LaBarge Weinstein Quarterly, Winter 2010
Welcome to LaBarge Weinstein’s spring runoff…with the quickly warming tech corporate finance and M&A markets inspiring balmy temperatures and our brilliant and early spring, we look back on three months’ dealflow cascading down from virtually every stage of the company formation and development.
Among our publicly traded clients, the firm continued its late 2009 momentum with the completion of a bought deal financing for Ottawa-based MOSAID in early January. On the private side, our lawyers handled a range of early stage growth financings, including several IAF investments, assisted companies in raising over $1.5M in angel financing from southern Ontario-based angels, and acted for Silverback Media (now Adenyo) and Atreus Pharmaceuticals in their respective recent later stage fundraising efforts. M&A dealflow has started to bloom as well, with our lawyers helping IMRIS add Neuroarm to its medical imaging bouquet, Indiana-based Summit Software’s dip into the liquidity bucket in its sale to New Jersey’s iRely Software, and Tomoye continue to round out Newsgator’s social media offering.
In all, a much sunnier start to 2010 and a welcome deliverance from the dark days of the previous year. Together with the Ontario Emerging Technologies Fund swinging into gear, market intermediaries Canaccord and Genuity joining forces to attack a robust 2010, and some great news on the fund formation front both big (Tandem Expansion Fund and XPV) and small (Mantella Venture Partners), we very much like the look of the fallow in the field.
Affordable securities regulatory compliance…
Over the past year, our lawyers have sought and received feedback from small- to mid-sized publicly traded companies regarding securities law compliance pain points. We’ve heard some fairly consistent and widespread feedback from the C-suite and beyond: too much money, too much time, and too little month-to-month business process improvement and integration with their external service providers. Public companies with or without internal counsel are looking for an effective, fixed price solution to the day-to-day compliance needs that allows them to focus on growing their businesses. LaBarge Weinstein has stepped up with just such an offering, and our lawyers would love to chat with you about it. If you’d like to hear more, or would be interested on learning more about the firm’s advocacy efforts for small-cap companies in the vacuum left by the OSC’s decision to abandon its small- and mid-sized public issuer input group several years ago, please drop a line to Paul Amirault (email@example.com) or Debbie Weinstein (firstname.lastname@example.org) and we’d be happy to assist.
Ding, Dong, Section 116 is dead…
After extensive lobbying (Deloitte’s John Ruffolo and his cohorts at the CVCA deserve special credit, given his personal crusade over the past many years), the federal government confirmed in its recent budget that the appropriate changes would be made to our tax legislation to eliminate the section 116 filing and withholding burden for most dispositions of shares in Canadian companies. What practical effect will it have, both on our firms’ share capital structures and on US investors’ appetite for investing in Canadian firms?
In his signature part-sage, part-curmudgeon style, Wellington’s Mark McQueen cautions against the “end of history” proclamations following the changes. Altos Ventures’ Anthony Lee, a Valley-based expatriate, agrees, reacting to the budget as follows: “There are two ways to increase U.S. venture investment into Canadian startups. One is to take away reasons to say “no” to a Canadian investment. Eliminating Section 116 removes a major obstacle to cross-border investment, so that is a huge positive change in the market. The second is to give investors more reasons to say “yes”. The vast majority of U.S. VCs aren’t terribly aware of opportunities in Canada nor are they compelled to make the effort to look. Just as the Israeli and Indian communities have done so successfully here in Silicon Valley, we need to tell a more compelling story about the great entrepreneurs and cool companies that are being started in Canada. Now that there is one less reason to say “no”, let’s give investors more reasons to say “yes”. In other words, like the punchline to that great lawyer joke, the budget is merely a good start, some additional work to do to return to our heady deal flows of the past.
To be or not to be IFRS: the private company dilemma…
We’re certain our publicly traded clients have been hard at work in IFRS compliance over the past few months (we attach the OSC’s recent report on how they are doing), but its begged the question for many of our private company CFOs as to what resources to apply to the effort. For some thoughts from some grizzled veterans and Gordon Heard, a Waterloo-based IFRS consultant to both private and public companies, see the attached link.
To your health…
Perhaps inspiring ungenerous thoughts regarding the proper use of legislative time and energy, recently material changes have been made to the Ontario Health and Safety Act that effect all Ontario employers, requiring them prior to June 15, 2010 to conduct a risk assessment and then adopt workplace harassment and violence policies reflecting the results of that risk assessment. Our partner, Shane McLean (email@example.com) would be happy to assist if you need some help in conducting the assessment and developing the required policies, please drop him a note if you’d like any additional information.
Blogs & Other
Our firm’s lawyers have certainly heard and echo the demand from our startup companies for a more standardized format of seed investment materials similar to the forms sweeping the blog and twitter worlds over the past several weeks. Any step that reduces the friction typically associated with seed and angel investing and the time commitment that our lawyers have to make for such investments, very much the better for everyone. We’d appreciate your feedback on the forms themselves and the institutions out there that might endorse them, and if you have any thoughts drop them by email to James Smith at firstname.lastname@example.org.
At a recent event, we met up with the founders of a terrific new software firm, Wave Accounting. The company offers some very accessible tools for small business accounting, and we’ve managed to get a free 30-day trial and startup rate for its service should you wish to check it out and proceed. You can access the service at the attached link, the promo code for the service is STARTUP2010, and we thank founder Kirk Simpson and his team for making the offer available to our network.
Here is a sample of the publicly announced transactions that our lawyers have worked on over the past several months:
- IMRIS Acquisition of Neuroarm
- Silverback Media (now Adenyo) Offering of Units
- MOSAID Bought Deal Offering
- iRely Software acquisition of Summit Software
- Strategic Investment in Atreus Pharmaceuticals
- Newsgator’s acquisition of Tomoye
Events & Calander
Our firm presented at and hosted three terrific events over the past quarter. In early February, our firm’s lawyers were welcomed by the Royal Bank’s national Knowledge Banking Group to discuss the current state of the nation in venture capital financing in Canada. Later in February, we cohosted with OCRI and The Ottawa Network, a panel and networking session focused on cleantech project financing opportunities in the region, with speakers from the solar, wind and geothermal industries. Finally, just this past week, we co-sponsored the Toronto Founders & Funders dinner, the firm’s first entrepreneur-focused event in the Toronto area since our local office’s opening this past October.
Please look for our lawyers and seek us out at the upcoming mesh 2010, CVCA, and Biofinance events, and if you are even further event-starved, check out the lists below for events in your area/area of interest: