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Accredited Investor means those persons who meet the requirements of Accredited Investor as defined in Regulation or National Instrument 45-106 (Prospectus and Registration Exemptions), including an individual:

  • who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1,000,000;
  • an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5 000 000;
  • an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
  • an individual who, either alone or with a spouse, has net assets of at least $5,000,000.

AMF means the Autorité des Marchés Financiers

An Angel investor or Angel (also known as a Business angel or Informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. The term derives from "Theatre Angels" who were private investors that provided the initial capital needed to get a new theatre production onto Broadway and in exchange received a share of the production's earnings. Angel investors are often wealthy individuals who have entrepreneurial experience themselves or specific industry experience that is shared with the company being invested in. Angel investors are often retired entrepreneurs or executives, who may be interested in angel investing for reasons that go beyond pure monetary return. These include wanting to keep abreast of current developments in a particular business arena, mentoring another generation of entrepreneurs, and making use of their experience and networks on a less than full-time basis. Thus, in addition to funds, angel investors can often provide valuable management advice and important contacts. A 2010 Harvard report by William R. Kerr, Josh Lerner, and Antoinette Schoar Overall, suggest that the bundle of inputs that angel investors provide have a large and significant impact on the success and survival of start-up ventures. Angel capital fills the gap in start-up financing between "friends and family" (also called “love money”) who provide seed funding—and venture capital funds. Although it is usually difficult to raise more than a few hundred thousand dollars of love money, most traditional venture capital funds are usually not able to make or evaluate small investments under a few million $. Thus, angel investment is a common second round of financing for high-growth start-ups, and accounts in total for almost as much money invested annually as all venture capital funds combined, but into more than 60 times as many companies. Angel investments bear extremely high risk and are usually subject to dilution from future investment rounds. As such, they require a very high return on investment. Because a large percentage of angel investments are lost completely when early stage companies fail, professional angel investors seek investments that have the potential to return at least 10 or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering or an acquisition, ideally by a strategic buyer. After taking into account the need to cover failed investments and the multi-year holding time for even the successful ones, however, the actual effective internal rate of return for a typical successful portfolio of angel investments is, in reality, typically around 20–30%.

An Angel network is a group of angel investors that meet to discuss and invest in early stage businesses. These groups can come together for geographical, industrial, or other reasons. There is often a network manager who sources the investment opportunities for the network and there can even be an investment committee who screens and/or prepares the opportunity before being presented to the investing members. Because there are no public exchanges listing their securities, private companies meet angel investors in several ways, including referrals from the investors' trusted sources and other business contacts; at investor conferences and at meetings organized by groups of angels where companies pitch directly to investor in face-to-face meetings. In Québec the only organized group is Anges Québec.

Auditors means the auditors or accountants of the Company.


Balance Sheet means a statement of the assets, liabilities, and capital of a business at a particular point in time, detailing the balance of income and expenditure over the preceding period.

The Book value of the Shares of a Company established according to the Company's annual financial statements, consolidated, if any, for the year preceding the event giving rise to the determination of the book value and adjusted to reflect subsequent events; such financial statements to be prepared by the auditors in applying generally accepted accounting principles, consistently applied, and accompanied by a report of the Auditors.

Bootstrapping refers to the starting of a self-sustaining process that is supposed to proceed without external input. In relation to an early stage venture, a company that has been bootstrapped is one that has not taken in external finance (from business angels or venture capitalists), preferring to be supported by the finance and assets of the founding team and any revenue generated. Such start-ups fund the development of their company through internal cash flow and are cautious with their expenses. Generally at the start of a venture, a small amount of money will be set aside for the bootstrap process. This financing approach allows owners to maintain control of their business, enables them to focus on customers instead of investors, and forces them to spend with discipline. Most commonly, entrepreneurs engaging in bootstrapping incur personal credit-card debt, but they may utilize a wide variety of methods. While bootstrapping involves increased risk for entrepreneurs, the absence of any other stakeholder gives the entrepreneur more freedom to develop the company. Many successful companies - including Dell Computer and Facebook - started by bootstrapping.

Break-even Point means the point at which revenues equal expenses. Helps a business see how much sales are needed to cover costs and expenses in order to start making a profit.

Bridge Financing means a short-term loan that is used until a person or company secures permanent financing or removes an existing obligation. This type of financing allows the user to meet current obligations by providing immediate cash flow. The loans are short-term (up to one year) with relatively high interest rates and are backed by some form of collateral such as intellectual property, tax credits or inventory. As the term implies, these loans "bridge the gap" between times when financing is needed. For example, let's say that a company is doing a round of equity financing that is expecting to close in six months. A bridge loan could be used to secure working capital until the round of funding goes through.

