This presentation gives an overview of the steps involved in acquiring funding for a cleantech company, including sources of funding, typical early financing transaction challenges, as well as existing government programs.
Commercializing CleantechYour Blueprint for Acquiring Funding to Manufacture Your ProductThe Canadian Institute’s Forum on Commercializing CleantechPresented by: Alex KilgourPhone: +1 613 783 9679Email: alex.kilgour@fmc‐law.comLinkedIn: http://www.linkedin.com/in/alexkilgour 1
Funding Your Cleantech Company From Idea to Manufacturing – Three Phases• Private Company/Startup – investors are friends, family, angel investors, government funding, venture capital• Expansion Capital – investors are strategic investors, mezzanine financing, subordinated debt• Public Company – investors are the public, institutions, mutual funds, pension funds through initial public offerings and other financings on a stock exchange 2
Early Stage Funding Sources• Friends and family• Angel investors• Government funding sources• Venture capital 4
Angel Investment• Why – significant experience and expertise/validation• When – product development and early commercialization• How – loan/convertible loan/preferred shares• Who – high net worth individuals who are often also successful entrepreneurs• e.g. National Angel Capital Organization (York Angels, Maple Leaf Angels, Golden Triangle Angelnet) 5
Government Funding• Why – bridge funding to early revenues, acquisition or VC• When – IP and product development, early commercialization• How – repayable or non‐repayable grant/loan/convertible loan (secured or unsecured)• Who – federal and provincial government programs• e.g. SDTC – (Sustainable Development Technology Canada), MaRS Investment Accelerator Fund, Ontario’s Innovation Demonstration Fund and Strategic Jobs and Investment Fund 6
Venture Capital• Why – significant development, marketing or capital costs• When – product development, customer engagement and operational expansion• How – preferred shares with certain bells and whistles• Who – professional investment funds with significant capital and high growth expectations• e.g. Emerald Technology Ventures, XPV Capital, GrowthWorks, DBL Cleantech Capital, Ventures West 7
Groundwork to Getting Funded• Incorporate and organize• Select knowledgeable advisors• Business plan• Intellectual property strategy• Network, network, network 8
Typical Early Financing Transaction Challenges• Too many investors• Poor incorporation and organization• Inexperienced advisors • IP ownership• Non‐competition obligations• Use of investor funds 9
Common Transaction Terms• Due diligence (previous financings, former founders)• Board of directors (board composition, independent directors)• Employment agreements (non‐compete and termination provisions)• IP assignment and ownership (unencumbered IP)• Shareholders’ agreement (transfer restrictions and drag along)• Founder share vesting (repurchase rights) 10
Government Programs• SDTC Tech Fund – research and commercialization projects ‐ non‐repayable contribution• SDTC NextGen Biofuels Fund – commercial scale demo projects ‐ repayable from free cash flow over 10 year period after project completion• Ontario Innovation Demonstration Fund (IDF) – grant program – 50% of eligible costs, from $100K to $4M – funding for pilot demo projects 11
Government Programs• MaRS Investment Accelerator Fund (IAF) – up to $500K in a hybrid equity/loan• Ontario Centres of Excellence (OCE) – Centre for Commercialization of Research and other commercialization programs – up to $250K• Strategic Jobs and Investment Fund (SJIF) – grant and loan program – at least $10M in eligible costs or 50 new “high value” jobs• Eastern Ontario Development Fund (EODF) – grant program for businesses with at least 10 employees, 15% of eligible costs, minimum project cost = $500K• FedDev Ontario – Investing in Business Innovation – up to one‐third of eligible project costs, up to $1M in repayable contributions for commercialization activities• Ontario Emerging Technology Fund (ETF) – co‐investor with qualified VCs 12
Other Government Assistance Ontario Network of Excellence The Ontario Network of Excellence (ONE) is a collaborative network of organizations across Ontario, designed to help you commercialize your ideas. Whether your are an innovator, a technology‐based business, entrepreneur, or researcher, ONE will connect you with services and programs to help you innovate and gain a competitive advantage. www.oneinnovation.ca 13
The preceding presentation contains examples of the kinds of issues companies dealing with cleantechcommercialization could face. If you are faced with one of these issues, please retain professional assistance as each situation is unique.
Thank you Alex Kilgour email@example.com://www.linkedin.com/in/alexkilgour +1 613 783 9679