Small Business Investments – Extension of Zero Taxes on Gains in the US

By Bryan Watson

What was originally supposed to go from September 27, 2010 until the end of last year, the US Federal Government made a provision to further exempt any gains made from Qualified Small Business Stock until the end of 2011.

Qualified Small Business Investments are defined as follows:

• Investments of individuals or partnerships in stock of a regular C corporation that has less than $50 million in assets
• Stock that is purchased directly from the corporation and held for at least five years
• The amount of gain under this law is limited to the greater of 10x the investment of $10 mio
• At least 80% of the corporation’s assets must be used to carry on a business or to conduct research or start-up activities
• Business cannot entail service, finance, mining, extraction, restaurant, and hospitality industries
• If an acquisition is made within the five-year holding period, the tax rules allow investors to hold the stock of the acquiring company to satisfy the five-year holding requirement

This law provides for a 0% tax rate on 100% of capital gains as oppose to the previous law of being taxed for the first 50% or 75%, and additionally removes the gain from the Alternative Minimum Tax calculation.

This has provided a quick turnaround with respect to funds provided by angels to entrepreneurs, which in turn allow them to grow their businesses and add new jobs to the economy.  See article for further details.

Reposted from National Angel Capital Organization

Throughout his career, both in Canada and the UK, Bryan J. Watson has been a champion of entrepreneurship as a vector for the commercialization of advanced technologies. Upon his return to Canada in 2004, Bryan established his venture development consulting practice to help emerging-growth companies overcome the barriers to success they face in the Canadian commercialization ecosystem.  Visit Bryan’s blog and the National Angel Capital Organization.

The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers pro vide a wealth of information based on their personal experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.

Read Full Post »

Well.ca continues plans of world domination

By David Crow

Ali Asaria and Well.ca are changing the way Canadians buy online. We’ve covered Well.ca’s funding in 2007 and again in 2009. And today they are announcing an addition $2.3MM in angel financing. That’s crazy, $2.3MM in angel financing. The financing includes some very interesting individuals including:

• Matt Mullenweg, founder of WordPress (AngelList profile)
• Jeff Fluhr, co-founder of StubHub.com (AngelList profile)
• iNovia Capital (as an angel investor)
• Follow on from Jordan Banks and David Ceolin

That’s right, I’m guessing that some pretty prominent angels from AngelList are investing in Canadian companies. If that’s not changing the game of raising money in Canada, I don’t know what is. Ali has done a great job bringing together a Canadian institutional investor (who is smartly adapting to a changing game) with local and international angels.

What’s the money for?

Growth. Well.ca has opened a Toronto office in the new CSI Annex at Bloor and Bathurst. They have recently hired Paige Malling as VP, Marketing away from Sears.ca.  The money is going to expansion. I learned today that Well.ca is the largest online diaper retailer in Canada. You don’t need to be a parent to know that diapers are a big deal, Amazon just spent $540MM on diapers (well Diapers.com). The Well.ca team has figured out the backend systems to attract customers, fulfill orders and generate revenue (hopefully a profit). Expanding the categories and footprint into Canadian homes beyond health and beauty is a logical next step. It reminds me of a online retailer based in Seattle, WA that started with books and continues to expand their categories.

Congratulations Ali and the Well.ca! Now that you’ve closed additional funding the hard work starts.

Reposted from StartUpNorth

David Crow is an emerging technology and start-up advocate/evangelist. David blogs at http://davidcrow.ca/ and http://startupnorth.ca/ or follow him on Twitter @davidcrow.

The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers pro vide a wealth of information based on their personal experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.

Read Full Post »

New innovation funding in Southern Ontario

By David Crow

The Federal Economic Development Agency for Southern Ontario announced a new Investing in Business Innovation program. The program offers matching grants for early-stage venture funding. This is a $190 Million  program running from 2010-2014.

There are provisions for startups and angel networks. Since we’re StartupNorth, let’s try to deal with the startup side first.

