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Archive for the ‘Misc.’ Category

My Top 5 Books For 2014

Posted by Shane McLean on December 15, 2014

This is the time of year when we see annual lists start popping up.  I use annual book lists as a way to find new books to read so I thought I would share the top books I have read (or listened to in my car) in 2014.  Some of these books might not be new this year, but I finally managed to get around to them this year so I have included them.  In no particular order, I liked:

1.   Abundance: The Future Is Better Than You Think by Steven Kotler and Peter H Diamonds

A more positive look ahead based on the theory that, as it has in the past, new technology will rise to meet the problems facing humanity and the Earth going forward.   The book is not without its warnings for the future, but overall it presents a relatively optimistic (and usually believable) view of tomorrow.

2.  Enchanted Objects: Design, Human Desire, and the Internet of Things by David Rose

I found this to be a great discussion of different ways in which the “Internet of things” and connected objects might evolve.  It covers some of the design concepts and thinking necessary to make connected objects useful and easy to use.   Good backgrounder.

3.  Do More Faster: Techstars Lessons to Accelerate your Startup  by Brad Feld and David Cohen

This book, from the founders of Techstars, is a collection of essays about various aspects of startup life and building a business.  Very good practical information for any startup founder or anyone who works with startups (like me!).

4.  The Maker Movement Manifesto: Rules for Innovation in the New World of Crafters, Hackers, and Tinkerers by Mark Hatch

Mark Hatch is a co-founder of TechShop, a chain of membership based maker spaces in the US, and he offers up this discussion of the maker movement.  Mark provides a series of discussions based on makers he has met, including the inspirations, challenges and successes faced by makers as many of them turn their hobby or passion into a business.   At times it reads like a bit of commercial for TechShop (naturally) but it is worthwhile if you are at all interested in the maker movement.

5.  Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal by Nick Bilton

This book had a bit of controversy around the time of its release with a bunch of the folks involved condemning the way the author presented the history of Twitter.    I found it to be a well written book.  The author takes pains to describe his sources and methods for researching the history of Twitter and I suspect some of the people who object to the book are objecting due to the fact that it hangs some part of the blame for Twitter’s early dysfunction on virtually every one of main players.

Honourable Mentions:

Killing Lincoln by Bill O’Reilly and Martin Dugard

The Clockwork Universe: Isaac Newton, The Royal Society, and the Birth of the Modern World by Edward Dolnick

The Story of Earth: The First 4.5 Billion Years, from Stardust to Living Planet by Robert M Hazen

Flash Boys, by Michael Lewis

Posted in Business Structure, Financing, Misc., Social Media, Startup, Venture Capital | Leave a Comment »

Review of TSX Venture Exchange New Listings Activity in 2013

Posted by Shane McLean on January 20, 2014

 Each year the TSX Venture Exchange publishes a summary of its “new listings” activity.  New listings include initial public offerings (IPOs), qualifying transactions through the Capital Pool Company program, companies completing a reverse takeover and companies moving up from the NEX exchange or down from the TSX.  Here are some highlights of the data for 2013:

  • In 2013 there were a total of 158 “new listings” compared to 240 in 2012 and 334 in 2011.  The reduction in new listings activity that we saw in 2012 clearly continued into 2013.
  • Of the new TSXV listings in 2013 there were just 52 IPOs compared to 125 in 2012.  15 of those were traditional IPOs of operating companies (vs 44 in 2012) and the other 37 were IPOs of Capital Pool Companies (vs 81 in 2012).  The rate of both traditional IPOs and CPC IPOs dropped significantly for the second straight year.
  • The amount raised in TSXV IPOs during 2013 was $118.7 Million, down 21% compared to 2012.
  • Mining issuers showed a 40% drop in TSXV going public activity in 2013 compared to 2012.  Only 7 mining issuers went public on the TSXV by way of a traditional IPO in 2013.
  • In 2013 there were 66 CPC qualifying transactions completed on the TSXV (vs 61 in 2012) and 13 Reverse Takeovers (vs 16 in 2012).    These are two categories where the numbers were actually fairly consistent year over year.

