This presentation given to entrepreneur graduates of a recent cohort of ACCES Employment outlines the importance of selecting a mentor and either having advisors or creating a Advisory Board before a founder raises professional capital. Then we delve into the various capital raising alternates that include Angel and VC. Introduction Finding The Perfect Mentor Advisory Boards Financing Alternatives Who Accesses Equity Financing The 5W’s of Angel Investing Angel Network in Canada The Entrepreneur's Benefits Pros and Cons of Accessing Venture Capital Some Pitfalls to Avoid Market Trends

1. Accelerate The Growth of Your Business
with
Mentorship and Capital
What Value Do Your Advisors Bring to the
Table Besides Capital?

2. Agenda
• Introduction
• Finding The Perfect Mentor
• Advisory Boards
• Financing Alternatives
• Who Accesses Equity Financing
• The 5W’s of Angel Investing
• Angel Network in Canada
• Halo Report 2013
• The Entrepreneur's Benefits
• Pros and Cons of Accessing Venture Capital
• Some Pitfalls to Avoid
• Market Trends
• Q & A

3. Who am I
• I am Gerard Buckley
– Founder & CEO of Jaguar Capital an Advisory Practice for Growth Companies in
Governance, Financial Structuring & Funding Strategies
– Chairperson of Board of Directors, Maple Leaf Angels Corporation & Investor in
eight early stage companies
– Nominated and Finalist for National Angel Capital’s Angel of the year in 2014
– Certified Corporate Director of the Institute of Corporate Directors
– Previously Entrepreneur in Residence with Incubes (An Internet Company
Accelerator)
– Past member of Small & Medium Enterprise Committee of The Ontario
Securities Commission
– Investment Committee of Mount Saint Vincent University, Halifax, NS
– 32 yr. Career with Scotia Capital as a Financial Risk Management Advisor to
Fortune 200 Companies: Rogers, Irving Group, Empire Co., Four Seasons, Bruce
Power, OPG, Province of Ontario, Ford etc.

4. How to Find Your Perfect (Right) Mentor
1. Your mentor should be strong where you are weak
a. Stay away from personal opinion vs. actual experience
b. Pick a person with empathy
c. A badly chosen mentor is worse than none at all
d. A good mentor will allow you to make a mistake, just not a fatal one
2. Your mentor does not have to be old with 20+ experience
a. A person that can foresee where you are heading and share your
goals and possibly your passion
3. Aim for the best. Even they feel good helping you
4. The mentor does not have to know why they are your
mentor
a. Keep regular contact, update them when you don’t have a concern
5. Don’t rely on your mentor
a. They are a sounding board, not a crutch
b. A wise mentor is not a decision maker

5. Advisory Boards: An Untapped Resource For You
• The right start-up advisor is a valuable as money
• Select an advisory board based on skills: Think Globally
• A formalized structured advisory board with at least four
scheduled meetings per year will allow your advisors to
complement each other and feel a commitment to your company
• Choose a confidant to chair your Advisory Board
• Formalize the compensation
• Respect your advisors time and have a agenda when meeting.
• Your Advisory Board is often a proxy for a future Board of
Directors
• If you give and ask for nothing, you will get nothing
• Avoid advisor fatigue

6. Advisory Boards: Who
• Reach outside your comfort zone
• Create a influential team of OCI’s
• Industry Vertical Experience
• Previous Start-up Experience
• People with large contact lists or Rolodex
• Members with Legal, Finance and M&A
• Customer Advisory Board
• People with Vision and future focus
• Those Comfortable with risk
• People capable of Strategic thinking for innovation
• Those who have a Understanding of technology

8. Financing Alternatives
• Personal Financing aka: Bootstrapping
• Business Loans
• SR&ED
• Government Grants
• Accelerators
• Angel Investors
• Asset Backed or Receivables Lending
• Venture Capital
• Bank Debt

9. Profit Magazine’s Hot 50

10. What is Angel Investing
• Angel Investing is individuals investing their personal money
in the equity or debt of a Early or Growth Stage Company
• Often referred to as Smart Money, it is where an individual
wishes to invest their time or experience as well money in a
start-up company.
• People wishing to give back their experience so others may
benefit which is often referred to as mentoring or serving on a
company Advisory Board or BOD.
• Angel Investing is Active Investing not Passive

