Episode 12 // Seven Insider Tips to Securing Equity Investment

Championed by our friends at Community Futures Sunrise

Equity financing is on the rise, Founders. Just a day before this writing, Canadian Venture Capital and Private Equity Association (CVCA) released its year-end report revealing VC investments for 2020 were 2nd-highest ever, second only to 2019.

Today, we’re bringing you the lowdown on equity financing, so you too can ride this wave and give your business the fuel it needs to accelerate its growth.

Sharing her insider tips on the topic, NTN Pro, Laurie Dmytryshyn, Chief of Equity Investment at PIC Investment Group, sets us up for success.

Part 1 // Equity Financing: Exchanging Ownership for Funds

The amount of capital you’re looking to raise, partnered with the stage of business you’re at, will impact your options, Laurie points out in Part 1. Love money, angel investors, venture capitalists, and private equity firms—Laurie breaks down the jargon and explains the merits and conditions that come with each form of equity capital.

In exchange for equity capital, shares (a percentage of ownership) are expected in return—which may also include decision-making control. Be forewarned, as Laurie points out, equity investors, in addition to eventually recouping the value of their shares, may be expecting regular dividends—a portion of the business’s net profits (after tax).

“Equity Financing is the process of raising capital through selling shares,” explains Laurie.

In Part 1 of this episode, Laurie shares with us the basics of equity financing and how finding the right investor(s) is critical for Founders.

Part 2 // What Equity Investors Are Looking For

Ever wonder what investors base their lending decisions on? In Part 2, you’ll find out. Get a glimpse into the investors’ perspective, and the key elements they examine when determining whether to invest.

Laurie’s quick to remind us, one of the biggest advantages of going the equity route is that investors share a purpose with the Founder—to see the business flourish. To this end, they’ll scrutinize the numbers, but they’ll also look past them, to see where the opportunity is, and what it will take to get there.

Founders are also required to look long-term. Not just from the perspective of the endgame (aka exit strategy), but in better understanding how the business will scale over time. Because unlike debt financing, equity investors are looking for their investment to pay off in both the short- and long-term.

Tune in to Part 2 to better understand what impact your business (its solution, opportunity, team, scaling potential and current debt load) may have on an equity investor’s decision to finance your vision.

Part 3 // Weighing the Pros and Cons

As Laurie reminds is, there’s much to love about equity as a source of financing:

1 // There are no principal payments due, lightning the cashflow burden and being able to use that cash to fuel growth.

2 // Equity funding won’t add leverage (aka debt) to the Balance Sheet.

But perhaps the greatest advantage, Laurie reminds us, to securing an equity investor is the invaluable experience, expertise and connections they bring to the business. Their insights and networks can help scale a business much faster, and more efficiently as they can help to smooth out any potholes a Founder may hit along the way.

There’s a long list of "upsides" when it comes to equity financing, and Laurie's taking the time to map them out in addition to some of the potential downsides, too. Tune in to do your due diligence.

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