Burn Rate means the rate at which a company spends its cash. In the early stages of your company you will simply be spending, running at a loss, before emerging into profitability and positive cash flows. Because of this the two most common questions for early stage companies are: what is your burn rate? and subsequently: what is your cash zero date? The metrics burn rate and cash zero date, have come out of the dot-com era when tech start-up companies went through several stages of funding to finance overheads before reaching positive cash flows. Burn rate is really your average monthly costs - it gives people a feeling for how much you spend in a given month. Because start-ups experience extreme contraction and expansion, you usually take an average of the previous twelve months expenses to smooth the metric out. The next metric is the cash zero date. This date tells your audience when you run out of cash (e.g. cash is equal to zero). When do you stop calculating cash zero dates? An ideal state for a small early stage company is to always be carrying 2-3 months burn, in cash, just in case you have a bad quarter. When your cash zero date starts to become a year or more out it is safe to say you can relax on providing the metric.

A Business incubator is an organisation that provides a range of resources to start-ups and early-stage businesses. These can range from office space to events and access to angel networks. The goal of a business incubator is to help startup and early-stage companies grow and succeed. Examples of start-up incubators include Montreal’s FounderFuel and Sherbrooke’s ACET.

A Business plan is an ever evolving document that outlines the company's goals and details how they will be achieved. It often includes the company's summary, market, industry, and customer analysis, the marketing, operational, and financial plans, and information regarding the management team. A business plan template is available from the BDC.

Business Traction is proof that somebody wants your product or service. Ideally, it should communicate momentum in market adoption. There is no easy way to measure traction; however, companies usually rely on Profitability, Revenues, no. of Active users or Registered users, Customer engagement or response, no. and type of Partnerships/clients and website Traffic as indicators of their success. While traction may be a seemingly abstract concept, it is important and helps a company understand where it stands in an industry and where it would like to be. The higher the traction, the more investors are attracted to the organization. Therefore, developing a high level of business traction is important to any start-up business and should be a large part of its business growth plan. Understanding the future of the organization, developing specific goals and a means to reach those goals, is the first step for successful start-up. However, simply defining these goals is not enough. To measure traction, the company needs to understand what metrics it will use to define success. Try to be imaginative about using the evidence that works for your business, while still including the basics that investors will want to see. Always make sure that you demonstrate momentum, but remain honest.


Cancellation right means the right that any Crowdfunding investor has of changing his/her mind for any or no reason and cancelling his/her subscription by sending a notice to within 48 hours of his/her subscription or if there is an amendment to the Offering document, such cancellation may be made by sending a notice to within 48 hours of receiving notice of the amendment.

The Cap table, or Capitalisation table is a table that presents a view of all of the shareholders of a company and their respective percentage of shareholdings and votes, calculated on a fully-diluted basis. This also includes the percentages owned by the founders and all other investors.

Carried interest is how funds and venture capitalists are generally compensated. Put simply, it's a share of the profits on the increased value of your investment (typically 20%).

Cash Flow Statement means a document that represents the cash inflows and outflows from the business operations.

Class A Preferred Shares means a specific share class that can be accompanies by more or less rights than subsequent classes. Typically Class A preferred shares have the same voting rights as other classes but a participation preference over common shares.

Class B, C, D, etc... Preferred Shares means a specific share class that can be accompanies by more or less rights than other classes. Typically the most recently issued class of preferred shares has the same voting rights as other classes but a participation preference over common shares and previously issued classes of preferred shares.

Common shares. A class of shares entitling their holders to participate in the increase in the valuation of the Company and possibly in dividends which vary in amount depending on the fortunes of the company.

Confidential Information means any and all confidential information of a company raising capital on the platform and/or its Subsidiaries and affiliates, including, without limitation, all trade secrets and all other financial, business, commercial, marketing, scientific or technical information relating to the affairs of such company and/or its subsidiaries and affiliates that are not generally and lawfully known to recipient of such information and that derives actual or potential commercial value from not being generally known to or readily ascertainable by other persons.

Control of an entity, the ownership by a person, other than as a creditor, of securities carrying more than 50% of the votes enabling it to elect the majority of directors of the entity concerned.

Convertible Debt (a.k.a. Debenture) – is a financing vehicle that allows start-ups to raise money while delaying valuation discussions until the company is more mature. Though technically this is debt the company promises to pay back to its lender(s), convertible notes are meant to convert to equity at a later date. Investors who agree to use convertible notes generally receive a discounted price (20% to 50%) when they purchase equity since they put in their money in at the earliest, riskiest stages of the business.

Crowdco means Crowdco Inc., the operator of the portal.

Crowdfunding Investors. Investment in a Start-up by non-accredited investors via the Crowdco portal is only available to residents of a Canadian Province that has adopted orders, decisions and/or instruments with regard to the implementation of the Notice 45-316 and is subject to all the terms and conditions specified therein. 


Deal Flow means the rate at which new proposals are made to a funding firm. Deal flow is also used to indicate the general feeling of how often a firm receives new offers.

Debt refers to money owed by one person/company to another. The borrower is required to repay the debt at a later date and is often required to pay interest on the initial amount borrowed (often)

Debt-based crowdfunding is lending by individuals to other individuals or businesses via a specialist platform. With this type of crowdfunding, individuals lend money to businesses or other individuals with the expectation that it will be repaid together with interest added.

Debt financing includes both secured and unsecured loans. Security involves a form of collateral as an assurance the loan will be repaid. If the debtor defaults on the loan, that collateral is forfeited to satisfy payment of the debt. Most lenders will ask for some sort of security on a loan. Few, if any, will lend you money based on your name or idea alone. Here are some types of security you can offer a lender: (1) Guarantors or endorsers sign an agreement stating they'll guarantee the payment of the loan with or without collateral. (2) Accounts receivable allow the bank to advance 65 to 80 percent of the receivables' value just as soon as the goods are shipped. (3) Equipment provides 60 to 65 percent of its value as collateral for a loan. (4) Real estate, either commercial or private, can be counted on for up to 90 percent of its assessed value. (5) Savings accounts or certificate of deposit can also be used to secure a loan. (6) Inventory typically secures up to only 50 percent of the loan. The most common source of debt financing for start-ups often comes from friends & family. When borrowing money from your relatives or friends, make sure you use proper legal papers dictating the terms of the loan. Why? Because too many entrepreneurs borrow money from family and friends on an informal basis. The terms of the loan have been verbalized but not written down in a contract. Make sure to check with your attorney before accepting any loans from friends or family. One of the most popular avenues of obtaining start-up capital is credit cards. Although most charge high interest rates, credit cards provide a way to get several thousand dollars quickly without the hassle of paperwork, as long as you don't overextend your ability to pay back the money in a timely fashion. Interest payments on credit-card debt add up quickly. A small-business loan (if available) usually costs a little more than a loan at the regular prime rate, which is the rate that banks charge their most favored customers. Small businesses usually pay one to five percentage points above that prime rate. Most small-business owners are more concerned with finding the right loan at the right terms than with the current interest rate. Firms that are already highly leveraged (a high debt-to-equity ratio) will usually have a hard time getting more bank funding.

Debenture see Convertible notes.

Dilution. A reduction in the ownership percentage of a share of stock caused by the issuance of new stock. Dilution can also occur when holders of stock options (such as company employees) or holders of other optionable securities exercise their options. When the number of shares outstanding increases, each existing stockholder will own a smaller, or diluted, percentage of the company, making each share less valuable unless the new shares are issued at a value equal or greater than their current value. Dilution is common in the domain of venture capital. Without dilution, follow-up financing rounds would not be possible. Nevertheless, founders (who are most strongly affected by dilution) will be interested in keeping the effect of dilution as small as possible. Generally speaking, follow-up financing rounds and the related increases in the share capital are very positive because they significantly increase the company value. In other words, it is much better to have a small piece of a large cake than to have a large piece of a small cake.

Diversification is an investment strategy to spread risk and minimise losses. Diversification is an investment strategy that involves mixing the amount, values and types of assets held within a portfolio to spread risk and minimise losses. Traditionally the asset classes held included the big three: stocks, bonds, and cash.

A Dividend is the distribution of a portion of a company’s profits to shareholders. Most early stage ventures do not pay dividends as the profits are reinvested into the business in an effort to accelerate growth.

Donation-based crowdfunding is a type of crowdfunding that involves people donating money without expecting anything in return other than the satisfaction of having contributed towards something they feel is worthwhile. It is typically used by social causes, not-for-profit organisations and arts projects.

Drag-along rights are the contractual obligation that allows majority shareholders to force minority shareholders to join in the sale of a company on the same terms, valuation and conditions of the majority shareholders. Hence the majority is ‘dragging’ the minority to the exit. In early-stage investing business angels and syndicates of investors consider drag-along rights as one of the basic investor protections they will not invest without.

Due diligence is the process of systematically researching and verifying the accuracy of a statement. Due diligence serves to confirm all material facts in regards to a transaction. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party. Due diligence is what investors should do before investing in a company. It covers aspects ranging from the company's product or service to the team and the financials. The purpose is to allow the investor to reassure themselves that all material facts are correct and that they are not overpaying for their shares. The theory behind due diligence holds that performing this type of investigation contributes significantly to informed decision making by enhancing the amount and quality of information available to decision makers and by ensuring that this information is systematically used to deliberate in a reflexive manner on the decision at hand and all its costs, benefits, and risks.


