Leverage It - grow your business & leverage your funding
Business financing is not just about filling in a form and submitting it to decision-makers. Rather, seeking government funding is a launch pad for growing your organization. It is a critical step along the commercialization continuum.
Through its Leverage It service, The Funding Portal assists companies to leverage their applications into both government and private sources of funding, and to move their business or project forward along the commercialization continuum.
Specifically, the Portal's experts assist clients in the following important areas:
- Leveraging your application into government decision-makers;
- Leveraging your government funding commitment into VCs and other sources of capital and matching funds;
- Securing private funding commitments to meet matching requirements under many government funding programs;
- Identifying and achieving the next steps in the commercialization of your product, solution or organization;
- Advancing your company or project among commercialization partners and into customer markets.
1. Leveraging your application into government
The leveraging process begins prior to submitting your application and continues both during and after the application has been submitted to government. Building a relationship with a government funder is like building a relationship with your banker. Government funders are first and foremost stewards of the government purse. They are right to be cautious and somewhat skeptical about the many applications they receive for funds. As an applicant, it is your role—and our role to assist you—to build up confidence with this important decision-maker that your company is a credible and effective organization that will manage government funding for the purposes for which it was intended. We work with our applicants to ensure that they build the case for a relatively low-risk high-return investment by the funder.
Specific areas of focus of our Leverage It service include:
- Does the application demonstrate that a government investment will provide value for taxpayers’ money? Will taxpayers achieve a public good or policy objective in return for their investment?
- Is the level of risk associated with the company or its funding proposal acceptable under the parameters of that particular program?
- Does the company have a governance model and system for stewardship of funds that would satisfy the Auditor General that the funder’s decision was a prudent one?
- Does the company, or the individuals aligned with the application, have a profile and reputation in the community that makes them a strong candidate to receive taxpayer funds?
2. Leveraging your application into private sources of financing
Venture financing is scarce in Canada: many government funders increasingly require “private matching funds,” and many private sources of capital will look more favourably on an applicant that has a government funding commitment in place.
Government requirements for Private Matching Funds
The days of government “grants” are largely over. Instead, governments prefer to “contribute” to the costs of a proposal. Hence, many government investments are now called “contribution agreements.”
As a “contributor,” governments often expect to see some level of financial contribution to the project costs by the company itself and perhaps by a third party, such as a strategic partner or an investor. Under some programs, the private funds must be committed in advance and, under other programs, the government funds will be approved conditional on the applicant being able to secure private funds. In these circumstances, the government funds can be used to ”leverage” or attract investors or strategic partners. Strategic partners and investors are often larger corporations that have a commercial interest in the research or project outcomes, as well universities and research institutions.
Our experts assist our clients to understand government requirements for private matching funds, to identify possible sources of private funding, and to leverage government funding applications into other levels of government and into private sources of capital.
The benefits of government funding in attracting private funding
Angel investors and Venture Capital firms (VCs) receive far more applications than they are able or willing to fund. Companies that bring forward a clear funding commitment from a respected government funding agency clearly have a competitive advantage. And companies that have worked through a government funding application process--whether successful or not–are clearly in a much stronger position to face a private investor. Their business plans have been scrutinized, their financial plans analyzed, their credibility tested. In short, the money is important and the experience is too.
3. Identifying and achieving next steps in your commercialization objectives
Our Leverage It and commercialization experts assist our clients in their broader corporate and project financing objectives, bringing both knowledge and networks to guide you through the objectives of advancing your company into government funders, angel investors, venture capitalists, or commercial lenders.
Our Leverage It team provides access to our clients to a growing collection of online resources, coaching sessions and connections.
Visit The Funding Portal's Products & Pricing page to learn more about this service, as well as pricing.
The Funding Portal’s Funding Continuum
Creating a financing plan is a challenging yet crucial step for any business. Most experts agree that the key to a successful financing plan is understanding the diverse sources of funding, and pursuing those that are applicable to the company's stage of growth. Please see our diagram below setting out the different sources of funding at each stage of growth.
There is no doubt that government funding is a critical source of funding for many organizations and should be included in any business financing plan. It is an important source of financing in its own right and can often be used to leverage additional private funds.
In particular, government funding is important for two reasons:
1. It is often designed to fill the gap when private sources of financing aren't available, and can in fact fill that gap; and
2. It can often be leveraged to attract private funding—investors will often respond more favourably to an investment pitch from a company that has a government funding commitment from a prestigious government sector funding agency. Wouldn’t you?
The Funding Portal’s Funding Continuum has been designed to assist our customers to better understand the role of government funding and how it compares with other types and sources of financing.
Using personal resources is often the first step in starting a business and it shows investors that you are committed to your business. Entrepreneurs can invest some of their own money through cash or collateral assets, or get loans or use personal credit. Entrepreneurs can also devote non-cash or "in-kind" resources to their business, such as time, expertise, services or a car, credit facility or home office.
Friends and Family
Friends and family may be willing to provide funding, and will often be patient in terms of repayment. In exchange for funding they may seek equity in the company, but it's wiser to consider the funding a loan. Often friends and family are a great resource for in-kind services, such as helping to write a business or financial plan, building a website and marketing. These services can save your business thousands of dollars.
Banks and Commercial Lenders
Elio Luongo, Canadian Managing Partner, Tax, KPMG
Rob Brouwer, Canadian Managing Partner, Clients and Markets, KPMG
Andy Robling, Hays Recruiting Experts Worldwide
John Reid, President & CEO, Canadian Advanced Technology Alliance (CATAAlliance)
Deborah Weinstein, Partner, LaBarge Weinstein LLP
Georgina Steinsky-Schwartz, former Deputy Minister, Government of Canada