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Accessing Canadian Venture Capital and the Canadian Capital Markets

Canadian Venture Capital And Listing On The Canadian Stock Exchange

The Canadian Capital Market

Many United States businesses are interested in accessing the Canadian capital markets and many Canadian investors are interested in investing in U.S. growth oriented, small cap stocks. The problem is that it is difficult to match the two parties up.

So if you are a United States firm wondering why there is this disconnect, it is a result of new trading rules that apply to Canadian investment dealers to trade in securities of United Stated issuers that have a class of securities (other than American Deposit Receipts) that have been assigned a ticker symbol on the OTC Bulletin Board or the Pink Sheets. (U.S. OTC Issuers).

It is helpful to look at your companies shares as an additional product your business has to market.

Being that Canadian investors are part of the most buoyant economy in the world, it may make sense to look at how to access these investors from the Canadian capital markets.

The Canadian economy is booming and so is the available cash to invest.

Canadian investors and Canadian venture capital companies have huge amounts of ready cash and a pent up need to invest it. For the past decade most high net worth Canadian investors have been extremely enthusiastic regarding foreign investing in general and United States stocks in particular. Now that the Canadian dollar is up more than 40% and on par with the US green back, investor enthusiasm toward U.S. stocks is extreme.

This spells opportunity for American firms.

The best way to gain access to Canadian Venture Capital and other investment avenues is to list your company on a Canadian Stock Exchange.
Phoenix Western is your connection to Canadian Venture Capital and other sources of investment dollars. Because of our vast experience in dealing with both OTCBB companies and Canadian Publicly Traded Corporations we can help you become listed on a Canadian exchange at relatively low cost and we can do it quickly, anywhere from 30-90 days.

The entire transaction will be handled by the professionals at Phoenix Western and at a cost of 1/3 or less of the investment you made to get your company on the OTC.BB.

We are able to provide this low cost listing service because all work is done in house with our own legal and IR Teams. As a result of listing your business on a Canadian Stock Exchange, you would overcome the difficulties Canadian investment dealers have trading in securities of United States issuers that have a class of securities that have been assigned a ticker symbol on the OTC Bulletin Board or the Pink Sheets (U.S. OTC Issuers). Thereby giving you access the Canadian Capital Markets.

Some Things You Should Know About Canada:
Has the tenth largest economy in the world(measured in US dollars at market exchange rates)
Is one of the world’s wealthiest nations Is a member of the Organization for Economic Co-operation and Development (OECD) and Group of Eight (G8)
Over the past couple of years Canada’s top performing stocks rose much more than America
Canada has one of the highest levels of economic freedom in the world.
Canada closely resembles the U.S. in its market-oriented economic system, and pattern of production.
The Canadian capital market is robust and is active in funding growth ventures.
Getting access to funding opportunities is facilitated by becoming public on the CNSX stock market.
In Summary
Being listed in Canada gives you access to the Canadian Capital Markets and the many pools of Canadian Venture Capital that are readily available.
Going public in Canada in addition to your listing on the OTC.BB raises your corporate profile and “puts you on the radar” as an investment opportunity in both the US and Canada as well as investors from around the world..

If you are interested in accessing this huge pool of capital please contact us by clicking here.

British Investment in Ukraine: London Channels Capital to Ukraine

Even though the United Kingdom is only the fifth-largest source of foreign direct investment (FDI) into Ukraine, an increasing amount of capital inflow is being channeled through London.

That’s no surprise since London is Europe’s financial capital.

“When we’re talking about British investment in Ukraine we should not forget the role London plays in channeling global investment into the country,” says Renaissance Capital’s Geoffrey Smith. “London offers the largest pool of capital.”

Ukrainian companies have in recent years stepped up efforts to raise money and list stock on international markets. Despite a slowdown linked to the global credit crunch, the expectation is that Ukrainian companies will raise record amounts of capital in the near term, and a long list of domestic companies will eventually list their stock via initial public offerings (IPOs) on the London Stock Exchange. So expect more investment with a London flavor spreading to Kyiv in the future.

Since the beginning of 2007, more than .6 billion was raised by Ukrainian companies on the London exchange through IPOs, according to Kyiv-based investment bank Dragon Capital. Billions more will be raised in the coming years.

For comparison, state figures suggest that some billion in FDI from the UK has poured into Ukraine since independence, less than the nearly billion that came from Cyprus and Germany, and the roughly .5 billion attributed to The Netherlands and Austria. These top five investing countries account for about half of all foreign direct investment in Ukraine, with inflows 40 percent up in the first half of this year.

True, much of the money flowing into Ukraine via London, be it syndicated bank loans or cash raised through IPOs, is not British in origin. Nor is the lion’s share of FDI from Cyprus, an offshore tax haven, Cypriot.

Yet investment from London has also brought priceless returns and experience to Ukrainian businesses. The more Ukrainian companies list in London, or borrow from top banks there, the more they find themselves playing to the highest global financial standards, regulations and rules of business.

Smith said the increased presence of Ukrainian companies on the London exchange, and borrowing from London banks, is also “an important indicator of Ukraine’s attractiveness.”

It shows that London-listed Ukrainian companies such as ore producer Ferrexpo and real estate developer KDD “can compete for capital in a truly global context,” Smith said.

“The money that is invested in them can just as easily be invested in companies with mines in Latin America or Africa, or real estate projects in the Middle East or Central Asia. London offers the world’s largest pool of capital, and thus the broadest circle of potential shareholders or lenders. As a result companies should be able to get the best possible price for their stock or bonds from that market.”

But succeeding in this worthwhile venture has proven to be a challenge for many Ukrainian companies.

“The vital condition is that they show the levels of transparency and corporate governance that the London market demands. This is something that a lot of Ukrainian companies have shied away from in the past, but it is a discipline they will have to submit to in future if they want to attract capital to finance their growth,” Smith said.

Slowly, but surely, Ukrainian companies are succeeding in this challenge. And as they do, more British direct investment into Ukraine will follow.

British punters

Direct foreign investment by British companies into Ukraine, be it through Greenfield projects or mergers and acquisitions, is gradually rising.

There is no single leading British investor in Ukraine that stands out as having invested the largest amount, or made the biggest difference. There is, however, the London­based European Bank for Reconstruction and Development, founded by developed countries of the world for the purpose of supporting economic development in transition countries. While not British per se, the EBRD claims to be the largest investor in Ukraine with some billion invested through loans and acquisitions. Last year was a particularly strong year for the EBRD, with annual business volume reaching billion.

And this is just the tip of the iceberg. Many companies active in Ukraine, but backed by domestic or Russian businessmen, are registered in UK tax havens. Mapping them out and their would­be British roots would entail writing a book.

Who are the real British investors in Ukraine? According to the British Embassy in Kyiv, there are more than 60 companies with UK ties operating in virtually all sectors of Ukraine’s economy. Like with all investment, regardless of origin, the most attractive sectors for British investment are financial services, wholesale trade, real estate, leasing, construction, and metals.

Embassy figures show that British firms invested more than .2 billion into Ukrainian financial institutions, heavy industry followed with more than 0 million while construction and real estate received 0 million apiece.

And Ukraine, a country of 46 million, has not gone unnoticed by British exporters.

Over the last three years, British exports to Ukraine have shown steady growth, between 20 and 30 percent annually, reaching a record high of 8 million in 2007, embassy figures show.

British exports to Ukraine are expected to increase strongly now that Ukraine has joined the World Trade Organization (WTO).

But British expats who have been doing business in Ukraine since the early 1990s are cautious.

Like all investors, British firms universally complain about Ukraine’s tedious and corrupt customs procedures and say it harms the nation’s image. “Ukraine must immediately computerize every transaction to make it transparent and adopt European Union customs procedures,” said Martin Nunn, chief executive at Whites Communication.

And longtime Brits active in Ukraine’s real estate market, such as Terry Pickard, chairman of NAI Pickard, look back and say doing business in Ukraine is still tough. Referring to the notorious bureaucracy of development approval in Ukraine, and getting 120 signatures for it, Pickard said: “The bureaucracy in general is very old­fashioned and everything is very slow and complicated.”

And it doesn’t help to be British, according to Pickard. All foreign companies doing business in Ukraine complain that the justice system is very poor and non­reliable, he added.

Hope has not yet died, particularly in light of success in joining the WTO. But longtime British expats such as Nunn don’t hesitate to provide some honest British advice for Ukraine: “If Ukraine carries on down its current path it will be the first country that will be asked the leave the WTO.”

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I Haven?t Actually Started My Business Yet ? Can I Still Get Start-Up Capital?

If you have an idea for a business selling an outstanding product or service, but don’t have it operating yet, can you attract an investor and get the start up funds you need? The answer is an astounding YES!

Business Angels, also called private investors don’t necessarily need to see your business up and running. In fact, most prefer partnering with early-stage business owners especially if they can see huge growth potential.

Here is what they look for when considering an investment:

A great idea – what is your product or service? Is there a great need for it? Is it innovative? Who are your competitors?

A solid business plan – you need to have a comprehensive plan in place detailing all aspects of your venture. Include income and expense statements, marketing plans, mission statements, organization charts, profit projections. Make sure your plan includes data for the next 5 years. Make this as complete and professional as possible.

Funds – How much of your own funds are you willing to invest?

Skills and experience – Do you have past business experience? What special skills or talents do you have? What education do you have?

Commitment – Are you 100% committed to your enterprise? Are you willing to do what it takes to make it successful?

Flexibility – Are you prepared to accept new ideas and concepts? Are you eager to learn different ways of doing things?

Personality Traits – Do you have entrepreneurial traits? Investors will want to see that you have self-discipline, self-mastery and self-management skills.

Some business angels are more stringent than others; some only invest in their own area of expertise. If you can show them that you have what it takes to start and maintain a business, and you have thoroughly researched your product or service, your chances of partnering with an investor will increase exponentially.

Meet with several investors and choose one you feel at ease working with. Remember that they will want a say in major business decisions, and may even require partial ownership. They are investors after all, and will be looking for a profit, like any other business venture!

In Chapter 8 of 11 in his 2010 interview with Capture Your Flag host Erik Michielsen, East African venture capitalist and conservation investor Josep Oriol shares why he believes East Africa is full of transformational investment potential. He cites three factors. One, given the small economic footprint, large impact investment opportunities exist. Two, modernization opportunities exist across existing resource constrained infrastructure, including public health and education. Three, East Africa development offers a promise of advancement that can promote cultural change. Oriol highlights how this can increase population hope and self confidence by shifting aspirations away from football stars and politicians to new careers options previously not understood or thought possible. View more videos at www.captureyourflag.com

The Basics of Venture Capital

Venture capitalism would be one of the things, which keeps businesses booming everywhere. It is basically one of the ways, which helps the newer businesses to thrive and flourish, because venture capitalists are always looking for fresh and innovative ventures, which could potentially yield a large return in the long run. They are not really into those businesses, which are already flourishing as they have more interest on the ones, which are just starting out or in need of restructuring.

Venture capital essentially refers to the funds that a venture capitalist provides to a venture or business in exchange for a company’s stake. Instead of simply loaning the money, these venture capitalists invest on the business in the hopes that it would be yielding a lot of money eventually. This would mean that whatever future profits and earnings of the company, he or she would have a share in it. This would go the same with any losses.

Venture capitalism is truly a risky business however it has become the source of support of the industry as a lot of start-up companies depend on these forms of investments to be able to keep their business operational and also to make sure that their ideas would materialize. Generally, those people that have great ideas and the knowledge to be able to execute them look for venture capitalists to get funding for their capital. Since they are not yet major players in the industry, these individuals usually do not have access to the traditional resources of capital like banks, private lending institutions and other financial institutions.