EBITDA (earnings before interest, taxes, depreciation and amortization). An accounting technique valuable for business owners as an important standard measure of profitability. What makes EBITDA valuable is that unlike standard net income calculations that use a simple formula of revenue minus expenses, EBITDA factors in other expenses, like taxes and interest. EBITDA allows analysts to generate useful comparisons between companies, and to project long-term profitability and the ability to pay off future financing. EBITDA assists investors in comparing profitability between companies and industries, since it eliminates the effects of financing and accounting. Because EBITDA is not a part of generally accepted accounting principles (GAAP), it may not automatically be included in a company’s financial statement. With an EBITDA value, the business and its investors are now able to better compare profits against those of the business’s competitors. To calculate EBITDA, a business must know its income, expenses, interest, taxes, depreciation (the loss in value of operational assets, such as equipment) and amortization, which is expenses for intangible assets, such as patents, that are spread out over a number of years. With those numbers in hand, the formula is: EBITDA = Net Income +interest, taxes, depreciation and amortization.

Elevator Pitch. An elevator pitch, elevator speech, or elevator statement is a short summary used to quickly and simply define a person, project, product, service, organization, or event and its value proposition. The name "elevator pitch" reflects the idea that it should be possible to deliver the summary in the time span of an elevator ride, or approximately thirty seconds to two minutes. The term itself comes from a scenario of an accidental meeting with someone important in the elevator. If the conversation inside the elevator in those few seconds is interesting and value adding, the conversation will continue after the elevator ride or end in exchange of business card or a scheduled meeting.

Eligible security means a common share, a non-convertible preference share, a security convertible into a common share or a non-convertible preference share, a non-convertible debt security linked to a fixed or floating interest rate, or a unit of a limited partnership.

Encumbrance means mortgage, hypothecate, pledge, encumber, grant rights (including options) with respect to or otherwise charge any of their Shares charge in any manner whatsoever, or otherwise deal in any way whatsoever, or any attempt to perform either of these operations.

Entrepreneurs. An individual founder, major shareholder, manager or operator of a Start-up.

Equity. The term equity refers to shares or other securities that represent an ownership interest in a company. Those that hold equity are referred to as shareholders and may or may not be entitled to a vote in certain company decisions.

Equity Crowdfunding – The offering of securities by a privately held company to the general public (the “crowd”) through an online platform. The model permits anyone to acquire a share in privately held companies (i.e., those that have yet to be sold on public stock exchanges) by allowing a company to offer a certain percentage of its equity for a set amount of capital that it is aiming to raise. Through a funding portal, such as, investors can buy small parts of the company’s equity stake, interact with the company’s management team and become advocates for the company within the investors' own social networks.

Escrow Account. A temporary pass through account held by Crowdco Inc. during the process of a transaction between the investors and the issuer. The funds are held in escrow until the closing or cancellation of the transaction.

An Exit occurs when the investors in a start-up are able to dispose of their participation in the start-up. The three most common types of exit are acquisition by a third party, initial public offerings (IPO), and management buyouts.

Exit Strategy. The method by which a venture capitalist or business owner intends to get out of an investment that he or she has made in the past. Usually it comes in the form of IPO, acquisition by a larger company or selling assets.


Financial forecast. An estimate of future financial outcomes for a company.

Fully diluted Shareholdings. The total number of shares that would be outstanding if all possible sources of conversion, such as convertible debentures, debt or bonds and stock options, were exercised.

Funding posting agreement means the Funding Posting Agreement entered into between Crowdco and any issuer seeking to raise money using the portal in conformity with orders, decisions and/or instruments implementing the Notice 45-316.

Fundraising is the term used to describe the action of a company seeking to raise finance through the issuance of shares or debt.

Funding Period – A specific time frame, which is set in advance (maximum 90 days), allowed for the company to raise funds during a fundraising campaign. The company has until the end of the Funding period reach its minimum raise or else it receives nothing and the funds raised are returned to the investors.

Funding portal means a crowdfunding intermediary such as that facilitates or proposes to facilitate on-line start-up crowdfunding distributions. 


General terms and conditions means the General Terms of Use and Service which can be found at

Gross Margin. The difference between revenues and the total cost of sales.

Growth stage. The term growth stage refers to the stage a business is in when it has moved beyond the initial seed stage. Companies are often considered to be in growth stage when they have completed their proof of concept, have an initial form of traction, revenue and profit increase and are looking to accelerate the growth of the business.


An Illiquid asset is one that can’t be turned into cash quickly or without losing substantial value. For example, a shareholding in a private (not publicly listed) company is an illiquid asset, whereas shares in a company listed on a major stock exchange have much greater liquidity. In times of economic turmoil especially, holders of illiquid assets may be unable to dispose of them or may only be able to do so at a substantial loss.

Internal rate of return (IRR) means the rate of return used in capital budgeting to measure and compare the profitability of different investments. In terms of early stage investments, IRR is often used by business angels to show their returns from investing in these companies. It is the discount rate that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. Assuming the costs of investment are equal among the various projects, the project with the highest IRR would probably be considered the best.

Initial Public Offering (IPO). The first time that a company’s shares are made available for public purchase through the listing on a stock exchange.

