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Finding Alpha in Canada:
How Canadian Start Ups Produce
Extraordinary Returns
June 2017
CONFIDENTIAL & PROPRIETARY
More than money TM
CONFIDENTIAL & PROPRIETARY PAGE 2
Canada is open for business.
The Canadian Government will continue to
support and grow programs that make us
the most attractive to investors.
CONFIDENTIAL & PROPRIETARY PAGE 3
Finding Alpha: Canada
Macro: Canada
Economy
Creating the atmosphere
Higher returns with lower risk
Micro: Seed Fund
Uniqueness
Market advantage
How Alpha is Created
CONFIDENTIAL & PROPRIETARY PAGE 4
How Canada Creates Alpha
Macro: Canada
Leading economy in G7
Stable banking system
Most Immigration
Exchange rate
BDC
VCAP
BC High Tech fund
EDC, STDC, IRAP
Tax Credits: SRED, EBC
Incubators/Accelerators
Lower costs to start up
Faster time to scaling
Lower risk to investors
Shared interest in success
Better ideas
30% more - same US$
CONFIDENTIAL & PROPRIETARY PAGE 5
Evolution of Early Stage Funding
CONFIDENTIAL & PROPRIETARY PAGE 6
Start Up Investment Ecosystem: Silicon Valley
Business Plan Beta Profitability
$100 M
$50 M
$1MDEC
REA
SIN
G R
ETU
RN
DECREASING RISK
Idea Prototype Sales
Strategic Partners
Banks
REVENUES
STAGE
Incubators/Accelerators/
Angels
GovernmentF & F
Venture Capital
IPO
CONFIDENTIAL & PROPRIETARY PAGE 7
Start Up Investment Ecosystem: BC
Business Plan Beta Profitability
$100 M
$50 M
$1MDEC
REA
SIN
G R
ETU
RN
DECREASING RISK
Idea Prototype Sales
Strategic PartnersIPO
Banks
Traditional
Venture Capital
REVENUES
STAGE
Government
Incubators/Accelerators/
AngelsF & F
Early Stage Venture
Capital
CONFIDENTIAL & PROPRIETARY PAGE 8
How Canada Creates Alpha
Micro: Seed Fund
Dominant player strategy
Unique model; active
Execute traction program; scaling up sales and marketing
Sweat equity
Most experienced team
Laser focus on early stage
Sidecar investments
50% lower valuations
50% lower compensation costs
Capital efficiency via bootstrapping
5-10X ave deal increase
Faster time to exits
Lower fail rate
Lower risk to investors
Higher returns with lower risk
CONFIDENTIAL & PROPRIETARY PAGE 9
30% exchange rate bonus
50% lower compensation costs (vs Silicon Valley)
50% lower start up valuations (vs Silicon Valley)
40% of venture funding matched by Federal &
Provincial governments
US Investors are > 100% De-Risked
CONFIDENTIAL & PROPRIETARY PAGE 10
McCullagh Experience: > $9 Billion in Exits
550% return - 1.5 years
– 75% still held/unrealized
CEO or Senior Exec Investor
NAV January 31, 2017
~ 47% IRR
Current
Companies
100% return - 2 years
192% return - 2.5 years
– 40% still held/unrealized
Exited
Companies
InsureCert
PathGO
CONFIDENTIAL & PROPRIETARY PAGE 11
Canada Delivers Alpha
Macro: Canada
Economy
Creating the atmosphere
Higher returns with lower risk
Micro: Seed Fund
Uniqueness
Market advantage
How Alpha is Created
CONFIDENTIAL & PROPRIETARY
Connect with me on LinkedIn
Download the Value Accelerator TM Toolkit @
www.tenx.biz/downloads
Thank You
PAGE 12