CAPITAL MARKET REGULATORY SYSTEM IN INDIA

 

The objective of any economic activity is to promote the well-being and standard of living of the people, which depends on the distribution of income in terms of real goods and services in the economy.  For the growth process in the economy, production plays a vital role.  Production of output depends upon material inputs, human inputs and financial inputs.  Material inputs are in the form of physical materials like raw materials, plant, machinery and buildings.  Human inputs are in the form of labour and venture.  Financial inputs are in the form of capital, cash and credit.  The proper co-operation between human and material inputs subject to the easy availability of financial inputs promotes the growth process in the economy and thereby promotes the well-being and standard of living of the people.

  The financial inputs emanate from the capital market system.  Trading in money and monetary assets constitute the activity in the capital markets and are referred to as the capital market system.  Savings mobilization and promotion of investment are functions of the stock and capital markets which are a part of the organized financial system in the country

  The term “Capital Market” is used in the wider sense as to include both the new IPO market and the stock market.  In this sense, both primary and secondary markets are covered here.  Trading in the stock market is debt claims of a medium and long-term nature which can be classified into those of the Government sector and of the private sector.  The securities of government are traded in the stock market as a separate component, called gilt-edged market.  These securities include those of the Central and State Governments, local bodies, semi-government bodies and those guaranteed by the Government.  In this market, there are again three types of securities – short, medium and long-dated Government securities, depending on the maturity period.  Another component of the stock market deals with trading in corporate securities such as equity shares, preference shares and debentures.  Equities are shares of companies of the ownership category.  When these equities are floated to the public for the first time by the companies as shares, they constitute the new IPO market, which is a component of the capital market and when the same securities are traded again and again as secondary items, they constitute secondary markets .Derivatives are also introduced in the capital market for the benefits of small and institutional investors.

 The new issue market deals with the raising of fresh capital either for cash or for consideration other than cash by companies and encompass all institutions dealing in the issue of fresh claims.  The forms in which these claims are incurred are equity shares, preference shares, debentures, rights, bonds, deposits, miscellaneous loans and so forth.  All the financial institutions in the capital market which contribute, underwrite or directly subscribe are part of the new issue market.

           The placement of the IPO may be through (a) prospectus (b) offer of sale   and (c) rights issue.

 Already issued and listed securities are traded in the secondary stock market.  Shares, debentures and other securities are traded in the stock market.  Money flows in daily through the trading of these securities.  Secondary market is one of the main segments of financial system of the country.  Securities Contracts (Regulation) Act, 1956, regulates the stock exchanges in the country. The investment environment in India is easily the most amiable for individual investors.  The capital market is fairly well-organized and growing fast too.  There are government sponsored investment schemes, as well as private sector sponsored investment schemes, representing the true options of a mixed economy.

Mutual funds are collective investment schemes and they are an important constituent of the capital market.  India has a long history of mutual funds.  The Unit Trust of India is over 25 years old and other mutual funds are just 3 years old.  The investible fund in mutual funds has increased significantly.  Mutually funds provide the benefits of diversified portfolios, expert investment advice and management.  So far, mutual funds have been set up by public sector financial institution like LIC, Unit Trust of India and commercial banks like Indian Bank, State Bank of India and Canara Bank.  All the mutual fund schemes are highly safe and provide nominal return and are very successful.

Derivatives, as the name implies, derive their value from the underlying securities/assets like stock, foreign exchanges, commodity, bond, etc.

 Having discussed the security market instruments of primary and secondary market, it is needless to mention that, the Indian capital market has undergone a sea change in the post-independence era.  More particularly, the stock (Share) Operations has witnessed a spurt of activities with the liberalization of the economy and active participation of development banks.   