• Startups who receive a term sheet from a qualified angel investor (as defined by the Ontario Securities Commission) or venture capital firm (registered with the Canadian Venture Capital association) are eligible to apply for up $1 Million in loan from the federal government.
• Restrictions:
  • Start-up businesses will be eligible for repayable contributions up to $1 million for no more than one-third (33⅓ percent) of total eligible and supported project costs.
  • An angel and/or venture capital investor(s) must be committed to provide at least two-thirds (66⅔ percent) of the cash contribution toward eligible and supported project costs.
  • In-kind contributions related to mentoring, networking, and other business skills cannot be considered as part of the angel or venture capital investor’s cash contribution.
  • A maximum of one project per eligible start-up SME can be funded under the initiative.
  • Direct eligible costs for start-up businesses may include:
    • Labour, capital and operating expenditures;
    • Materials and supplies;
    • Consulting and/or professional fees (limited to market rate); and,
    • Minor and non-capital acquisitions (e.g., software).
  • All project activities must be completed by March 31, 2014;

Basically there is federal government matching loans up to $1 Million for startups that are raising angel or venture funding in Southern Ontario. This is a fantastic start.

It’s great for startups in Southern Ontario, it’s curious that the program is only available in Southern Ontario. Why not all of Canada? How are the repayment terms set? Is this a zero percent interest loan from the Federal Government? Does the term sheet have to be equity investment? Is convertible debt eligible? How do startups “demonstrate they are using business mentoring, counseling, or related services”?

Reposted from StartUp North

David Crow is an emerging technology and start-up advocate/evangelist. David blogs at http://davidcrow.ca/ and http://startupnorth.ca/ or follow him on Twitter @davidcrow.

The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers pro vide a wealth of information based on their personal experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.

Read Full Post »

Where are the Canadian super angels?

By David Crow

Boris Wertz asks where are all the Canadian super angels?

“So when I check Angellist, the most important directory of angels in North-America and Europe, I only find 3 Canadian angels (of a total of 350 registered on the site), two in Vancouver (Danny Robinson and myself) and one in Edmonton (Kevin Swan).”

While Angellist is not the comprehensive list of global angel investors, it is the best list of Internet and mobile investors around. It has folks like:

• Aydin Senkut
• Brad Feld
• Dave McClure
• Dave Morin
• David Cohen
• Josh Kopelman
• Mike Maples
• Mitch Kapor
• Chris Dixon
• Max Levchin
• Howard Lindzon

There are angel groups in Canada. You can see the great work that our friend Bryan Watson at the National Angel Capital Association is doing to educate and advocate for angel investments, they provide a great list of angel groups in Canada. There are the efforts of groups like Maple Leaf Angels and the work of Randall Howard with the Golden Triangle Angelnet. And you can see the work that ad-hoc events like Founders and Funders to connect angels with emerging technologies and early-stage companies and founders.

However there are less well know angels like:

• Jordan Banks
• Greg Wolfond
• Jonathan Erhlich
• Robert Montgomery

The thing that makes Angellist so amazing is the self-service nature of first person connection. You don’t need to know the right people. It provides one click, direct access to the key players in the economy of emerging companies. It’s something that is missing from the Canadian scene. The best part of Angellist is that Nivi and Naval validate and reference check all of the angel investors, so the wannabes are edited out. This is an edited list of the best angels actively doing deals.

Here’s hoping that more Canadian angels take the time to complete their Angellist profile.

Reposted from StartUp North

David Crow is an emerging technology and start-up advocate/evangelist. At Microsoft Canada, he is responsible for helping Canadian start-ups gain access to software, support and visibility in the Microsoft ecosystem through programs like BizSpark (details at microsoft.com/bizspark). David blogs at http://davidcrow.ca/ and http://startupnorth.ca/ or follow him on Twitter @davidcrow.

The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers pro vide a wealth of information based on their personal experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.

