Startup Legal 101 – What’s the deal for startup financings?

Last Wednesday, Bootup and Contractually hosted a Startup Legal 101 session on the ins and outs of structuring financings for startups, with Mark Longo and Brock Smith from Clark, Wilson.

Here’s the slide deck that Mark and Brock presented:

 

Key points from the presentation included:

  • Getting your startup incorporated and organized properly, with advice from a lawyer with expertise working with tech startups, can smooth the path to a successful financing later (and save you time & money later).
  • In addition to raising money from investors, startups should look to other forms of funding, such as government programs like IRAP and SR&ED.
  • When raising money from investors, startups need to comply with securities law. For seed and angel financings, this means making sure that the shares are issued under an exemption from the requirement to file a prospectus.
  • For raising money from seed and angel investors, common financing structures are –

(1) ‘light’ preferred shares: the investor is issued shares that have certain preferences over the founders’ common shares — for example, on the sale of the company, the investor may have the option to get their money back, plus a minimum return and before the common shareholders get any sale proceeds, or to convert the preferred shares into common shares;

(2) convertible debt: the investor invests by lending money to the startup company, and that loan is convertible to shares at the time of the Series A financing (or when certain other events occur; and

(3) common shares.

  • Convertible debt has become more and more popular for early-stage financings in Vancouver, following the trend in the US.
  • Many other financing structures are possible depending on what the entrepreneur and the investor would like. However, opting for simpler, well-understood structures can facilitate later financings (it’s easier to explain the structure to later investors).

* * *

Big thanks to Mark and Brock for highlighting how startups can prepare for raising financing.

Got suggestions for future Startup Legal 101 sessions? Send them to Martin Ertl, at martin [at] contractual [dot] ly.

Social Marketing Kung Fu, Purple Belt with Dave Olson

Dave Olson

Photo by Kris Krug

On Wednesday, April 27th, I sat in on my first startup talk at the Bootup Garage. Dave Olson, Director of Marketing at Hootsuite, came in to do his third talk in a series aptly named Social Marketing Kung Fu (#smkf).

In January, Dave started off with Social Marketing Kung Fu, White Belt (Maura’s notes from that session are here), then in March, he came in for the Yellow Belt – “Listening Everywhere” session.

Dave is always a joy to listen to – I’ve seen him speak at a few different conferences – so I was eager to hear what he had to say in session number three: Social Marketing Kung Fu, Purple Belt – Release Day. His talks are always full of interesting tidbits and useful information, and this one was definitely no different.

I jotted down a few notes to share with you, but you can also find Dave’s notes on getting your Purple Belt here.

What to Release

  • Should be something substantial, or a few things bundled together and released around the same time.
  • Code names for product releases are always smart, as they’re memorable.

Know Your Coverers

  • Reach out to the media that you want to cover your story: RT them, comment on their stories, add them to twitter lists, etc.
  • Get to know them, and what they write about.
  • Personally invite them to join your media e-mail list.
  • When you send them info, make their life easy. Respect their time.
  • Spoon feed them the story, but never be condescending.

Craft Stories

  • Take 3 important talking points, and craft them into different forms.
  • Tell them why your story matters!
  • Get quotes from your customers, not your CEO (unless it’s a special circumstance, where a quote from the CEO is appropriate).
  • Putting a boiler plate “About” section at the bottom of a press release is unnecessary and a waste of space. Link to your website/blog instead.
  • Tune your vocab. Make it active, not passive. Lose the buzz words, and keep your vocab as consistent as possible.
  • Include image(s) to support your story, so they use your image and not their own.

Line up Dominoes &/or House of Cards

  • Constantly keep your media kit up to date. If you have one page on your website, this should be it.
  • Thursday before the release: Send an internal memo to your team to share the master plan. Include your 3 main talking points, who you’re telling, and why it matters.
  • Monday 1PM: Local press release, & media preview e-mail. Include assets, like an infographic, if possible. Make them feel like they are getting the story first.
  • You can also send a preview e-mail to your key clients, to keep them in the loop, and ultimately, make them feel special.
  • Tuesday 5AM: Scheduled blog post. Make everything point here, so it answers any questions people may have. This way you are controlling the conversation.
  • Next comes Twitter & Facebook updates, a general e-mail to clients, and a wire release (with links, tags, etc.) Keep the Facebook update light and airy. You don’t want it to become your main feedback channel.
  • Tuesday 9AM: Make sure your dominoes have fallen into place! You can also update any LinkedIn groups, Forums, Q & A sites like Quora, Formspring, etc.
  • Tuesday 11AM: Optionally, you can host a webinar, an hour at most, to go over any details that go along with the release.
  • Schedule any interviews requested by the media.