Against this background, the liberalization in the primary capital market was mainly aimed at greater autonomy to corporate and better transparency for investors.  These included free pricing norms for issues, removal of interest ceiling on debentures, abolition of the position of Controller of Capital Issues and dropping of mandatory conversion of debt to equity by term lending institutions, Derivative trading.  Statutory powers were conferred on the Securities and Exchange Board of India (SEBI) and comprehensive measures were taken for investor protection in the form of laying down disclosure norms, allotment procedures, control over insider trading,  rights issue norms, handling of investor complaints, etc.,All India development banks have promoted individually and collectively, new institutions to help investors and entrepreneurs.

 To operate efficiently, capital market and financial institutions have to be guided by market forces rather than government directives.  Competition needs to be strengthened by encouraging the entry of new and innovative providers of financial services.  And all the players of the capital market need to introduce discipline in their activities and transparency in their transactions. Further Financial derivatives and their regulations of trading activities should be streamlined by security exchange board of India and other legislative authorities pertaining to security market in order to protect the interest of investing community at large.

 

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Private Equity vs Venture Capital ? Understanding The Difference

While private equity firms as well as venture capitalists provide funds needed to run the business, there are some key differences. Comprehending these differences would help you understand the realm of business finance better.

Anyone associated with business finance comes across terms as Private Equity (PE) and Venture Capital (VC) which are often used interchangeably. At a level, both the terms can certainly be used to describe the investment – putting in cash to purchase equity in business entities and realise returns. However, in fact, there are several key differences between the two. Understanding these differences would help you comprehend how venture capitalists and private equity firms differ.

PE vs VC: Definitions

Private Equity

Private equity is an asset class consisting of equity securities in business entities that are not publicly traded on a stock exchange. Some examples of private equity investment strategies are Leveraged Buyouts (LBOs), Mezzanine Capital and Growth Capital. Even Venture Capital (VC) is a subset of private equity as per business school professors.

Venture Capital

Venture capital (VC) is finance provided to start ups, early stage, high potential businesses. Venture capital funds usually invest in firms having novel technology or business model in high technology industries like biotechnology, IT etc. Venture capitalists prefer high risk high fund companies.

PE vs VC: How They Differ

PEs and VCs, both invest with the objective of making substantial returns on their investments. However, they have different ways for attaining the objective.

Stage of Investment

PE firms invest in mature, well-established public companies where any chance of losses for a long term investment is close to none. On the other hand, VCs invest mostly in start up businesses where the risk of losing the investment is considerable. And, in case of success, returns are big too. VCs can even provide the seed money to fructify an idea which a PE firm would never do.

Ownership Acquired

PE firms tend to buy large stakes in a company which can be even 100%, whereas VCs usually buy minority stakes which is less than 50%. VCs are content in making profits with their investment rather than getting involved in running a business. If they are satisfied with the business plan, they will invest and reap profits, and let the entrepreneur be at the driving seat.

Size of Investment

PE firms put in large investments which run into hundreds of millions dollars. VC investments are much smaller, often below million for start up or early stage business ventures. The size of investment is quite dependent on the stage of investment. For a firm which has already begun making profits and needs funds for expansion, venture capitalists could provide larger funds.

Structure of Investment

PE firms’ investment usually combines equity as well as debt. However, VC firms use only equity mode of investing. Venture funds usually make initial investment for three to five years and thereafter make follow-on investments in an existing portfolio. Investment strategy of PE firms is much more sophisticated.

Risk Factor

VCs know that their business is risky. Hence they diversify their investment, hoping that even if a few of these fail, there will be some generating enough returns to make the fund as a whole profitable. As they invest small amount of money in dozens of firms, this model works for them. As for the PEs, number of their investments is smaller while the size is larger. This means that they have to play a safe game. They ensure their investments are safe by putting in their money in large stable companies.

Private equity firms as well as venture capitalists have a critical role in pushing the business wheel. They provide businesses with funds they require to keep moving or expanding themselves without any need to go the banks for expensive loans or to raise money at stock exchanges. Venture capital funds provide the start ups and early stage businesses with crucial financial support.

Keynote Speaker: Director of market services and head of AIM, London Stock Exchange
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