11. Who is an Angel Investor
• Angels are investors who leave out the control. They
essentially bundle just Advice and Money
• A person prepared to invest their personal or family money
• A person who can add value to the company
• An accredited investor as defined by OSC 45-106
• A member of an angel network
• The majority of angel investment in Canada is completed by
individuals >85%
• Estimate of Cdn Angel Investment is 916mm in approx. 1500
companies (VC about 2b)

12. Target Investee Companies
• Companies who are in seed and early stage.
• In technology, life sciences, ict, health care devices, med
tech, clean tech, power solutions, fin tech, …..
• Solve a Problem, Secret Sauce or technology ....... USP,
validated business model, Great management team

13. Equity Capital Life Cycle

14. What Angels Look For
• High anticipated growth rate – Scalability
• Experienced management team
• Sustainable competitive advantage
• Barriers to entry ie. Exclusive IP
• Clear strategy for commercialization
• Proof of concept or enterprise level validation
• Business model anchored in Reality
• Investor exit strategy in 5 to 8 years
• Investing in what you know – vertical expertise
• Coach ability of the entrepreneur
• Amount of dilutive capital required

15. Investment Process
1. Pre-screening – Network Staff
2. Curbside Mentoring or Individual Member Mentoring
3. Present to Investment Review Committee
4. Present at members meeting
5. Due-diligence Committee is formed and led by a member
6. Term Sheet is negotiated & agreed between parties
7. Investment is papered by lawyer
8. Member is appointed to board
9. Quarterly company reporting

16. Factors that appear to impact investor outcome
• Due diligence time: More hours of due diligence positively
related to greater returns (> 40 hours)
• Experience: An angel investor's expertise in the industry of
the venture being invested
• Participation: Angel Investors that interacted with their
portfolio companies at least a couple of times per month
mentoring, coaching, providing leads and monitoring
performance experienced greater returns.

17. Angel Network’s in Canada
• NACO – National Angel Capital Organization
• 33 Angel Groups in Canada
• They have collectively about 2100 investors
• Three large groups accounted for 58%
• 75% of angel group members - former & current entrepreneurs
• The majority have fewer than 50 members
• 75% of groups set up since 2007
• Vast majority do volunteer due diligence
• 12 Angel Groups in Ontario
• Keiretsu Forum & Golden Horseshoe Venture Forum are Private
For Profit Angel Groups

18. Canadian Angel Group Investment Activity 2013
• 199 Investments in 2013 totaling 89 m an increase from 2012
of 139 investments & an increase in investment from 40.5M
• Average investment is $945k up fr $314k
• 78% - Ont & Que, 21% West, 1% Atlantic
• ICT (45%), Life Sciences (33%), Clean Tech (13%)
• Valuation – Median 6.1m, Mean 5.0m
• 61% of transactions involved a co-investor
• Of 3775 applications 5.2% get funded by networks in Canada
• Angels in Canada appear increasingly able and willing to
provide follow-on funding to carry companies through to the
next stages of growth.

19. Angel Resource Institute – Halo Report – 2013
• Median Angel Round Size trends up to $600K Q4 from $550K
Q3. When invested with others 1.7m
• Pre-Money Valuations continue to climb at $3M in Q2/14;
however, top valuations increased from $6.6M to $9.3M
• 72% of deals occur in angel groups’ home states
• 73% of Angel Deals are Syndicated or Co-Invested
• Share of Deals by Sector - Internet 38.5%(+), Healthcare
19.6%(-), Mobile & Telecom 16.2%(+), Software (non-
Internet/mobile) 4.0%(-)
• Interesting that the top US angel group in 2013 is Golden
Seeds with 300+ members invests predominately in women
led & controlled companies

20. Traditional Angel Network is Changing
• Currently Southern Ontario Angel Investment community has 12
Angel groups
• Government programs ( IAF, MaRS, OCE, IBI)
• Online - Angel List, Syndicates, Funders Club, The Funded, Gust
• Y Combinator, Tech Stars, 500 Start-ups, +110 Accelerators in
Canada …. Consolidation occurring to access gov’t funding
• Incubators & Accelerator funds
• Crowd funding such as kickstarter.com and equity crowd funding
will follow
• Introduction of OM - Offering Memorandum will have an impact
• “Future of Venture” – unbundling of advice, money and control
• Super Angels & Micro-VC’s

21. Entrepreneur Benefits
• Large capital source
• Broad pool of Knowledge & Contacts
• Efficient Process
• Capital Connections
• In many provinces there is investor tax credit
• Leverage sources of funding (IAF, IBI, BDC etc.)
• Focus on value-add and advice, not the biggest cheque

