Zeifmans’ recent Instagram Live session focused on helping startups succeed from first financing to the final phase of their life cycles. The session was a roundup of our recent four-part series on startups, where we partnered with Cassels Brock & Blackwell LLP, a full-service business law firm. The blog series covered everything from first financing and issuing shares to venture capital financing and making an exit.
Along with Zeifmans partner Ahmad Aslam, we were joined by Aly Somani, a Cassels partner and co-chair of their High-Growth Venture Capital Group and Chris Carder, the executive director of Schulich’s School of Business’s Office of Innovation and Entrepreneurship.
The session covered a variety of topics, including key trends in early financing. According to Somani, strategic investors are becoming increasingly interested in early-stage companies. This is evident in the manufacturing and tech field, where some large companies are setting up capital funding for promising startups. Because of Covid, we’re also seeing detailed reporting requirements for startups, with covenants being put into place that asks companies to keep investors updated regularly.
When asked about common mistakes companies tend to make, Aslam stressed the importance of having a solid long-term business plan with a good understanding of cost structure. He also encouraged founders to recognize when to bring in an expert. This was echoed by Somani, who urged startups to speak to a trusted lawyer early on in their company’s lifecycle. This way, you’ll be prepared for any sudden financing opportunities or issues that may arise.
As we explored in part 1 of our series, startups don’t have to settle for traditional debt financing. Options include bootstrapping, non-dilutive financing, equity financing and more. According to Aslam, some companies don’t have the cash flow for a traditional loan and might need to consider angel investors or government grants instead.
In Somani’s experience, bootstrapping can lead to some issues if you don’t have the right support. Take one founder who tried to save money by dealing with financing on his own without any legal advice. While he saved initially, he ended up issuing shares that didn’t exist, a serious mistake that was expensive to fix.
As our series explores, starting and growing your company is both an exciting and stressful endeavour. While some companies are nervous to rush financing or feel they’re unprepared to approach larger venture capital firms (a topic we cover in part 3 of our series), Aslam advises founders to look into financing before they’re ready for it. This way, you won’t be taken off guard when your company reaches its growth stage.
For more guidance on growing your startup, reach out to our experienced team at Zeifmans.