This presentation is being given to Cohort 4 of Incubes, an accelerator to Canada's leading internet companies. This presentation is the 6th in a series of 6 presentations delivered on subjects related to accelerating your business for entrepreneurs.

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

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 $460 mm in Q1‘13 is up 55%
from Q1’12
• Disbursements to 137 companies up 17% ‘13 vs. ‘12
• Ave investment increased to 3.4m Q1’13 from 2.5m
in Q1’12 which is only 49% of that seen in the US in
Q1’13 for like firms
• VC investment in Cda is DN fr 5.9b in ‘00 to 1.5b in
’12 which was similar to ‘11.

7. Venture Capital Investment
• Q1’ 2013 Clean Tech 180m, IT 150m & Life Sci 40m
• Q1’ 2013 had 15 exits with 2 doing IPO’s and the
remainder seen as been strategic. In 2012 there were
only 30 exits for the entire year
• Fundraising is DN 44% in Q1’13 to 381m of which
178m from retail investors, 100m from single fund
entity & 78m foreign
• Only 3% of the universe of venture capital firms
generate 95% of the industry returns

8. 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

9. 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

10. 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

11. 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

12. 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)

13. 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’12 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

14. Profit Magazine’s Hot 50

15. Profit Magazine’s Hot 50 2012 Top Performers

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

17. 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