Intellectual Property refers to intangible property rights. Although ideas and concepts are by default part of the public domain, certain laws allow for the creation of certain exclusive ownership rights. The most well-known intellectual property rights (also referred to as ‘IP’) are Patents, Trade Marks, Industrial Designs and Copyright. All four protection methods have limitations -there's no one perfect way to protect an idea. Patents are hard to obtain and only protect inventions that are embodied in an art, process, machine, manufacture or composition of matter which are truly useful, novel and non-obvious. Copyright protects the expression of the idea, but not the ideas themselves. Ideas and concepts that have not been disclosed publicly may be protected as Trade Secrets if proper secrecy measures are put in place such as the signature of NDAs (non-disclosure agreements), which provide a contractual remedy for misuse or disclosure of the idea. It is very difficult if not impossible to protect the same idea by using Patents and Trade Secrets. Indeed, patent laws require a full public disclosure of the invention so that it may be easily copied when the Patent expires. A Trade Mark is like a brand name. It is any word(s) or symbol(s) that represent a product to identify and distinguish it from other products in the marketplace. A trademark can be registered in each country where its owner does business. The cardinal rule is that a mark must be distinctive. The more distinctive it is, the easier your trademark will be to enforce. This is why so many trademarked products have unique spellings. Trademark rights last indefinitely if the company continues to use the mark to identify its goods or services. When the mark is no longer being used, the registration is terminated.

Interested entities means entities (other than a Start-up seeking to raise funding via the portal) that is involved or interested in the start-up ecosystem

Interested individuals means individuals (other than an Entrepreneur, a Crowdfunding Investor, an Accredited Investor or a Lead Investor) that is involved or interested in the Start-up ecosystem.

Investment in the context of a Junior Crowdfunding financing on the GoTroo portal, this means an amount of at least the minimum amount specified in the offering document and not exceeding $1,500 per Crowdfunding investor.

Investment access agreement means the agreement that must be signed by a Crowfunding investor before he/she is given access to investment opportunities on the portal.

Investor Relations – A responsibility of a Company relating to how and when the Company communicates with investors in connection with the Company’s performance. Strategic Investor Relations can help a Company maintain a good relationship with its investors and facilitate subsequent investments.

Issuer means every person who issues or proposes to issue any security.

Issuer group means the issuer, an affiliate of the issuer and any other issuer that is engaged in an enterprise with the issuer or an affiliate of the issuer or whose business is founded or organized, directly or indirectly, by the same person or persons who founded or organized the issuer.


A Lead Investor is an Accredited Investor with experience in business and preferably in Start-ups. Lead Investors are typically called to: i) negotiate the terms of the investment with the Start-up, ii) carry out the due diligence review before the closing of the investment, iii) act as or manage the general partner of the Vehicle created to act as an intermediary between the Crowdfunding Investors and the Start-up, and iv) actively follow the Start-up after the investment until a liquidity event.

Liquidity is a measure of how easy it is to buy or sell an investment. An investment can be described as 'liquid' if it is easy to buy or sell; for example shares in TSX or NADASQ companies. The level of liquidity may be lower in the case of small stocks or during periods when the market is in turmoil.

Liquidity Event means any event which allows private investors to dispose of their investment such as the merger, purchase or sale of a corporation or an initial public offering. A liquidity event is a typical exit strategy of a company, since the liquidity event typically converts the ownership equity held by a company’s founders and investors into cash. A liquidity event refers to the process by which an investor monetizes its investment in a private company. Liquidity events are most often triggered by financial buyers such as private equity firms in order to exit their investments. There are various ways to undertake a liquidity event including the sale to or merger with another company, or taking the public company through an initial public offering (IPO). While a sale is considered to be the main way to provide liquidity for investors, some liquidity can also be achieved by having the company pay out some or all of its cash flow in dividends. Financial buyers measure the internal rate of return (IRR) in their investment by not only estimating the net cash realized when the liquidity event is triggered, but also via dividends throughout the life of the investment. Investments in private companies are said to be "illiquid" because the stock isn't traded in a public stock exchange.

Long Term Debt. Loans and financial obligations lasting over one year.


Management buy-in (MBI) occurs when an outside team of managers, raises the necessary finance and buys into a company, replacing the incumbent management team and managing the business themselves. An MBI is the opposite of a management buyout (MBO).

A Management buyout (MBO) occurs when the current management, often aided by existing or new investors, seek to buy out the parent company or current shareholder of a firm in order to change the way that the business is run. Through a management buyout current investors are offered a way to exit their shares by selling them to the incoming team.

The Management team is the group of individuals that operate at the higher levels of an organisation and have day-to-day responsibility for managing other individuals and maintaining responsibility for key business functions. The management team is also generally responsible for putting together the business strategy and ensuring the business objectives are met. The Management team are held accountable by the company’s board of directors.

