» Investor Interaction: Credible Connections
1. How do you gain traction with financial backers and compel them to sit up and take notice of your business opportunity?
2. What public relations activities support your relationship-building efforts with prospects, customers and investors?
What we learned
- Misconception of clean-tech being “huge” needs to be proven
- Money is not easily attained; instead focus on one specific solution to a specific need
- Investigate third-party endorsement
- Explore government grants
- Be leery of PR
- PR focus on targeted customers and investors
- Utilize established support network
Challenges of finding financing; public versus private
- Investors are only interested in return; it’s about business – not research projects
- Depends on stage of company; proven sales with cashflow is a lot easier than a start-up company
- Not enough information about the Clean-Tech sector in Canada
- If investor is knowledgeable about the business, there is greater potential for successful financing
- Be leery of “pump and dump” technique: US public companies express interest in buying shares to increase their own. After share increase, deal is ‘dumped’
- More opportunities in Europe and Middle East, however Europe can be more expensive
- Biggest challenge is how to position your company to get highest validation
- Qualify and shorten timeframe for financing.
- It is looked upon negatively if financing is looked for outside of Canada
- US is more aligned to “our” thinking
- Difficult to attract right investor based on successful track record, trust factor
Why is it easier to gain financing offshore than at “home”?
- Capital markets are tight
- Access private funds through third parties
- Raising guarantees is different in Canada; dollar-to-dollar guarantee
- A lot of preconceptions and misconceptions in Canada; “a big herd mentality” and “flavour of the quarter”; limited ability to hear company’s story, preoccupied with the herd mentality
- Investors who have available funds want to hang on to them unless there is a high percentage return, like a “lottery ticket”
- US might be easier but only because audience is larger
- “Capital pool” can assist but can be very expensive
- Improve your process, narrow down target investors for greatest potential
- It’s like a funnel, keep that funnel filled
Finding sources of revenue – how to qualify investors
- Be honest with yourself about who is willing to invest
- Focus on grant route
- Fast support from IRAP (Industrial Research Assistance Program)
- Investigate Green Finance; properly qualify investors
- Locate in-kind contribution for matching funds, not necessarily cash
- Build credibility with already established government funds
- Multiple stages in technology world is not seen anymore
- Convertible debt turns into equity
- “Dragon’s Den” analogy: what are you willing to give up to bring IP to a stage that is more marketable?
- MaRS networking highly efficient because companies are pre-selected
- Get a quicker NO; be more aggressive in decisions
- Feel out timing and go when timing is right’ go with “this is your chance” attitude
Public relations (PR) is difficult to measure; what are you doing in PR to communicate with investors?
- PR can create a lot of “noise”; needs to be newsworthy with success and/or “humanitarian” stories; 10:1 return
- Articles in Energy magazine
- Connect yourself with a few key associations/municipalities to get the word out
- Cannot be a meaningless release, document track record
- Go to events and partner events, but be leery of tradeshows as they can be expensive and time consuming
- Collaborate with large partners in industry, stand on their shoulders to appear larger
- Nurture the “few” investors
- Provide Education about energy management
- Have someone speak at an event to come across as a “leader”
- Rent a hotel for series of events without physically being at a tradeshow
- Gaining credibility is what carries successful PR and, in turn, investment discussion
- IR/PR depends on strategy and appetite
- Stimulate blue sky interest to stimulate investors; Bloom Box has done a
great job on PR
- Draw on third-party PR; articles can be more credible when someone else says it versus you saying it
- Utilize your lead customer for good PR
- Tyler Hamilton, Toronto Star business columnist, (his column Clean Break, appearing every Monday in the business section) can be contacted for feedback
- Astris Energi Inc.
- Cachet Cleantech
- Global Earth Products
- GreenCore Composites
- H2Green Energy Corporation
- Hybridyne Power Systems
- Remco Solid State Light Inc.
- Yield Energy Inc.