4 ms·

Canadian Early-Stage Fund with Investment Decisions in 48hrs

29 points by mikejarema 11y ago

wooyi 11y ago
Wouldn't touch this with a 10ft pole.
faramarz 11y ago
"$110k through investment and government grants in exchange for an equity stake" http://www.mla48.com/take-action/ For how much equity?
- vinay427 11y ago
  I would assume it varies based on valuation.
- alooPotato 11y ago
  So they get equity in exchange for gov't supplied money? Sounds shady.
  - giarc 11y ago
    See kitcar's answer. Sounds like the govt might pitch half and the investors the other.
  - baudehlo 11y ago
    It would definitely be more honest to have this on their site. That certainly shouldn't be worth more than a few percent.
- patmcc 11y ago
  And why should mla48 get any equity in exchange for government grants, exactly? That phrasing strikes me as misleading.
  - themartorana 11y ago
    Why do drug companies get patent protection on govn't funded research? (This is something that's been discussed more than once here, I'm putting it out there as a comparison, not an answer.)
    - briandear 11y ago
      Mla48 isn't the creator. They're a middleman between the company and te money. It's not a direct comparison with drug manufacturers. in terms of patent protection, how much can of the drug does the government actually fund? The drug company is still assuming risk by developing the drug despite some grant funding. What I would suggest is that grant-funded research include a provision that the drug be provided at cost to the government if it were successful. This would allow the company to profit privately but it would also benefit the public. This would actually work as a clever disincentive to reduce the reliance on government money and thus resulting in an opportunity to lower taxes. I don't want to pay taxes for Merck to make a billion dollar drug. Merck can assume that risk themselves. However many of the government programs are for Orphan drugs which would not have been produced otherwise. These drugs typically result in no or minimal profit to the manufacturer, thus a need for government help. Patent protection is essential for these drugs: if you patient population is 500; if someone steals your drug, you have still lost money despite the government assistance. Grants don't cover the full cost of drugs or research, thus a patent is important ther wise drug companies would not assume the finial risk for a reward that would be immediately eliminated. You'd have drug vultures: companies that would wait until someone else does all the work, then they swoop in and manufacturer and market the drug. Imagine if Stephen King had no copyright protection; he would not have had a career writing books; he'd probably be teaching English at some small New England prep school instead of entertaining millions.
jonathannorris 11y ago
Canadian VC's have a terrible habit of stringing along founders for months to try and gather more info/data on the companies and never giving a firm answer. It is one of the most destructive forces possible, it causes Founders to waste months chasing money when they should be building their product/teams, I've seen it kill many good companies with great founders who should have been given a chance to build a team/product, not chase money for months. Hopefully this fund will force Canadian VC's move faster, as long as there aren't any landmines in the terms... But with the government money invested I worry about the terms.
- jboy55 11y ago
  IMHO, government money is so tough to divy out. Mainly because there is a large group of people who are cheerleading for the investment to fail. That is, the opposition party and their supporters.
- akg_67 11y ago
  Second this. I had similar experience in 2003-2004. I guess things haven't changed much in last decade. Another issue was the Canadian VCs being followers. It was funny when I was raising money in Canada. A few Canadian VCs I talked didn't return calls until I sent them email mentioning that I am visiting U.S. VCs tomorrow. The C. VCs called me at 11pm few minutes after I sent emails. I came back to U.S. by end of 2005. It is most probably handout by politicians to their favorites. I had some interesting experiences trying to get govt funding too in Canada.
currentoor 11y ago
It's a pretty interesting experiment, trying to recreate something that happened organically in Silicon Valley.
- olalonde 11y ago
  What do you mean? Investors in the Valley usually give answers within 48 hours?
kitcar 11y ago
Just a guess here (I'm not affiliated in any way) but the "Ontario Centers of Excellence" is listed on their partners page - the OCE is a gov't funded body which provides ~$55K of matching funds in the form of grants to early stage companies (i.e. you raise $55K from accredited investors, they provide the other $55K as a grant) - that could be why their max commitment is $110,000.
- alooPotato 11y ago
  Wow. That is shady to say that they provide $110K in cash for equity stake.
Jack000 11y ago
shame it's only in Ontario, I might have applied. The site's pretty light on info as well. I guess they want people to contact them.
mikejarema 11y ago
FWIW, I saw this fund after reading about their first investment [1], I thought the fund itself was noteworthy in its quick turnaround on funding decisions. Edit: also see [2] [1] http://betakit.com/orchard-labs-receives-500000-from-the-mla48-angel-investment-fund/ http://betakit.com/orchard-labs-receives-500000-from-the-mla... [2] https://mapleleafangels.com/blog/2015/6/10/mla48-angel-investment-fund-completes-first-investment https://mapleleafangels.com/blog/2015/6/10/mla48-angel-inves...
MichaelGG 11y ago
Are there any VC-type investment groups that aren't chasing huge returns? For instance, I'm working on some technology that could relatively easily get to be a several million dollar company - a similar product was sold to Oracle for $20M. I need about $80K to develop and launch it solidly, though I'm trying to bootstrap (got a $100K/yr verbal commit from a potential customer -- but I need the product first). Or is it simply not worth looking for outside investors and instead should I just bother family and friends and whatnot?
- lamuerteflaca 11y ago
  Rule of thumb is to not bother family or friends. Not worth it for a lot of reasons. Also because you will most likely fail.