A Marketing plan is a comprehensive document that outlines a company’s overall marketing effort. It is a blueprint that that outlines how a company will implement its marketing strategy, and use a combination of resources to achieve business objectives including sales targets or customer acquisition. Due to the every changing environment and marketing tools that become available, the modern day marketing plan tends to be relatively short in nature, covering from one to a few years. A marketing plan tends to include:

  • An Introduction and broad objectives
  • Marketing overview
  • The market landscape
  • SWOT analysis
  • Specific objectives
  • Brand strategy
  • Promotional strategy
  • Actions, deadlines and budgets

Mezzanine Financing is a hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies. Since mezzanine financing is usually provided to the borrower very quickly with little due diligence on the part of the lender and little or no collateral on the part of the borrower, this type of financing is aggressively priced with the lender seeking a return in the 20-30% range. Mezzanine financing is advantageous because it is treated like equity on a company's balance sheet and may make it easier to obtain standard bank financing. To attract mezzanine financing, a company usually must demonstrate a track record in the industry with an established reputation and product, a history of profitability and a viable expansion plan for the business (e.g. expansions, acquisitions, IPO).

Minimum offering amount means the minimum amount sought in the offering document. Only if the entrepreneur meets his minimum funding target is the project funded. This is a form of investor protection that requires a minimum buy-in from all the backers before a project is funded. 


Non-diluted basis means the total number of voting Shares issued and outstanding (excluding options, warrants and any convertible securities).

Nondisclosure agreements sometimes called NDAs or confidentiality agreements are contracts intended to protect information considered to be proprietary or confidential. Parties involved in executing an NDA promise not to use or divulge secret or proprietary information disclosed during employment or other business transactions. For example, an NDA is appropriate for prohibiting others from disclosing a new design, an idea for a new Web site, or confidential material contained in a copyrighted software program. However, the use of NDAs is not an end in itself. The purpose of these agreements is to create a confidential relationship between one person who has a trade secret and another to whom the secret is disclosed often to prevent a public disclosure which could affect the right to obtain a patent in most jurisdictions. Parties can also establish a confidential relationship informally, either through an oral agreement or through the conduct of the parties. Few people rely only on such informal arrangements, however. A one-way agreement is used when only one party is making a disclosure—for example, when a secret is explained to a contractor or investor. A company may require an employee to sign a nonuse and nondisclosure agreement. Generally, it does not matter who furnishes the nondisclosure agreement, so long as it contains the basic elements limiting disclosure and use.

Non-targeted users. The Crowdco portal is not directed to, and may not be used by, any person in any jurisdiction where (by reason of that person's nationality, residence, age or otherwise) the publication, availability or use of the Crowdco portal is prohibited or would otherwise be contrary to applicable laws, rules or regulations of any governmental authority or where Crowdco is not authorized to provide its services. For example, the Crowdco portal is not directed to minors (in most jurisdictions a person ceases to be a minor at the age of 18 or 21). Persons in respect of whom such prohibitions apply must not access or use the Crowdco portal or the Services.


Offering document means a duly completed crowdfunding offering document containing all the disclosures and information required by Form 1 in conformity with orders, decisions and/or instruments implementing the Multilateral CSA Notice 45-316 (Start-up Crowdfunding Registration and Prospectus Exemptions) including the accompanying schedules and explanations and including any amendment thereto.

An Option is a financial derivative security whereby the security provides the buyer the right but not the obligation to buy/sell a security at a predetermined price during a specified period of time.


P/E Ratio. A measurement tool frequently used in the investment industry and calculated by dividing the price per share by the earnings per share.

Participating jurisdictions means British Columbia, Manitoba, New Brunswick, Nova Scotia, Québec and any other jurisdiction whose securities regulatory authority or regulator has issued a corresponding start-up crowdfunding order.

Participating shares are shares of a Company's equity Share capital which, at any time, give their holders the right (i) to receive the remaining property of the Company at its dissolution or voluntary or forced liquidation and (ii) participate in the profits or surplus assets of the Company.

Pitch Deck. A presentation of a summarised business plan.

The Pooling agreement regulates the pooling of Crowdfunding investors. It may be accessed on the investment page of the respective start-up.

Pooled Investment Vehicle. Funds from many individual investors that are aggregated for the purposes of investment, in a somewhat similar fashion to mutual funds. In this way, the shareholders will be easier to manage by the company and will make it possible to secure follow-on financing without the need to obtain the consent of dozens if not hundreds of individuals. There is a small additional costs associated with the formation of these vehicles which typically take the form of a limited partnership which is managed by a general partner (usually the 'Lead') which will be paid only if the investment is profitable. The remuneration of the general partner will take the form of a 'carried interest' (or portion of the profits - see above for explanation). Many start-ups on will not allow you to invest small amounts directly into their business because they want to facilitate the subsequent funding by venture capitalists or angel investors. For this reason, the shares of the crowdfunding investors are pooled and the startups and VCs will have a single person to negotiate future rounds of financing with and sign the related documentation. Without pooling, the start-up would be of no interest to angel investors or VCs because there would be too many people. Instead, you invest in an investment vehicle under common management, which regroups all equity crowdfunding investors, and invests in the start-up as one shareholder. The investment vehicle holds the underlying securities which will be sold together with those of the other shareholders upon the occurrence of a liquidity event and the net proceeds of the sale will be distributed to the crowdfunding investors in proportion to their detention of units in the Partnership. This is a very long-term investment.