Read Full Post »

Top Three Reasons why Biotech Companies should use Social Media

By Jeremy Grushcow

Tech startups use social media avidly [rabidly?], but biotech companies? Not so much.  Biotech companies should be blogging, tweeting and linking in like mad, though.  Here’s why:

1. Your customers (pharma companies) do it. More and more pharma companies are active in social media. Take a look at this article in the December issue of Life Science Leader (h/t @FiercePharma) or read the Dose of Digital blog any day of the week and you’ll be directed to interesting information about how products are being developed, tested and marketed. These are things you need to keep in mind as you move through your own product development process. Also, lots of pharma folks are on LinkedIn, so if you are as well, you’ll maximize your ability to reach out through personal connections when you’re building a constituency for your partnering deals.  Here’s my Twitter list of BioPharma news and analysis.
2. Your investors do it. Check out this Twitter List of Canadian VCs, Angel investors and other funders.  Look at what they’re talking about, and you’ll see you don’t have to tell people what you ate for lunch (or disclose your latest lab results) to convey that you’re doing something interesting that other people are interested in.  Check out the CVCA’s blog, Capital Rants or the Maple Leaf Angels blog.  In Toronto? Stop in at the MaRS blog or the R.I.C. blog to see where investors will be and what they’re thinking about.
3. Your peers (other startups) do it. If you’re not participating in online conversations, you’re missing a world of good advice and perspectives.  Click over to Rick Segal’s blog or  StartupCFO, Mark MacLeod’s Blog. It doesn’t really matter that these guys aren’t involved in biotech. Lots of startups are facing similar issues to yours — funding, staffing, etc. and getting out of the biotech bubble from time to time can be a good thing.  Plus, being at a startup is isolating, particularly in biotech with its strong incentives to run a virtual company, so go online to find peers, mentors and other resources.

If this all sounds reasonable, but you’re still skeptical, or not interested, then find someone in your organization who’s excited about it, regardless of their actual job, and set him/her loose.  [Not totally loose, of course. Common sense is critical online because it’s hard to hit “undo” on the web, and appropriate confidentiality remains key to biotech ventures.  But all your people have common sense and discretion, right?]

We’ll be keeping an eye out for biotechs and other bioscience companies that are making good use of social media as part of our Biotech Trends series this coming year.  Other suggestions for 2010 biotech trends?  Let us know.

Re-posted from the Cross-Border Biotech Blog

Jeremy Grushcow is a Foreign Legal Consultant practising corporate law at Ogilvy Renault LLP. He has a Ph.D. in Molecular Genetics and Cell Biology. His practice focuses on life science and technology companies.

The RIC blog is designed as a showcase for entrepreneurs and innovation. Our guest bloggers pro vide a wealth of information based on their personal experiences. Visit RIC Centre for more information on how RIC can accelerate your ideas to market.

Read Full Post »

Top three reasons why Biotech Companies should use Social Media

Re-posted from the Cross-Border Biotech Blog

By Jeremy Grushcow

Tech startups use social media avidly [rabidly?], but biotech companies? Not so much.  Biotech companies should be blogging, tweeting and linking in like mad, though.  Here’s why:

1. Your customers (pharma companies) do it. More and more pharma companies are active in social media. Take a look at this article in the December issue of Life Science Leader (h/t @FiercePharma) or read the Dose of Digital blog any day of the week and you’ll be directed to interesting information about how products are being developed, tested and marketed. These are things you need to keep in mind as you move through your own product development process. Also, lots of pharma folks are on LinkedIn, so if you are as well, you’ll maximize your ability to reach out through personal connections when you’re building a constituency for your partnering deals.  Here’s my Twitter list of BioPharma news and analysis.
2. Your investors do it. Check out this Twitter List of Canadian VCs, Angel investors and other funders.  Look at what they’re talking about, and you’ll see you don’t have to tell people what you ate for lunch (or disclose your latest lab results) to convey that you’re doing something interesting that other people are interested in.  Check out the CVCA’s blog, Capital Rants or the Maple Leaf Angels blog.  In Toronto? Stop in at the MaRS blog or the R.I.C. blog to see where investors will be and what they’re thinking about.
3. Your peers (other startups) do it. If you’re not participating in online conversations, you’re missing a world of good advice and perspectives.  Click over to Rick Segal’s blog or  StartupCFO, Mark MacLeod’s Blog. It doesn’t really matter that these guys aren’t involved in biotech. Lots of startups are facing similar issues to yours — funding, staffing, etc. and getting out of the biotech bubble from time to time can be a good thing.  Plus, being at a startup is isolating, particularly in biotech with its strong incentives to run a virtual company, so go online to find peers, mentors and other resources.

