This document provides an overview of capital raising options for startups and scaleups. It discusses establishing an initial capital structure with founders and team members before seeking outside capital. Common funding rounds like pre-seed, seed, and Series A are explained. Key aspects of finding investors through angel networks, crowdfunding portals, and other sources are covered. Requirements for businesses to be investment-ready like having a solid pitch deck and understanding valuation are also summarized. Lastly, tips are provided on understanding the investment process and closing deals.

1. NCFACanada.org #VanFunding
RAISING CAPITAL:
Capital Raising Options for Start-Ups and Scaleups
by Alixe Cormick
Angel Investor; Member of: Kieretsu Forum, Vancouver Angel Technology Forum (Vantec), and
various advisory boards; and a corporate securities lawyer
October 18, 2016

2. Disclaimer
• Information purposes only: The materials and information contained in this
presentation are intended to provide information (not advice) about equity
crowdfunding and related matters. You should not act on this information presented
without first consulting with an attorney.
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• No Warranties: The information provided in this presentation is provided “as is”. We
make no warranties, representations, or claims of any kind concerning the information
presented is complete. We are not responsible for any errors or omissions in the
content of this presentation or for damages arising from the use of the information
provided under any circumstances.

3. @AlixeCormick
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Outline of Discussion
• Your Initial Capital Structure
• Create a Solid Capital Raising Plan
• Find Investors
• Must Haves for Businesses Looking for Investors
• Your Pitch Deck
• Deal Breakers
• Understanding the Investment Process
• Last Minute Tips

4. Your Initial Capital Structure:
Pre-Outside Capital
• Rough guideline for tech & biotech
• Founders: 80%-90%
• Team Members: 10%-15%
• Advisors: 1%-3%
• Compensate for value not hours worked!
• Put in writing and use vesting agreements
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5. Your Initial Capital Structure:
Pre-Outside Capital - Pricing
• Skin in the game
• Shares issued for less than $0.01 makes a
Canadian IPO less likely
• Effect on pricing when looking for outside
capital
• Create a cap table: Excel Example
@AlixeCormick
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6. Your Initial Capital Structure:
Outside Capital Rounds
• Non-dilutive capital
• Common, preferred shares, and debentures
• Pre-seed
• Seed
• Series A and subsequent rounds
@AlixeCormick
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7. Your Initial Capital Structure:
Outside Capital Rounds
Round Amount Purpose Pre-$
Valuation
$ Sources % of
Business
Pre-Seed $25,000 to
$300,000
Build & test
MVP/Proof of
Concept/R&D
$100,000 to
$1M
Bootstrap/FFB/
Crowdfunding/Gov
Grants
5% to 25%
Seed $300,000 to
$1M
Beta Test/Launch
Product/Proof of
Product Solution
Fit
$1M to $3M Angels/Crowdfunding
/Seed VCs/Co-
investment funds
10% to 50%
Super Seed $1M to $2M Working Business
Model/ Proof of
Product Market
Fit/Product
Traction
$3M to 10M Angels/Seed
VCs/Crowdfunding/
Strategic Investors
10% to 50%
Series A $2M to
$30M
Scale customer
acquisition and
revenue
$10M to
100M
VCs/Family Offices/
Crowdfunding/Instit-
utional/ Strategic
Investors/AltFin
Platforms
20% to 50%
@AlixeCormick
#VanFunding

8. Your Initial Capital Structure:
Valuation
• Geography and investor group dependent
• Look for comparable businesses
• Ultimately a negotiation between investor
and business
• Expect 10% to 30% dilution per round
• Use convertible debt or preferred shares if
uncertain or to avoid significant dilution
@AlixeCormick
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9. Create a Solid Capital Raising Plan
• Determine your key milestones or inflection
points that will impact your value
• What is the minimum amount you need to
get to each point
• What non-dilutive sources of capital are
available to you at each stage?
• Identify what you want to offer investors
@AlixeCormick
#VanFunding

10. Create a Solid Capital Raising Plan
• Make a list of contacts that can help
• Old school versus new school capital raises
• Identify potential investors or credible
market intermediaries
• Sample, track, learn, and improve what you
are doing to raise capital
• Keep all doors open
@AlixeCormick
#Vanfunding

11. Find Investors:
Identification
• Friends and family
• Angel investor networks
• Free or almost free angel investor forums
• Pay to play angel investor forums
• Online accredited investor portals
• Individual angel investors and venture capital firms
• Introductions from professional advisors and others
• Identification through research
• Signaling angel investors and venture capital firms
• Third-party finders
@AlixeCormick
#Vanfunding

12. Find Investors:
Approach
• Method 1:
• Well connected angel/VC assists with
introductions
• Commitments;
• Downstream intros and more commitments
• Method 2:
• Credible market intermediary streamlines
process
@AlixeCormick
#VanFunding

13. Find Investors:
Start-Up Crowdfunding Portals
@AlixeCormick
#VanFunding
AB, BC, SK, MB, QU, NB, NS
BC, SK, MB, QU, NB, NS
BC, QU, NS, NB
QU, NB, NS
BC, NB
BC BC

14. Find Investors:
AI & OM Crowdfunding Platforms
@AlixeCormick
#VanFunding
ONAB, BC, MB, ON, QU
AB, BC, ON, QU
AB, BC, SK, MB, ON
ON
? AB, BC, ON
AB, BC, SK, MB, ON, QU, NB, NS
ON AB, BC, SK, MB, ON, QU, NB, NS, PEI, NFL
AB, BC, ON, QU
AB, BC, ON, QU