Then…

LISTEN
REPLY
THANK
SHARE
REPEAT

Prepare for the haters

  • If you comment on articles right away and thank the author for sharing your story, you may prevent a good portion of negative comments, because they know you’re there listening.
  • Prepare some stock comment copy for the trolls, so that you don’t take their criticism personally.

Finally

  • Thursday: Send a News Round-up. Share your favourite coverage from the release. If someone has created a video tutorial on your product, make sure to include that. Don’t forget to trackback to those articles.

Next month, Dave O will be back for the fourth installment of Social Marketing Kung Fu at the Garage, so be sure to come check it out.

After the talk, most of us headed over to the Alibi Room for Startup Drinks. Sign up for the Bootup Meetup Group if you haven’t yet, so you don’t miss out on the next one!

Additionally, if you have any other notes or tips that I have missed, please feel free share them here.

Upcoming Bootup Garage Startup Seminars

We have 3 upcoming Startup Seminars being held at Bootup Garage that we thought you all would be interested in.

The Art of the Investor Pitch w/ Boris Wertz

  • Thursday, February 17th
  • 3:00pm
  • Bootup Garage, 163 West Hastings St., Suite 200
  • Garage Members: Free
  • Non Members: $31.19
Social Marketing Kung Fu, Yellow Belt – “Listening Everywhere” with Dave Olson

  • Wednesday, February 23rd
  • 5:00pm
  • Bootup Garage, 163 West Hastings St., Suite 200
  • Garage Members: Free
  • Non Members: $31.19
Co-Founder and Captables with Danny Robinson

  • Wednesday, March 2nd
  • 3:00pm
  • Bootup Garage, 163 West Hastings St., Suite 200
  • Garage Members: Free
  • Non Members: $31.19

BC Government Funding for Startups

We have all heard about SR & ED! In fact, I have even heard some entrepreneurs refer to SR&ED as the Canadian version of seed funding.  But there are many programs and resources available to startups.  To shed some light on what is available at various stages of a companies growth, I reached out to Riz Kheraj, Industrial Technology Advisor for IRAP in BC.  Riz came to Bootup on January 19 to share his knowledge and provide more information on the resources available.

Riz broke Goverment funding into 3 stages:

  • Early Stage: (BC – Before Customers)
  • Early Customers (EC)
  • Customers Customers (CC)

There are plenty of programs available in the BC & EC stages.  As your company matures, and you are trying to scale your business – there is not a lot of government funding available to you.   Riz, who has worked in startups before, stressed that it always better to focus on getting real customers for your business rather than chasing and applying for government funding.  Some of the applications do take time to complete and require additional reporting once approved.  Some IRAP programs, for instance, require monthly reports with receipts to release additional funds.

Bootup is in the process of finishing up a handy little spreadsheet on all of the different government programs available, including deadlines and contact information.  Until then, check out Riz presentation below and please share your feedback and experiences on what government programs you may have utilized in the past for fellow entrepreneurs.

KPMG Prize Give-a-way at LPV10

“I had no idea what to expect from LPV10. I had a great feeling and went with it. Obviously, it was a good feeling.”  – Ramona Macleod

At Launch Party Vancouver 10, one of our sponsors KPMG decided to give away the seasons most coveted gadget. Upon arrival, all attendees were asked to drop their business cards into a box for a draw. Not a single attendee knew what was up for grabs. When Shana Korotash from KPMG pulled Ramona MacLeod’s name out of the box – Ramona was ecstatic. However, to win the prize — she had to entertain the crowd with a Christmas Carol. She sang her way to a brand spanking new iPad.

Shortly after LPV10, I saw Ramona at the Bootup offices where I learned she had signed up for the Bootup Garage program.  Ramona is working on a startup called BigMama, a site that makes it easy for students to rent textbooks.

You can follow BigMama on Twitter: @bigmamadotca

A huge congrats to Ramona for winning the iPad and a huge thanks to KPMG for supporting LPV10 and making the give-away possible.

This Week in Tech Events: Jan. 17 – Jan. 23, 2010

I can’t believe we are half-way through January already. Time sure does fly! I started to write this post and realized that our great friends at TechVibes had gone ahead and published – This Week in Events. So, I have gone ahead and included any cost details.

Angel Investor Overview Workshop

* Tuesday, January 19th – all day
* SFU Vancouver Campus
* Company Registrant: $330. Registration is closed.

