Information For Companies:
Investment
Process
There are
three steps that companies must take if they wish to obtain an investment
from WUTIF.
These
are:
- Satisfy preliminary
screening criteria
- Negotiate terms and
conditions
- Complete technical and
business review
- Finalize investment
1.
Preliminary Screening Criteria
- Must be an eligible B.C.
company (VCC rules)
- Must be early stage
(typically < 5 years old)
- Must be technology driven (proprietary
IP, etc)
- Valuation less than $2M
(preferred)
- Less than $500K seed
funding required (typical)
- Company has identified
angel co-investors (ideal)
- Great potential (not a
"lifestyle" company)
- Must be willing to accept
Terms & Conditions
(see below)
Before
submitting an executive summary, companies should ensure that the above
criteria are addressed.
2.
Terms and Conditions
Once it
is determined that the Company is a suitable investment prospect, WUTIF will
make an investment offer that will include certain terms and conditions in
addition to the investment itself. For example, the Company must have or find
additional arms-length angel investors or mentors that will invest in, and
provide coaching to, the Company. WUTIF may require the right to nominate one
board member (who may be an angel co-investor). Also,
it will require that a competent board is in place and that
certain governance standards will be applied. The principals may be required
to enter into, or add WUTIF to, a shareholders agreement.
Standard
terms and conditions will be made known to the Company at the outset so that
it can determine if it wishes to seek an investment from the Fund. A Terms
Sheet (download sample) will
be negotiated early in the process. As part of the Terms Sheet, the
following two documents are required:
a)Capitalization Table (proforma) (see sample)
b)Company's Subscription Agreement.
After an
investment is made, companies will be required to report on their progress to
WUTIF on a regular, monthly basis (download
sample report).
3.
Technical and business review
WUTIF
will conduct a review of the Company's business plan. The Company must
clearly demonstrate how the funding will allow it to achieve certain
milestones in the business plan. Goals and objectives, and how these will be
achieved, should be clearly articulated. This step will likely entail a few
meetings between the Fund's management and the target company.
4.
Finalize Investment
After
completing the above, the Terms Sheet will be finalized (updated) and a
Subscription Agreement will be entered into. As soon as any necessary Board,
Regulatory and Ministerial approvals are obtained, the investment can be finalized
and a cheque issued.
How
much will WUTIF invest?
WUTIF will invest to a maximum of $200,000. More typically,
investments will be in the $50,000 to $100,000 range. WUTIF's
investment will be part of a larger investment. WUTIF will not invest more
than 50% of the total seed round being raised. WUTIF may "lead" or
syndicate an investment and help bring in other investors or it may simply
"follow" by topping up a round that already has investors behind
it.
How to
Apply?
Companies
may apply at any time. The best way to do this is on-line at:
http://www.angelsoft.net/apply/wutif
Note:
Applicants should make sure that the above-mentioned
preliminary screening criteria are satisfied and should address these by
specific reference thereto. e.g. eligibility,
valuation, amount required, angel investors identified, etc.
WUTIF may
be able to assist companies with introductions to angel investors. As a first
step, entrepreneurs are referred to www.wutif.ca/angels
for additional information.
Companies can simultaneously apply to VANTEC by going to:
http://www.angelsoft.net/apply/vantec
Note: If the same login and
password are used for Vantec, then it is NOT necessary to re-enter all of
the application information. Any future updates should also be made by
logging into both sites.
How
long does it take?
WUTIF is
fast - if the deal looks good! Companies will get an immediate assessment and
indication of WUTIF's interest.
The time from the first meeting to cash invested can be less than one
month! A more realistic expectation is one to three months.
Unfortunately, the legal paperwork, government approvals and other time
demands can slow down the process.
Typical
timeframes are:
- Satisfy preliminary
screening criteria: 1 to 2 weeks
- Negotiate terms and
conditions: 1 to 4 weeks
- Complete technical &
business review: 1 to 4 weeks
- Finalize investment: 1 to 2
weeks
When a dialog
is first initiated, we can provide an estimate of timing. Often, this will
depend on the Company and how quickly it can respond and, of course, the
number of companies in WUTIF’s queue, and the
current availability of investment capital, and other resources.
Feb'2009 update:
Due to the economic turmoil
that we are presently facing the investment process is slowing down
somewhat. WUTIF itself has not raised as much capital in the past year as it
expected to.
Entrepreneurs raising capital should keep in mind that valuations are
dropping substantially - more than 50% - and deals are taking longer to
complete. While many angel investors are still writing cheques, the cheque
amounts are smaller and therefore more effort is required to attract
additional investors.
