This was another wonderful opportunity to work with the entrepreneurs of Cohort 2 @Incubes.

1. Mentoring Presentation
Pros of Cons of Accessing Venture
Capital too Early
&
Some of the Pitfalls to Avoid

2. Agenda
• Meet & Greet
• Introductions
• 90 Second Company Elevator Pitch
• Pros and Cons of Accessing Venture Capital
• Some Pitfalls to Avoid
• Q&A
• Future Topics

3. Superhero of the Modern World

4. Equity Capital Life Cycle
Concept and Introduction Growth Maturity Decline
product
development
Sales
Sales and
profit
Cash flow
Profit
Time
R&D Pre-Seed Start-Up Round 1 Round 2
& Seed Exit
Grants
/ Love Angel Angel VC $ VC $
Money $ $
$

5. Financing Alternatives
• Personal Financing
• Business Loans
• Government Grants
• Accelerators
• Angel Investors
• Asset Backed or Receivables Lending
• Venture Capital
• Bank Debt

6. Venture Capital Investment
• Cdn VC’s invested $438 mm in Q2 ‘12 up 17% from ‘11
• Disbursements to 135 companies up 6% due to a slower
Q1 2012
• Domestic market activity 725mm as of June 30 is down
3% 2012 vs. 2011
• These #’s are substantially down from the high water
mark of almost 4billion in the late 1990’s and 2.1b in ’07
• VC invested has dropped from a high of 5.9b in ‘00 to
1.1b in ‘10.

7. 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

8. Venture Capital Pros
• Small piece of a big company is better than a
large piece of a small company
• Industry expertise
• 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 $

9. 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

10. 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.

11. 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

12. Do it Your Way - Parting Thoughts
• Over 90% of all businesses are started and
grown with no equity financing
• VC is the OPM drug of Start-ups
• Oct’11 Profit Hot 50 - Seed Financing – 96%
Founders own capital, Growth Capital – 64%
Founders own Capital
• Control your destiny until you create sales
• Eyes Wide Open and be well researched

13. Future Topics
1. Bootstrapping a Company & Exec Summary
2. Forming an Advisory Board
3. Preparing a Pitch for Investors
4. Accessing Capital from a Angel Network
5. Terms to expect from an Investors Term
Sheet
6. Pros of Cons of accessing Venture Capital too
early & some of the pitfalls to avoid

14. Gerard Buckley, BBA, FICB, ICD.D
President and CEO
Jaguar Capital Inc.
(C) 416-884-9522
(W) 416-646-6789
g.buckley@jaguarcapital.ca
www.jaguarcapital.ca
@jaguarcapital
@gerardbuckley