29 points by mikejarema 11y ago

wooyi 11y ago

Wouldn't touch this with a 10ft pole.

"$110k through investment and government grants in exchange for an equity stake" http://www.mla48.com/take-action/ For how much equity?

vinay427 11y ago
I would assume it varies based on valuation.
alooPotato 11y ago
So they get equity in exchange for gov't supplied money? Sounds shady.
- giarc 11y ago
  See kitcar's answer. Sounds like the govt might pitch half and the investors the other.
- baudehlo 11y ago
  It would definitely be more honest to have this on their site. That certainly shouldn't be worth more than a few percent.
patmcc 11y ago
And why should mla48 get any equity in exchange for government grants, exactly? That phrasing strikes me as misleading.
- themartorana 11y ago
  Why do drug companies get patent protection on govn't funded research? (This is something that's been discussed more than once here, I'm putting it out there as a comparison, not an answer.)
  - briandear 11y ago
    Mla48 isn't the creator. They're a middleman between the company and te money. It's not a direct comparison with drug manufacturers. in terms of patent protection, how much can of the drug does the government actually fund? The drug company is still assuming risk by developing the drug despite some grant funding. What I would suggest is that grant-funded research include a provision that the drug be provided at cost to the government if it were successful. This would allow the company to profit privately but it would also benefit the public. This would actually work as a clever disincentive to reduce the reliance on government money and thus resulting in an opportunity to lower taxes. I don't want to pay taxes for Merck to make a billion dollar drug. Merck can assume that risk themselves. However many of the government programs are for Orphan drugs which would not have been produced otherwise. These drugs typically result in no or minimal profit to the manufacturer, thus a need for government help. Patent protection is essential for these drugs: if you patient population is 500; if someone steals your drug, you have still lost money despite the government assistance. Grants don't cover the full cost of drugs or research, thus a patent is important ther wise drug companies would not assume the finial risk for a reward that would be immediately eliminated. You'd have drug vultures: companies that would wait until someone else does all the work, then they swoop in and manufacturer and market the drug. Imagine if Stephen King had no copyright protection; he would not have had a career writing books; he'd probably be teaching English at some small New England prep school instead of entertaining millions.

jonathannorris 11y ago

Canadian VC's have a terrible habit of stringing along founders for months to try and gather more info/data on the companies and never giving a firm answer. It is one of the most destructive forces possible, it causes Founders to waste months chasing money when they should be building their product/teams, I've seen it kill many good companies with great founders who should have been given a chance to build a team/product, not chase money for months. Hopefully this fund will force Canadian VC's move faster, as long as there aren't any landmines in the terms... But with the government money invested I worry about the terms.

jboy55 11y ago
IMHO, government money is so tough to divy out. Mainly because there is a large group of people who are cheerleading for the investment to fail. That is, the opposition party and their supporters.
akg_67 11y ago
Second this. I had similar experience in 2003-2004. I guess things haven't changed much in last decade. Another issue was the Canadian VCs being followers. It was funny when I was raising money in Canada. A few Canadian VCs I talked didn't return calls until I sent them email mentioning that I am visiting U.S. VCs tomorrow. The C. VCs called me at 11pm few minutes after I sent emails. I came back to U.S. by end of 2005. It is most probably handout by politicians to their favorites. I had some interesting experiences trying to get govt funding too in Canada.

currentoor 11y ago

It's a pretty interesting experiment, trying to recreate something that happened organically in Silicon Valley.

olalonde 11y ago
What do you mean? Investors in the Valley usually give answers within 48 hours?

kitcar 11y ago

Just a guess here (I'm not affiliated in any way) but the "Ontario Centers of Excellence" is listed on their partners page - the OCE is a gov't funded body which provides ~$55K of matching funds in the form of grants to early stage companies (i.e. you raise $55K from accredited investors, they provide the other $55K as a grant) - that could be why their max commitment is $110,000.

alooPotato 11y ago
Wow. That is shady to say that they provide $110K in cash for equity stake.

Jack000 11y ago

shame it's only in Ontario, I might have applied. The site's pretty light on info as well. I guess they want people to contact them.

mikejarema 11y ago

FWIW, I saw this fund after reading about their first investment [1], I thought the fund itself was noteworthy in its quick turnaround on funding decisions. Edit: also see [2] [1] http://betakit.com/orchard-labs-receives-500000-from-the-mla48-angel-investment-fund/ http://betakit.com/orchard-labs-receives-500000-from-the-mla... [2] https://mapleleafangels.com/blog/2015/6/10/mla48-angel-investment-fund-completes-first-investment https://mapleleafangels.com/blog/2015/6/10/mla48-angel-inves...

MichaelGG 11y ago

Are there any VC-type investment groups that aren't chasing huge returns? For instance, I'm working on some technology that could relatively easily get to be a several million dollar company - a similar product was sold to Oracle for $20M. I need about $80K to develop and launch it solidly, though I'm trying to bootstrap (got a $100K/yr verbal commit from a potential customer -- but I need the product first). Or is it simply not worth looking for outside investors and instead should I just bother family and friends and whatnot?

lamuerteflaca 11y ago
Rule of thumb is to not bother family or friends. Not worth it for a lot of reasons. Also because you will most likely fail.