Entrepreneurs

Information For Entrepreneurs

Investment Process

There are four steps that entrepreneurs must take if they are seeking investment from WUTIF for their business (the “Company”).

These are:

  1. Satisfy preliminary screening criteria
  2. Negotiate terms and conditions
  3. Complete technical and business review
  4. Finalize investment

1. Preliminary Screening Criteria

  • Must be an eligible B.C. company (VCC rules)
  • Must be early stage (typically < 5 years old)
  • Must be technology driven (proprietary IP, etc)
  • Valuation less than $2M (preferred)
  • Less than $500K seed funding required (typical)
  • Company has identified angel co-investors (ideal)
  • Great potential (not a “lifestyle” company)
  • Must be willing to accept Terms & Conditions
  • (see below)

Before submitting an executive summary, companies should ensure that the above criteria are addressed.

2. Terms and Conditions

When it is determined that the Company is a suitable investment prospect, WUTIF will make an investment offer that will include certain terms and conditions in addition to the investment itself. For example, the Company must have or find additional arms-length angel investors or mentors that will invest in, and provide coaching to, the Company. WUTIF may require the right to nominate one board member (who may be an angel co-investor). Also,  it will require that a competent  board is in place and that certain governance standards will be applied. The principals may be required to enter into, or add WUTIF to, a shareholders agreement.

Standard terms and conditions will be made known to the Company at the outset so that it can determine if it wishes to seek an investment from the Fund. A Terms Sheet (sample Terms Sheet) will be negotiated early in the process. As part of the Terms Sheet, the following two documents are required:

a)Capitalization Table (proforma) (sample Cap Table)
b)Company’s Subscription Agreement.

After an investment is made, companies will be required to report on their progress to WUTIF on a regular, monthly basis (sample report).

3. Technical and business review

WUTIF will conduct a review of the Company’s business plan. The Company must clearly demonstrate how the funding will allow it to achieve certain milestones in the business plan. Goals and objectives, and how these will be achieved, should be clearly articulated. This step will likely entail a few meetings between the Fund’s management and the target company.

4. Finalize Investment

After completing the above, the Terms Sheet will be finalized (updated) and a Subscription Agreement will be entered into. As soon as any required Board, Regulatory and Ministerial approvals are obtained, the investment can be finalized and a cheque issued.

How much will WUTIF invest?

WUTIF will invest to a maximum of $200,000. More typically, investments will be in the $50,000 to $100,000 range. WUTIF’s investment will be part of a larger investment. WUTIF will not invest more than 50% of the total seed round being raised. WUTIF may “lead” or syndicate an investment and help bring in other investors or it may simply “follow” by topping up a round that already has investors behind it.

How to Apply?

Companies may apply at any time. The best way to do this is on-line at:

http://gust.com/angel-group/wutif

Note: Applicants should make sure that the above-mentioned preliminary screening criteria are satisfied and should address these by specific reference thereto. e.g. eligibility, valuation, amount required, angel investors identified, etc.

WUTIF may be able to assist companies with introductions to angel investors. As a first step, entrepreneurs are referred to VANTEC (www.vantec.ca) for additional information.

Companies can apply to BOTH WUTIF and VANTEC at the same time by going to:

http://gust.com/angel-group/vantec

Note: If the same login and password are used for Vantec, then it is NOT necessary to re-enter all of the application information.

For additional help in making your business case, check: Business Basics for Entrepreneurs.

How long does it take?

WUTIF is fast – if the deal looks good! Companies will get an immediate assessment and indication of WUTIF’s interest.

The time from the first meeting to cash invested can be less than one month! A more realistic expectation is one to three months. Unfortunately, the legal paperwork, government approvals and other time demands can slow down the process.

Typical timeframes are:

  1. Satisfy preliminary screening criteria: 1 to 2 weeks
  2. Negotiate terms and conditions: 1 to 4 weeks
  3. Complete technical & business review: 1 to 4 weeks
  4. Finalize investment: 1 to 2 weeks

When a dialog is first initiated, we can provide an estimate of timing. Often, this will depend on the Company and how quickly it can respond and, of course, the number of companies in WUTIF’s queue, and the current availability of investment capital, and other resources.

Questions?

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