15. Main Crowdfunding
Securities Law Exemptions
@AlixeCormick
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16. Canadian Small Business
Marketplace Lending Portals
@AlixeCormick
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Rates: 9.75% and up Rates: 6% and up
Rates: 10% and up
Receivable Financing
Rates: 9% and up
Rates: 15% and up

17. Must Haves for Businesses Looking
for Money
• Tax credits
• Small Business Venture Capital Act
• Scientific Research And Experimental Development Tax Incentive
Program
• Government grants – NRC Concierge Service
• Product or service that addresses a large market
need versus a want or nice to have
• Team that can execute
• Solid understanding of business and challenges
@AlixeCormick
#VanFunding

18. Your Pitch Deck
• Bare Essentials:
• Description of your company;
• Team;
• Problem or need (market opportunity);
• Solution (make sure your name is on this slide);
• Value proposition to investor;
• Any traction you have;
• Use of proceeds (may use a timeline or roadmap);
• Summary & contact information.
@AlixeCormick
#VanFunding

19. Deal Breakers
• Raising $ to replace debt; pay big salaries;
develop an idea not a business; or with no
clear purpose
• One man team
• No personal skin in the game
• Unrealistic valuations
• Serious character flaw(s)
@AlixeCormick
#VanFunding

20. NDAs – Non-Disclosure Agreements
• Exceptions but, seasoned Angel Investors
and VCs will not sign
• Business plan contains no proprietary
information
• If you really want an NDA:
• narrow coverage
• introduce at due diligence stage
@AlixeCormick
#VanFunding

21. Understanding the Investment
Process
• Long process
• Meet and greet first step
• All investment basics must be met
• Due diligence review
• Terms may be renegotiated
• Close in person
@AlixeCormick
#VanFunding

22. Last Minute Tips
• Securing a key investor early will make
raising capital significantly easier
• In person meeting = 5x more $ than an
email and 3x more $ than a phone call
• People only invest if they know you, know
the business, and like the investment
opportunity
@AlixeCormick
#VanFunding

23. Thank-you and Good-Luck
Venture Law Corporation
618-688 West Hastings Street
Vancouver, BC V6B 1P1
Phone: 604-659-9188
Fax: 604-659-9178
Email: acormick@venturelawcorp.com
Website: www.venturelawcorp.com
Blog: www.AlixeCormick.com
Twitter: @AlixeCormick
Google+: AlixeCormick
@AlixeCormick
#VanFunding

24. Resources
Canadian Crowdfunding Specific Exemptions
Start-Up Crowdfunding Exemption
• BCI 45-535 Start-up Crowdfunding Registration and Prospectus Exemptions Form 1 -
Start-Up Crowdfunding – Offering Document
• Form 2 - Start-Up Crowdfunding – Risk Acknowledgement
• Form 3 - Start-up Crowdfunding – Funding Portal Information Form
• Form 4 - Start-up Crowdfunding – Funding Portal Individual Information Form
• Form 5 - Start-up Crowdfunding - Report of Exempt Distribution (Form 5) (fillable form)
• Start-up Crowdfunding - Purchasers Information (Schedule 1 to Form 5) (excel)
• Start-up Crowdfunding Guide for Investors
• Start-up Crowdfunding Guide for Businesses
• Start-Up Crowdfunding Guide Preparing an Offering Document
• Start-up Crowdfunding Guide for Funding Portals
• CSA Notice 45-317 Amendment to Start-Up Crowdfunding Exemption (Jan 25, 2016)
@AlixeCormick
#VanFunding

25. Resources
Canadian Crowdfunding Specific Exemptions
National Instrument 45-108 - Crowdfunding
• Notice of Approval MI 45-108 Crowdfunding
• Annex A1 - Multilateral Instrument 45-108 Crowdfunding
• Annex A2 - Form 45-108F1 Crowdfunding Offering Document
• Annex A3 - Form 45-108F2 Risk Acknowledgement
• Annex A4 - Form 45-108F3 Confirmation of Investment Limits
• Annex A5 - Form 45-108F4 Notice of Specified Key Events
• Annex A6 - Form 45-108F5 Personal Information Form and Authorization to
Collect, Use and Disclose Personal Information
• Annex A7 - Companion Policy 45-108CP Crowdfunding
• Annex B - Consequential Amendments to National instrument 45-102 Resale
of Securities
@AlixeCormick
#VanFunding

26. Resources
Canadian Amended Offering Memorandum
Exemption
• Multilateral CSA Notice of Amendments to National Instrument 45-
106 - Prospectus Exemptions Relating To The Offering Memorandum
Exemption
• Changes to Companion Policy 45-106CP Prospectus Exemptions (Jan
7, 2016)
• Amendments to NI 45-106 Prospectus Exemptions
• National Instrument 45-106 Prospectus Exemptions
• Companion Policy to National Policy Instrument 45-106 Prospectus
Exemptions
@AlixeCormick
#VanFunding

27. Resources
U.S. Securities Rules
• Regulation D – Rule 506(c)
• Eliminating the Prohibition Against General Solicitation and
General Advertising in Rule 506 and Rule 144A Offerings;
• Small Entity Compliance Guide;
• Disqualification of Felons and Other “Bad Actors” from Rule 506
Offerings
• Regulation A+
• Amended Conformed Version of Regulation A as Amended
• SEC Title III Crowdfunding Final Rules
• Crowdfunding Rule
@AlixeCormick
#VanFunding