Post-Money Valuation means the company’s value after receiving funding. For example, if your company’s pre-money valuation is $1 million and you raise $500,000 through equity crowdfunding, your company’s post-money valuation $1.5 million.

Pre-emption. A pre-emption right is a contractual provision which requires a company seeking to issue new shares to offer existing shareholders the chance to purchase additional shares to maintain their percentage of equity before making the offer available to new investors. In early-stage investing, business angels and syndicates of investors consider pre-emption as one of the basic investor protections they will not invest without.

Preferred Shares. A share which entitles the holder to a participation preference, usually including a cumulative dividend whose payment takes priority over that of ordinary shares.

Pre-Money Valuation. The company’s value prior to receiving funding.

Principal means a promoter, director, officer or control person.

Privacy policy means the privacy policy which can be found at

Private Placement. The sale of securities to a relatively small number of select investors as a way of raising capital. In such cases, detailed financial information is not disclosed and the need for a prospectus is waived. You generally must be an "accredited investor" to invest in a private placement.

Profit and Loss Statement. A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time – usually a month, fiscal quarter or year.

Projected Cash Flow presents projected changes in the Company’s cash balances.


Questionnaire means the questionnaire and consent form relating to shareholders, directors and officers that must be completed by all issuers seeking funding on the portal.


Related person in respect of another person, any person not dealing at arm's length with the other person, according to the meaning given to that expression by subsection 251 (1) of the Tax Act (Canada).

Return on Investment (ROI). A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. In the context of early-stage investing, return on investment, or ROI, refers to the financial gain an investor sees on an amount invested into a company. To calculate the return on investment, an investor divides the profit achieved by the cost of the investment. For example, if Paul invested $100 into company X and in five years sold his share for $140 his return on investment would be 40% = (140-100) / 100. Compare with IRR above.

Revenue Model. Key component of the business model. It primarily identifies what product or service will be created in order to generate revenues and the ways in which the product or service will be sold.

Rewards Crowdfunding. A crowdfunding model where entrepreneurs ask for money to support their business in exchange for rewards and perks not in a financial form. This is perhaps the best-known type of crowdfunding and well-known platforms include Kickstarter and Indiegogo. Reward-based crowdfunding involves individuals contributing comparatively small amounts of money to projects in return for some kind of reward. The size of the reward is usually a reflection of the amount contributed. Rewards can range from something simple such as a thank-you postcard to a production version of the crowdfunded product. In most cases, these rewards are the product or service the entrepreneur plans to create.

Risk, in the context of early stage investing, refers to the danger associated with the company one has invested in going bankrupt and most, or all of the money invested being lost. Risk can also be used to describe a number of challenges that the company itself faces (market risk, Product Risk, Finance Risk, Team Risk, Execution Risk).

Risk acknowledgement means Form 2 - Start-up Crowdfunding Risk Acknowledgement which must be read and accepted by every Crowdfunding Investor prior to making an investment through the GoTroo portal.

Royalty Crowdfunding. Backers/supports get rewarded by a percentage of revenue.


Secondary market. A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The Toronto Stock Exchange (TSX), the New York Stock Exchange (NYSE), and all others often referred to as stock markets are secondary markets.

Secured Loan. A loan that is supported by some type of collateral.

Securities are typically divided into debt securities and equities. A debt security is a type of security that represents money that is borrowed that must be repaid, with terms that define the amount borrowed, interest rate and maturity/renewal date. Debt securities include government and corporate bonds, debentures, certificates of deposit (CDs), certain preferred stock and collateralized securities. Equities represent ownership interest held by shareholders in a corporation, such as a stock.

The Seed stage refers to the period just after a company has launched and is working on their proof of concept. During this period a company is also looking to gain initial transaction and receive feedback from early adopters so that they can refine what they offer before looking to move into the growth stage.

Seed Capital. The initial capital used to start a business. Seed capital often comes from the company founders' personal assets or from friends and family. The amount of money initially invested is usually relatively small because the business is still in the idea or conceptual stage. Such a venture is generally at a pre-revenue stage and seed capital is needed for research & development, to cover initial operating expenses until a product or service can start generating revenue, and to attract the attention of venture capitalists. Seed capital is needed to get most businesses off the ground. It is considered a high-risk investment, but one that can reap major rewards if the company becomes a growth enterprise. This type of funding is often obtained in exchange for an equity stake in the enterprise, although with less formal contractual overhead than standard equity financing. Banks and venture capital investors view seed capital as a "high risk" investment by the promoters of a new venture, which represents a meaningful and tangible commitment on their part to making the business a success.