If this all sounds reasonable, but you’re still skeptical, or not interested, then find someone in your organization who’s excited about it, regardless of their actual job, and set him/her loose.  [Not totally loose, of course. Common sense is critical online because it’s hard to hit “undo” on the web, and appropriate confidentiality remains key to biotech ventures.  But all your people have common sense and discretion, right?]

We’ll be keeping an eye out for biotechs and other bioscience companies that are making good use of social media as part of our Biotech Trends series this coming year.  Other suggestions for 2010 biotech trends?  Let us know…

Jeremy Grushcow  is a Foreign Legal Consultant practising corporate law at Ogilvy Renault LLP. He has a Ph.D. in Molecular Genetics and Cell Biology. His practice focuses on life science and technology companies.

Read Full Post »

A match made in heaven

RIC  partners with Maple Leaf Angels

Ric www.riccentre.com has partnered with Maple Leaf Angels www.mapleleafangels.com to create new funding and investment opportunities throughout Peel Region and west to Oakville and Burlington.

Maple Leaf Angels is Ontario’s largest and most active angel investor group having invested close to $6 million in financings since its launch in 2007. The membership base is largely in Toronto and the partnership with the RIC Centre allows the group to expand its chapter to the western part of the GTA.

“In order to ensure we have a large pool of investors who are looking to make deals, we needed to find a way to effectively tap into the Mississauga, Burlington and Oakville areas” says Rob Koturbash, managing director of Maple Leaf Angels. “The RIC Centre is an ideal partner because it allows Maple Leaf Angels to integrate with the start-up ecosystem they have fostered through their early stage company mentoring and advisory services.”

RIC Centre, based in Mississauga,  is one of the Ontario government’s 12 regional innovation networks. RIC offers advisory, mentoring, networking and industry outreach programs to help companies commercialize ideas in the aerospace, advanced manufacturing, life sciences, and emerging technology fields. RIC is currently active with more than 60 companies.

“We are excited to team up with the Maple Leaf Angels” says Pam Banks, commercialization director of the RIC Centre. “We feel this offers an excellent opportunity for some of our promising clients, who are looking for funding, to have access to Maple Leaf Angels. We are also looking forward to being able to leverage the experience and networks of angels that want to get actively involved with helping and supporting their investee companies.”

The first Maple Leaf Angels – West chapter meeting will be held on Nov. 19 at 8 a.m.at the Ric Centre, 701 – 77 City Centre Drive in Mississauga, and is open to all current or potential angel investors. Interested investors can call Pam Banks at 905 273 3530 or email pam.banks@riccentre.com

The RIC Centre and will provide a convenient location for west GTA based angel investors to access Maple Leaf Angels’ deal flow and leverage the due diligence expertise of the existing 40+ members to help evaluate deals.

Maple Leaf Angels has provided access to its members to get early round investments in some of Canada’s leading start-up companies such as Well.ca www.well.ca, Homestars http://www.homestars.com, Regen www.regenenergy.com and Streamlogics www.streamlogics.com (acquired by Thomson Reuters).

About RIC Centre

The Research, Innovation and Commercialization Centre (RIC Centre) is a non-profit organization that provides business and technical services to small and medium enterprises (SMEs) to commercialize their innovation. RIC’s primary focus is in the aerospace, advanced manufacturing, life sciences, and emerging technologies sectors.

Please visit http://www.riccentre.com for more information.

About the Maple Leaf Angels

The Maple Leaf Angels is a group of private investors who come from a wide variety of backgrounds and careers. The group has invested nearly $6 million into 14 high growth companies and is based in Toronto.

Maple Leaf Angels possess deep expertise in the information technology, cleantech, advanced manufacturing and medical device spaces.  Visit their website at http://www.mapleleafangels.com

Read Full Post »