Clearly, 2013 was another bad year for TSX Venture Exchange new listing activities.   It continues to be a tough market in which to go public on the TSXV.  Here’s hoping that things turn around for 2014.

Posted in Capital Pool Company Program, Financing, Misc., TSX Venture Exchange | Leave a Comment »

The Ins and Outs of Granting Equity to Your Tech Startup All Star Team

Posted by Shane McLean on November 13, 2013

This great article by my law partner James Smith is worth checking out if you are considering using equity grants to members of your tech startup team (hint:  you should be):

http://www.techvibes.com/blog/startup-equity-2013-11-13

Posted in Business Structure, LaBarge Weinstein, Law, Misc., Startup | Leave a Comment »

Saskatchewan Proposes Its Own Crowdfunding Prospectus Exemption

Posted by Shane McLean on October 23, 2013

The Saskatchewan Financial and Consumer Affairs Authority (FACC) has announced a detailed equity crowdfunding proposal.  This follows an update by the Ontario Securities Commission (OSC) in August about its own progress on coming up with a new crowdfunding exemption from prospectus requirements (Read more here).

The FACC put out a backgrounder for discussion purposes back in July.  As a follow up to that discussion piece, this month the FACC released a draft order for comment purposes which contained far more detail on what an equity crowdfunding exemption may look like in Saskatchewan.  As with the OSC proposal, the FACC will require that equity crowdfunding be raised through an online portal but the Saskatchewan proposal appears focused on smaller financings than the OSC’s proposal ($150,000 per offering no more than twice a year vs the OSC’s $1.5 Million per year).  On the other hand, the Saskatchewan process seems to be simpler for the issuer, investor and portal than what we expect to see coming out of the OSC.

The high level details of the FACC’s proposed process are as follows:

  • The exemption will be available to private companies only and both the issuer and the investor must have addresses in Saskatchewan (i.e. this is a Saskatchewan only exemption).
  • The issuer must file an issuer information form and each promoter, director, officer and control person of the issuer must file a personal information form ten business days prior to beginning to trade.
  • The issuer must use a defined form of offering document which must be filed ten business days prior to beginning to trade and made available through the portal to investors.  The offering document must disclose how the funds raised will be used and set a minimum offering amount to close the offering, which must be equal to the amount needed to carry out the purpose for which the funds are sought as set out in the offering document.
  • The offering size must be $150,000 or less, no investor may invest more than $1,500 in any offering and the offering period must not be longer than 6 months.
  • There can be no concurrent offering by the issuer or other issuer for the same project.
  • The securities being offered must not be derivatives.
  • The issuer and its promoters, directors, officers and control persons must not use this exemption more than two times in a calendar year.
  • No commission or other amounts are paid to the issuer or its promoters, directors, officers, control persons, employees or agents with respect to the trade.
  • The issuer must file a report of trade within 30 days after the offering closes.
  • Unless another exemption is available, the securities purchased under this exemption will be subject to a hold period until the date that is 4 months and a day after the later of (i) the distribution date; and (ii) the date the issuer becomes a reporting issuer in any province or territory of Canada.

The FACC has clearly set out the requirements it proposes for portals as follows:

  • A portal must file an information form and each promoter, director, officer and control person of the owner of the portal must file a personal information form thirty days prior to beginning to facilitate crowdfunding trades.
  • The portal must not provide advice.
  • The portal must:
  1. Make the offering document of the issuer and certain risk warnings separately available to investors electronically online;
  2. Not allow an investment until the investor confirms online they have read and understood the offering document and risk warnings;
  3. Not release funds to the issuer until the minimum amount to close the offering has been reached and until that time ensure that all the funds received for the offering are held in trust for the investors;
  4. When the offering is closed, provide the issuer with the details of the investors (name, address, telephone number, email address, details of purchase) within 15 days of closing of the offering; and
  5. Ensure issuers and investors have an address in Saskatchewan.

The FACC’s portal requirements are not as demanding as we expect the OSC’s requirements to be (based on the material put out by the OSC to date).  It is interesting to note that under the FACC’s proposals a portal is not required to be registered as a broker or dealer and there is apparently no vetting of the issuer or investor required except to ensure that the investor has read and understood the risks and that the issuer and investor have Saskatchewan addresses.

