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.

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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.

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The Community Power challenge in Ontario

By Ingo Koenig

I was interviewed recently on the differences between Community Power projects in Germany and Ontario.

In Germany wind power is “big business” and up to 90% of wind farms have community participation. After comparing the FIT rules, the tax rules, incentives and legal structures we came to the conclusion that the main difference is in the motives and scope for community projects. In Germany the drivers for the vast majority of community are:

• A passion to change the energy landscape from coal/nuclear to renewable sources
• Share the burdens and benefits of the project with other members of the local community
• Earn some decent returns on your investment (of time and money)

In Ontario, however,  this last point is undermined and almost a “no-no” when discussing Community Power projects. Almost exclusively co-op and not-for profit structures are discussed as entities with equal (or no) profit-sharing and one-share-one-vote etc.

However the co-op-model has not been applied to many wind or solar farms in Germany.  Personally I do not know of any. For the most part, there have been Limited Partnerships with profit-sharing and voting based on equity-share.

This model attracted a high number of highly educated and sophisticated individual investors into the industry. These same people very often switched their careers and are now entrepreneurs, managers, professional advisors etc. for renewable energies enterprises. This in turn has meant a professionalization of the community projects they own and run and results in better returns for the community projects. And again, more people are attracted into the community power space.

Something to think about when in Ontario Community Power projects are regarded as “granola-bar-eater-projects” by some of the “big players”.

Ingo studied business administration and economics at Kiel University where he received a PhD in economic policy and also earned an MBA from the University of Southern California in Los Angeles, USA. Visit www.koenigconsultants.ca

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

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Solar developers scramble to get FIT

By Henry Vehovec

Mindfirst Senior Associate Rob Sinclair co-wrote this article, which should be of particular interest to entrepreneurs looking to develop and finance solar projects.

As soon as the Feed in Tariff (FIT) program rules were finalized on September 24^th, developers of large scale solar projects (larger than 500 KW) jump started their activities in preparation for submitting project applications during the FIT initialization period ending November 30^th.

While some projects appear to be quite far along the development curve with signed product and service supply agreements and financing, many developers are struggling to pull together the financial and technical resources required to submit strong applications. This will certainly limit the number of projects that receive FIT contracts and even those that do may experience significant difficulty in financing and building their projects.

Our involvement in financing clients representing more than 30MW of solar capacity provides unique insights. Early indicators suggest:

• There are deep pools of equity funding available, from domestic, US, European and Asian sources.
• Investors take many forms from private individuals, retail investment funds, sovereign wealth funds, and industry players with balance sheet capacity.
• Debt financing seems to be harder to come by and appears to be focused on medium term paper (3-7 years) at rates ranging from 6%-8%.  This could have long-term negative impacts on equity investors if rates rise as expected.
• For most projects, debt pricing above 8% would leave very little return for equity investors and at rates above 10% most projects would not be financeable.

The risk averse nature of Canada’s big five banks make them unlikely early leaders. Our expectations are that they will wait out the initialization period and enter the market well into 2010, when the rules governing the program are made clearer and the players in the industry shakeout a bit. In the near term we believe large European debt houses with experience in renewables globally, will be first on the scene as they have existing expertise with structuring deals and identifying the most critical factors for success.

Therefore, it is likely that (like the RESOP program) some early contract winners will flounder due to a lack of financing opening the door for stronger players to consolidate good projects and allow weaker players and projects to fade away. Further compounding the difficulty in financing projects, is uncertainty around the new REA process and the supply of project critical components that meet local content requirements.

If these issues manifest we believe that a significant portion of the contracted system capacity that will be awarded during initialization will become available over the following 18-24 months as proponents fail to meet COD commitments.  This will allow that capacity to be re-allocated to new applicants and provide availability until the next wave of transmission and distribution system upgrades come online in 2013-2015.

Henry is President, Coach and Chief Strategy Officer of  Mindfirst Inc. Visit Henry at Mindfirst.

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