The Non-Dilutive Roundup: Funding Alternatives to Balance your Capital Needs

Date: July 15, 2014

Name: The Non-Dilutive Roundup: Funding Alternatives to Balance your Capital N Needs

Presenter: Rizwan Kheraj, Robert McGarry, Stephanie Sang, Paulina Cameron, Marc Drouin, and James Suk

This meeting seminar is to provide funding resources for startup entrepreneurs. There are other alternatives, such as government grants, in Canada that can provide additional supports for startup owners. Presenters in this meeting are specialized in funding and they are willing to assist startup companies to be successful in Canadian economy.

Rizwan Kheraj, Industrial Technology Advisor, NRC-IRAP

Industrial Research Assistance Program, IRAP, is a federal government program to help accelerate technology companies. The program provides funding support and advisory services for small and medium enterprises (SME)

IRAP works with over 9,385 SMEs and over 1853 companies successfully received funding in 2012. 80% of companies are less than 50 employees and generate one dollar to 10 dollar values ratio. IRAP uses monthly cash flow method, which means companies are required to submit monthly claims to receive funding.

IRAP uses the model of client innovative strategy that focuses on R&D, youth employment, market assessment, technology validation and business innovation access. Companies are encouraged to contact with IRAP advisors for specific requirements. IRAP requires companies to have moderate and reasonable risks and provide benefits to Canada.

During assessment, candidates need to demonstrate their needs and wants. This includes their milestones and their offer. The only obligation is when companies are accepted and decide to move outside of Canada, they are required to pay back the funding.

Robert McGarry, Concierge Advisor, NRC Concierge

NRC Concierge is to help startup companies to seek for opportunities in federal and provincial programs. The service is personalized and free for SMEs and it also facilitate SMEs path-finding.

The service has three phases: focus, expert information, and international linkage. Concierge advisors will advocate SMEs to go through all phases. NRC Concierge will help any companies at any stage of their business cycle.

Candidates are required to be incorporated, innovation and at least have one full-time employee. They are also required to submit a business draft plan with 2 years financial forecast.

NRC Concierge uses matching equity, and expects companies to know their terms and needs in advance.

Stephanie Sand, CEO of Grant Consulting

Grant Consulting is a company that helps startup companies to apply for grants. Their areas of services focus on operational, project, hiring and team training. They have 90% successful rate based on their one on one service approach.

Grant Consulting encourages companies to apply when they are in need of R&D, innovation, new function, employment, improving skills, and market expansion. Overall, Grant Consulting will assist companies that will improve Canada economy.

A successful application will have these elements:

• Establish goals
• Research
• Understand requirements: eligibility, commitment , and reporting
• Needs and wants
• Deadlines and planning ahead

Other funding resources provided by Grant Consulting:

R&D	Research Net
General	Canada Business Network, Civic info BC, Community Futures
Arts	Canada Council & BC Arts Council
Media	Canada Media Fund
Non-profit	Charity village
Other	Contests

Grant Consulting only look at current available grants.

Paulina Cameron, Business Development Manager, Futurpreneur Canada

Futurpreneur is a nonprofit organization that helps startup companies and pre-launch coaching. They work with 40 different community partners, and they provide many coaching programs, such as Startup Financing or Momentum mentorship.

They are looking for applicants who are in the age range between eighteen and thirty-nine. Their companies must be a startup, full-time, and have good credit score. They expect all applicants to provide formal business plan and 2 years forecast.

Successful applicants are able to receive funding up to $45,000 with low interest rate of prime plus three percent. Futurpreneur uses the model of character-based and 5 year repayment schedule.

Futurpreneur Canada also provides mentorship program that only offer to companies that operates less than 12 months. There is no industry restriction, but the applicants need to have over 50% ownership of the company. They also offer business plan template training and advisor for support.

Marc Drouin, Senior Manager, BDC

BDC is the only bank that dedicates their services to entrepreneurs. Their objective is to accelerate the success of entrepreneurs businesses. BDC focuses on unsecured SMEs and have high risk tolerance.

BDC designs to meet and protect cash flows with terms and conditions with entrepreneurs. In addition, their credit decision goes beyond the number, and BDC offers Lines of credit option for clients.

In most of the banks, they are required high volume of certainty from clients to protect themselves if clients did not pay back. Therefore, they usually increase high interest rates to cover the risk. However, BDC is less risk diverse than other banks.

James Suk, Partner, Boast Capital

Boast Capital is a company that provides non-dilutive financing for SR&ED and IDMTC. They have technology advisors to assist clients with tax credit and other non-dilutive capital. They also offer angel mentorship for clients.

 

Their advice for future startup companies:

• Pay yourself and staff
• Understand between segregate development versus commercial activities
• Incorporate company and ensure IP ownership

The common pitfalls for companies have these elements:

• Poor documentation
• Focus on feature & function versus underlying technology
• Confusing business logic with core logic

Boast Capital also suggests companies that have high contractor wages and low salaries will potentially trigger CRA audit. Companies with significant increase in Income Tax Credits will also trigger CRA audit as well.

It is important to claim SR&ED and IDMTC properly and Boast Capital can help companies to be risk adverse.

All presenters provide valuable services that will potentially help startup companies’ owners to have a successful start on their businesses. It is strongly suggest all startup entrepreneurs to look for advisors for programs that fit the needs of the current companies operation.