One potential barrier to the use of equity crowdfunding in Saskatchewan is the small size of the projects permitted.   The maximum amount that can be raised is $150,000, the amount raised must be “the amount needed to carry out the purpose” and no concurrent fundraising for the same project is allowed.  Issuers will have to be creative and careful about how they define the purpose of their fundraising to ensure that they can complete it using not more than $150,000 in financing.

Technically, this is still a request for comment by the FACC, but it is interesting to see another Canadian jurisdiction put out a detailed (but different) set of proposed rules for an equity crowdfunding exemption.   We will be watching to see which jurisdiction is first to actually implement a new rule and then to see how the different rules are eventually harmonized, if at all.

Posted in Crowdfunding, Financing, Law, Misc., Startup, Venture Capital | Leave a Comment »

Crowd funding in Ontario’s future

Posted by Shane McLean on September 5, 2013

In December 2012 the Ontario Securities Commission published a Staff Consultation Paper seeking comments on a number of potential new prospectus exemptions.  One of the potential exemptions that created a bit of excitement in the startup community was an exemption which would allow Canadian companies to raise equity financing through crowd funding, which is essentially a process of raising financing from a large number of small investors through an online portal.

Borrowing heavily from the concepts established by the US regulators in the JOBS Act approved in early 2012 (most of which has yet to be implemented in practice), the OSC described the following possible crowd funding structure:

  • The funding would have to be raised through a registered funding portal that meets certain qualifications.
  • A company would not be able to raise more than $1.5 Million in a 12 month period using the crowd funding exemption.
  • An investor’s investment in any one company would be limited to $2,500 and the investor’s aggregate investments in a calendar year using the crowd funding exemption would be limited to $10,000.
  • Investors would have to sign a form of risk acknowledgement.
  • Investors would have a 2 day cooling off period during which they could withdraw.
  • The company would be required to provide a pre-defined level of disclosure about the company, the financing and the funding portal.
  • The company would have certain ongoing disclosure obligations to investors that came in through the crowd funding exemption.

On August 28, 2013 the OSC released a progress report.  The good news for crowd funding fans is that the feedback received by the OSC on the crowd funding proposal has been positive.  As a result, the OSC will continue its work to come up with a definitive framework based on the proposed structure.  The key area where further deliberation and focus may be required seems to be on the role of the funding portal including the qualifications needed and the processes to be followed by such intermediaries.

The bottom line is that it sounds like Ontario companies and investors can expect to be able to someday take advantage of a crowd funding prospectus exemption for equity financings along the lines described above.   Regulators in other Canadian provinces are looking into this issue too and we would hope that any structure ultimately settled on will be rolled out as a harmonized policy across the country.

Posted in Crowdfunding, Financing, Law, Misc., Social Media, Startup, Venture Capital | Leave a Comment »

Roundup of Most Read CBLB Posts

Posted by Shane McLean on January 22, 2013

I was reviewing the stats for this blog recently and thought it would be neat to list the top 10 most popular posts to date:

10.  Update on the Ontario Emerging Technologies Fund (October 13, 2009)

9.     CPC Combinations Part 2 (September 16, 2009)

8.     From Wellington Financial -5 Pre Deal Questions to ask Your Venture Debt Lender (October 28, 2009)

7.    Ontario Small Claims Court Limit Raised to $25,000 (January 13, 2010)

6.    CPC Combinations Part 1 (August 9, 2009)

5.    What are Preferred Shares? (July 2, 2009)

4.    What is a Special Purpose Acquisition Corporation?  (June 7, 2009)

3.    Unanimous Shareholder Agreements  (September 22, 2009)

2.    Financing Term Sheet Basics (June 21,2009)

1.    What is the Capital Pool Company Program?  (May 28, 2009)

Since these posts continue to draw a lot of attention, my plan over the next several months is to review and update each one.  Most of these date back 3 years and things change so they could use a refresh.  Thanks for reading everyone.