Series A Financing. Usually the first round of funding after the initial seed capital.

Shareholders’ agreement. A contract/ agreement among shareholders of a company that describes their rights and obligations.

Shares: (i) shares of the Company held by Shareholders, (ii) treasury shares of the Company acquired by one or other of the Shareholders during the term of a shareholders agreement, and (iii) any share resulting from the consolidation, division or other reorganization of the capital of the Company.

Short Term Debt. Loans and financial obligations due in one year or less.

A Start-up is an early stage legal entity controlled by one or more Entrepreneurs that may or not be i) seeking capital from Investors, ii) seeking to find a co-founder or partner, or looking to find one or more person to hire as an employee or consultant.

A Subscription agreement is an agreement between a company issuing securities and investor(s) that sets out the price and terms of a purchase of shares in the company. The subscription agreement details the rights and obligations associated with the share purchase.

Subsidiary means any legal entity of which the Company holds or will hold, directly or indirectly, the Control.

Sweat equity is a party's contribution to a project in the form of effort, as opposed to financial equity, which is a contribution in the form of money. Similarly, in a start-up company formed as a corporation, employees may receive stock or stock options, becoming thus part-owners of the firm, in return for accepting salaries that are below their respective market values (this includes zero wages).

S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal to the company (think: reputation, patents, location). You can change them over time but not without some work. Opportunities and threats are external (think: suppliers, competitors, prices)—they are out there in the market, happening whether you like it or not. You can’t change them. New businesses should use a SWOT analysis as a part of their planning process. There is no “one size fits all” plan for your business, and thinking about your new business in terms of its unique “SWOTs” will put you on the right track right away, and save you from a lot of headaches later on. To get the most complete, objective results, a SWOT analysis is best conducted by a group of people with different perspectives and stakes in your company. Management, sales, customer service, and even customers can all contribute valid insight. 


Tag-along rights are the contractual obligation that if a majority shareholder sells their stake in a business then the minority holders have the right to sell their stake on the same terms and conditions as the majority shareholder. In early-stage investing, business angels and syndicates of investors consider tag-along rights as one of the basic investor protections they will not invest without.

Term Sheet means a non-binding agreement setting forth the basic terms and conditions under which an investment will be made. A term sheet serves as a template to develop more detailed legal documents. They generally cover the more important aspects of a deal, without going into every minor detail and contingency covered by a binding contract. For example, a term sheet from a venture capital company or angel group that is investing in an early-stage company may contain such details as the amount of investment, the percentage stake sought, anti-dilutive provisions and pre-money valuation. A term sheet can be as simple as a non-binding bullet-point document that outlines the basic terms and minimum conditions under which an investment into a company will be made.

Business Traction refers to the progress of a start-up company and the momentum it gains as the business grows. There is no one way to measure traction; however, companies usually rely on customer response and revenue as indicators of their success. The reasoning behind developing traction is to grow the business while meeting specific company goals and objectives. While traction may be a seemingly abstract concept, it is important and helps a company understand where it stands in an industry and where it would like to be. While the concept of traction is important for the company founders and employees, it is of equal importance to investors or other stakeholders who have an interest in the organization. The higher the traction, the more investors are attracted to the organization. Consequently, the more investors, the more funds are available to help your business succeed. Therefore, developing a high level of business traction is important to any start-up business and should be a large part of its business growth plan. Understanding the future of the organization, developing specific goals and a means to reach those goals, is the first step for successful start-up. To measure traction, the company needs to understand what metrics it will use to define success. Depending on the industry and external marketplace factors, traction may be measured through sales, customer response or market research. While there are many reasons start-ups fail, one of the most common is lack of a saleable product or brand awareness.


Unsecured Loan. A loan that is not supported by any type of collateral.


Voting rights are rights granted by the holding of a share or shares in a company that grant the holder the option to vote in relation to certain issues as provided in the law or the shareholders agreement.

Valuation. The process of determining the current worth of an asset or company. There are many techniques that can be used to determine value, some are subjective and others are objective. Valuation of start-ups is at best an educated guess with the goal of setting an attractive price for the people you want to invest in the Company while maintaining sufficient participation in the Capital to keep the founders motivated to build the Company. The valuation tools and methods can vary between valuators, businesses and industries. Common approaches to business valuation include review of financial statements, discounted cash flow models, and similar company comparisons.

Venture Capital is a source of capital provided by investors accepting a high degree of risk for start-ups not having access to traditional capital.

Voting Shares means the issued and outstanding Share capital of the Company having the right to vote at any meeting of Shareholders of the Company.


Warrant means a type of security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame.


45-316 Notice means Multilateral CSA Notice 45-316 (Start-up Crowdfunding Registration and Prospectus Exemptions) including the accompanying forms and explanations which can be found at