22. Entrepreneur Tips
• Find your lead investor early
• Investors don’t have to be in tech
• Have a good business plan and executive summary –
Most investors tend to think of start-ups without a
plan as expensive hobbies
• Most Decks Suck – Make yours Good
• Set a deadline
• Put money in yourself, it goes a long way

23. Selection Criteria
• The stage, quality of the management team, valuation and
technology of companies are more important than the sector
criteria
• Quality is more important than quantity
• The best of the best should only present and the number of
companies presenting should be limited to one or two,
introduced by someone who is willing to sponsor or lead the
investment and due diligence process

24. Superhero of the Modern World

25. Venture Capital Investment
• Cdn VC’s invested $734 mm in Q3‘14 is up 26% from 581mm
Q3’13
• Disbursements to 361 companies up 6% YTD ‘14 vs. ‘13
• ON(9th), QC(12th), and BC(15th) all place within the top 15 for
VC Investments in North America
• ‘14 YTD seen 1.6b of new venture investment up 16% from
‘13 while fundraising dropped 29% in the same period (drop
from 1.1b to 801m. VC investment in Cda is DN fr 5.9b in
2000 it’s high water mark.

26. Venture Capital Investment
• For entrepreneurs, choosing the best financing model for
their start-up isn’t a luxury – it is a necessity
• The terms you will be offered will be commensurate with the
value you have created. Sales = Higher Valuation
• VC’s money comes from LP’s which is mostly institutional

27. Venture Capital Pros
• Small piece of a big company is better than a large piece of a
small company
• Their goal is to grow the company quickly and exit.
• Deep pockets for follow on financing
• Allows you to focus on the business rather than constantly
raising $
• VC firm name helps & signaling positive
• It is their FT Job to help you succeed
• Industry expertise

28. Venture Capital Cons
• You have to qualify
• Often looking for exit in short time frame
• Negotiations tend to be one sided
• Legal costs of documentation are high
• Equity has a higher cost than debt +30%
• Staff & time commitment for due-diligence
• Reduced control or determination of business
• VC’s ask for and get better terms than Angels

29. Venture Capital Cons
• Your business is exposed to the VC’s funding cycle and market
uncertainties
• One author referred to VC’s as a last resort
• May control board decisions
• Follow on Financing requires higher valuations to support VC’s
valuation
• Funding is down and VC’s are taking less risk.
• Series A crunch

30. Pitfall’s
• Complex covenants based on performance metrics
• Inordinately thick documents
• May replace management
• Liquidation preference
• Anti-dilution clauses
• Loose control of the direction of your company
• May hold veto rights or rights to sell company
• Signaling effect (VC in seed rnd & passes nxt rnd)

31. Canadian SME Financing Market Trends
• Nation of independent contractors
• The state of employment is changing dramatically
• Canada is an Immigrant Nation
• Productivity in Canada has not improved
• USA advantage is the development of their risk Capital Markets
• Cost of start-up in CDA is less that USA (especially Silicon Valley)
• Seed and Pre-seed level is where VC money is going
• Consolidation of Accelerators and Incubators
• Angel Tax Credit provincially and is being lobbied federally
• Valuations for public companies are high and is effecting private
markets
• Less exits

32. Questions Entrepreneurs Should Ask Angels
or Venture Capitalists
• Where does your deal flow come from?
• Do you charge for presentations? Or charge for due-diligence?
Or Performance Fees?
• How much management Fee do you charge? How much interest
carry do you charge investors?
• How often do you hold pitches?
• Do you help prepare pitches?
• Do you invest together or make a investment decision
separately?
• Do you have a fund or make pre-seed investments?
• Do you disclose your investment process?
• Who will your board nominee be?

33. Do it Your Way - Parting Thoughts
• Over 90% of all businesses are started and grown with no
equity financing
• VC is the OPM (Other Peoples Money) drug of Start-ups
• Oct’13 Profit Hot 50 - Seed Financing – 98% Founders own
capital, Growth Capital – 62% Founders own Capital
• Control your destiny until you create sales
• Eyes Wide Open and be well researched

34. Gerard Buckley, BBA, FICB, ICD.D
President and CEO
Jaguar Capital Inc.
g.buckley@jaguarcapital.ca
www.jaguarcapital.ca
@jaguarcapital
@gerardbuckley