Posted in Business Structure, Capital Pool Company Program, Financing, Law, Misc., Special Purpose Acquisition Corporations, Startup, TSX Venture Exchange, Venture Capital | Leave a Comment »

LW Connect

Posted by Shane McLean on November 28, 2012

I have found that blogging is not unlike any other activity that you intend to do, know you should be doing and maybe even want to do (think of exercising). If you get into a routine it works great for a while but if you get out of that routine for some reason it’s easy for a great deal of time to go by before you even realize. It has been over 2 years since my last post to this blog. That’s hard to believe. Don’t get me wrong, I have been keeping busy — since my last blog post I have worked on over $130 Million in financings and about $640 Million in mergers and acquisitions. Having said that, I am going to try to get back into active blogging.

My firm, LaBarge Weinstein LLP, has set up a blog called LW Connect.   I am going to focus most of my energies there.  I will try to link to my LW Connect posts from this space (my most recent post is about temporary pricing relief measures from the TSXV) but I hope that you will visit LW Connect regularly and see not only my posts but posts from my colleagues as well.    As always, if there are any topics that you would like to see discussed here or at LW Connect please let me know.

Thanks.

Posted in Financing, LaBarge Weinstein, Misc., TSX Venture Exchange | Leave a Comment »

More Movement on Canadian Venture Capital Front

Posted by Shane McLean on February 9, 2010

Last week it was announced that the Canada Pension Plan Investment Board would invest  $400 Million in a “fund of funds” concept.  That is, it looks like they are proposing to deploy $400 Million to existing private equity and venture capital firms so that they may, in turn, deploy that money as part of their own investing activities.  The Montreal Gazette has a good write up about the announcement.

The fund of funds model is similar to the model employed by the Ontario Government and its co investors in the Ontario Venture Capital Fund which I blogged about last April (both the new CPP funds and the OVCF funds are both  managed by Northleaf Capital Partners).  The funding of the OVCF closed in June of 2008 and, as I understand it, it has yet to actually invest much money.   Unfortunately, very little of that money has been put to work so far.

Let’s hope that the CPP’s fund of funds is able to deploy funds a bit faster.  Without much needed capital, Canada’s knowledge based startups can’t get off the ground.  Mark McQueen recently lamented on the Wellington Financial Blog that the wicket is open for tech IPOs but there  isn’t enough “product”  — i.e. quality tech companies of the right size and trajectory.  Fund announcements like this may be too late to help launch companies that could take advantage of the IPO climate we face at the moment, but without a steady flow of funds to support generation after generation of knowledge based companies we will have a very hard time maintaining any kind of  robust public (or private) market for  tech companies in Canada.

Posted in Financing, Government Funding, Misc., Startup, Uncategorized, Venture Capital | Leave a Comment »

Ontario Small Claims Court Limit Raised to $25,000

Posted by Shane McLean on January 13, 2010

Effective as of January 1, 2010, the upper limit on claims brought before the Ontario Small Claims Court was raised from $10,000 to $25,000.   This change will almost certainly increase the overall number of claims that are brought in the $10,000 to $25,000 range.  Prior to this change it was not unusual for plaintiffs with claims in that range to give up the amount over $10,000 in order to bring their claim into the jurisdiction of the Ontario Small Claims Court with its lower costs and quicker timelines.

Of interest to Ontario based businesses, I expect to see a larger number of vendor disputes and employment matters ending up in Small Claims Court than before.   This includes claims in the $10,000 – $25,000 range that might previously have been brought in Small Claims Court but capped at $10,000 and claims that might otherwise be in the over $25,000 range but are close enough to $25,000 that the plaintiff believes it to be in their interests to limit their claim to $25,000 in order to bring it in Small Claims Court.

Posted in Law, Misc. | 1 Comment »

A case to watch for lawyers who serve on boards

Posted by Shane McLean on January 6, 2010

The Law Times has a good article (here) about a recently certified Canadian class action suit which has, as a side issue, the question of whether a law firm can be responsible  for the director related liabilities of a member of the firm who serves on the board of directors of a client.    The outcome of this case will  be important to watch for Canadian lawyers who serve or would consider serving on the board of directors of their clients and may make it prudent for firms to review their policy re:  firm partners and associates accepting board positions with clients.

Posted in Law, Misc. | Leave a Comment »