Bootup presents Government Funding & Resources for Startups

* Wednesday, January 20th – 9:00am to 11:00am
* Bootup HQ
* Event is sold out. Registration is closed.

XcelerateU Workshop: HR Fundamentals to Drive Business Strategy

* Thursday, January 20th – 9:00am to noon
* BCTIA Boardroom
* Workshop: $75 Register here.

Events not included on TechVibes that you should check out this week.

  • Monday, January 17th
  • 11:30am
  • Wavefront, 1055 W Hastings St, Conference Room – Lower Level, Vancouver
  • Event is free. Registration is closed. Event is at capacity

Content Rules with C.C Chapman presented by Third Tuesday

  • Thursday, January 20th
  • 6:00pm
  • Ceili’s Irish Pub, 670 Smithe St., Vancouver
  • Event is sold out. Waitlist being coordinated.

Announced: Launch Party Vancouver 10 Showoffs

After going through a lot of very good applications for LPV10, we are happy to announce the following 9 Startups that will demo at LPV10 on December 1st.

In no particular order, here are the companies:

ClinicBook

Clinicbook is a local health care website that helps over 60 000 Canadians each month find health care in a convenient and timely manner through consumer reviews and its up-to-date search directory. After launching the feature where the live wait time at walk-in clinics is displayed, Clinicbook will be demoing its online booking system for dental appointments in Greater Vancouver.

Foodtree

Foodtree helps you discover where your food is from and connects you directly with the source, so you can feel confident about the food you buy. Just like a family tree, a Foodtree traces the origins of your food from the farm, ocean or forest right to your table. For example, a quick search on Foodtreecan tell you not only where you can buy the freshest local salmon in your area but also provide you with detailed information on the fisherman, who caught it. With Foodtree, transparent (or reliable) and relevant food information is finally at your fingertips.

OpenCal

We’ve spent the past year and a half building OpenCal – the web’s most beautiful and easy-to-use online appointment system. With OpenCal, service-based businesses (think hair salons, massage therapists, anyone that sells their time) can receive appointments online 24/7, manage their staff’s schedules, track clients, create insightful reports, and lots of other cool things.

Panty by Post

Make the Postman Blush. Panty by Post delivers French panties right to your door, no matter where in the world you live. When your pretty panty surprise arrives monthly, the nostalgia of the packaging, note and tissue paper is a sensual experience bound to generate a mood to help you discover your inner sexiness. This means you can enjoy a taste of French romance every month (wink). Or, share this sensual surprise as a thoughtful gift for a friend or loved one. They’ll love you for it. There is also a line for brides, plus sizes and Briefs in a Box for men.

Geotoko

Geotoko is a promotional campaign management platform for geo-location based services. By leveraging existing API’s that provide checkin functionality (foursquare, gowalla, twitter, etc…), Geotoko help businesses engage their customers.  By creating simple self serve tools to create, manage and track promotional campaigns and reward loyal costumers, Geotoko aims to reduce the friction for businesses to get into the growing geo-location trend.  We’ll be officially launching our app at LPV.

NodeFly

We are a hosted application and infrastructure monitoring service that will be launching at LPV10.

TaxiNow

TaxiNow a free iPhone app that allows passengers to see the exact location of nearby available taxis on their iPhone map and hail them with one simple click. And passengers can track the taxi all the way to their pickup location through Apple’s GPS. Our goal is to make the the experience of hailing a taxi way better. The taxi industry is inefficient and we’re certain we can reduce the amount of time passengers wait for taxis and reduce the idle time for drivers. TaxiNow is available to any passenger and driver, anywhere in the world but the initial focus will be in Vancouver, Canada. We plan on rolling this out to other cities across Canada and revolutionize the way taxis are hailed. This will be the official launch of TaxiNow. We will demo the product and actually hail a taxi to Canvas Lounge to show how just how powerful what we have built is!

XKeyAMS

RSI is a company that offers software solutions, support and first class customer service for the hospitality industry. Our latest project is an amazing new product called XKey Activity Management System, which provides activity vendors the opportunity to maximize their revenues by having their inventory online! We will demo our visually appealing online booking engine, the seamless reservation integration, the personalized confirmations and the ability to use XKey as a Central Reservation System for multiple vendors (ie. Vancouver Attractions)!

AppGrower

AppGrower is a service meant to increase the traffic for social apps mainly on Facebook and other social game platforms. Appgrower will offer a pay per install campaign allowing the app developer to set the sale rate of their traffic.

We’ve created a list on Twitter, so you can follow these startups here.

If you haven’t purchased a ticket yet, there are still some regular tickets available. Buy here.

See you at the event.