li>Before  you try to raise money: </li></ul><ul><ul><li>Founders need to align...
Your Corporate Structure is Important <ul><li>Enables how you inject money into business </li></ul><ul><li>Enables how mon...
Corporate Structure - Examples <ul><li>Taking the VC Route </li></ul><ul><ul><li>CCPC Federal + US subsidiary (Delaware) <...
Process is Important – “The Deal” <ul><li>After  you have planned </li></ul><ul><ul><li>execute the financing plan </li></...
Your First Financing <ul><li>Founders inject capital </li></ul><ul><li>Who will be the founders </li></ul><ul><li>Maybe on...
Financing – Core Principle <ul><li>Good paper is like a good parachute – It may not let you down gently, but it improves s...
Financing - Exercise <ul><li>How far along are you? </li></ul><ul><ul><li>Show of hands </li></ul></ul><ul><ul><li>Poll th...
Agenda <ul><li>Financing sources </li></ul><ul><li>Instruments for financing </li></ul><ul><li>Equity financing process </...
Network to find investors <ul><li>Referrals </li></ul><ul><ul><li>Not Cold-calling </li></ul></ul><ul><ul><li>Consider: </...
Develop a Simple Pitch – Sample Outline Build interest in first 10 minutes or risk getting cut off. Experience shows 12 ch...
A real deal begins with a Term Sheet <ul><li>The “Show Me Yours And I’ll Show You Mine” stage </li></ul><ul><ul><li>Asking...
Negotiation is a process of allocating risk & return – On both sides Founders’ incentives Valuing the company Control deci...
All deal terms must be considered <ul><li>Provisions to align founder’s incentives: </li></ul><ul><ul><li>Performance and ...
Valuation <ul><li>Striking a valuation (or share price): </li></ul><ul><li>Is much easier before you get too far in </li><...
Valuation – Core Principle <ul><li>In Julius Caesar’s Rome, &quot;the fire department&quot; was a group of slaves, carryin...
Be prepared for due diligence <ul><li>Fact checking and so much more </li></ul><ul><li>Due diligence begins with the first...
Closing <ul><li>Term Sheet forms basis of definitive agreements: </li></ul><ul><ul><li>Subscription Agreement </li></ul></...
Financing – Core Principle <ul><li>A deal is not done until the money transfers! </li></ul><ul><li>Many things can go wron...
Investment Landscape and Ecosystem <ul><li>Canadian VC poorest performing asset class </li></ul><ul><ul><li>10 Year return...
Canadian Labour Sponsored VC Performance Source: 2008-02-16 Globe & Mail – “The ugly truth about Labour Sponsored Funds” S...
Venture Capital in Ottawa <ul><li>$1.26 Billion in 2000 down to $130 Million last year </li></ul><ul><li>Investment bias -...
Agenda <ul><li>Financing sources </li></ul><ul><li>Instruments for financing </li></ul><ul><li>Equity financing process </...
What do these companies have in common? Slide
Bootstrap…the definition <ul><li>A strap that is looped and sewn to a boot for pulling it on </li></ul><ul><li>A means of ...
Bootstrap versus Big Money Slide
Advantages <ul><li>It forces you to concentrate on selling to bring cash into the business </li></ul><ul><li>Lessens the n...
Disadvantages <ul><li>May not generate enough cash to grow at the desired rate </li></ul><ul><li>Limits potential sales, m...
Strategies for success <ul><li>Get operational quickly </li></ul><ul><li>Go find a customer </li></ul><ul><li>Forget about...
Get operational quickly <ul><li>Get up and running rather than waiting for the home run </li></ul><ul><li>Look for cash ge...
Go find a customer <ul><li>Reach out to customers from day one </li></ul><ul><li>Get out and sell before the product is re...
Forget about the crack team <ul><li>Reliance on inexperienced people is common </li></ul><ul><li>To learn faster, ask for ...
Keep growth in check <ul><li>Expand at a rate that you can control </li></ul><ul><li>Manage within your financial means </...
Focus on cash <ul><li>Cash is king – not profits, market share or other metrics </li></ul><ul><li>Create healthy margins f...
Form alliances for <ul><li>Market penetration </li></ul><ul><li>Sales/marketing channels </li></ul><ul><li>Product credibi...
Bootstrapping methods have various  levels of value potential and application <ul><li>Customers: </li></ul><ul><ul><li>Ask...
Bootstrapping methods have various  levels of value potential and application <ul><li>Suppliers: </li></ul><ul><ul><li>Ask...
Bootstrapping methods have various  levels of value potential and application <ul><li>Your team: </li></ul><ul><ul><li>For...
Bootstrapping methods have various  levels of value potential and application <ul><li>You: </li></ul><ul><ul><li>Use perso...
Financing – Core Principle <ul><li>“ Every dollar you save is one less you need to raise” </li></ul><ul><li>Actually it is...
Cash Conserving Tips <ul><li>Be Thrifty </li></ul><ul><ul><li>Compensate with Stock/Options </li></ul></ul><ul><ul><li>Use...
Agenda <ul><li>Financing sources </li></ul><ul><li>Instruments for financing </li></ul><ul><li>Equity financing process </...
Wrap <ul><li>We have scratched the surface </li></ul><ul><ul><li>You will learn as you go if you pay attention </li></ul><...
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Day 3 Morning - Financing The Business Charbonneau Colford

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Transcript of "Day 3 Morning - Financing The Business Charbonneau Colford"

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