Category Archives: Entrepreneurs and Start-ups

Lending Loop Surpasses $10M in Loans to Small Businesses Across Canada

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Lending Loop | | Oct 18, 2017

TORONTO Oct. 18, 2017 – Lending Loop has officially helped provide financing of more than $10 million to small businesses across Canada. To date, the company, which is Canada’s premier peer-to-peer (P2P) lending platform, has helped over 180 small businesses in a variety of industries access funding to expand their businesses.

Speaking on the achievement, Lending Loop co-founder and CEO Cato Pastoll said:

“We’re excited to have hit this milestone in such a short period of time. It wouldn’t have been possible without the support of our rapidly growing community of 12,000 Canadians who are all helping to contribute to our collective success. Everyone knows how important small businesses are to the continued growth of our economy and we’re proud to be playing a part in helping their growth.”

Lending Loop’s unique P2P lending model allows Canadians across the country to lend their money to small businesses posted on Lending Loop’s online marketplace. These investors derive their return from the interest rate attached to each loan, which in turn corresponds to the risk rating of that business. By cutting out the banks and the middlemen, Lending Loop loans are often significantly more affordable than loans from other financial providers, with rates starting as low as 5.9%.

See:  Lending Loop launches “Auto-Lend” after raising new round of funding

When asked about the milestone, Lending Loop co-founder and CTO Brandon Vlaar said that:

“Our team is deeply passionate about helping the small business community thrive. We’re looking forward to helping even more small businesses learn about our better way to borrow, while also educating Canadians about how they can grow their wealth through this new and exciting investment opportunity.”

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit www.ncfacanada.org.

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It’s Official – Google District – Ground Breaking – Today

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LinkedIn Pulse | Sydney Eatz | Oct 17, 2017

Google parent company Alphabet announces ground breaking Sidewalk Labs - Google District

The neighbourhood of the future.  Remember - May 11th - 2017 - this article from Co-moderator of Google Local guides moderator. Richard Trus - reprinted with his permission

With the recent announcement that Sidewalk Labs LLC, the urban innovation unit of Alphabet Inc, has applied to develop the 12 acre site Quayside property there have been many who have been scratching their heads.

What is a Google District? Why Toronto?

Don't worry if you don't get it - what is Google up to? Google is known for research and development and coming out with projects that in the beginning pivot into larger products for the company. Most of these Google products become part of your daily routine. If you have ever used Streetview - the companion to Google Maps that let's you see panorama's of where you are going in 360 - well that project started out 17 years ago as the Stanford City Block project.

See:  Canada is North America’s up-and-coming startup center

For the past 17 years pre-visualization has slowly taken form in projects across North America. Pre-visualization is a requirement for simulation and training that are used by major corporations and governments now.

Having been involved in one of the largest pre-visualization projects in the world - the product you see, is often not necessarily the product that is produced. For example the military needs to train soldiers. In order to get the assets (video of explosions, gun fire, helicopters) they partner with film and television companies. So you as the consumer see the final product of a movie like Terminator, while the pre-visualization assets are used by the military in training. It's a win-win scenario as the cost of film production is subsidized to produce content for pre-visualization and it gives both the movie viewer and the soldier trainee a high quality video to experience.

Moving to the Google District Toronto - pre-visualizing decisions in cities has always been an expensive proposition. There was no way to test alternatives for example of building a subway line and the economic benefits or problems associated with it, until you actually built the subway.

Now with pre-visualization you can use a 3D model of the city to test out A/B testing and find the best route, the problems to avoid and how to best accomplish city planning goals.

See:  4 reasons you should move your startup to Toronto today

For the past year a group that I have been one of the moderators have been building a 3D model of the city of Toronto as the progression of technology has always followed three stages. Text - Image - Sound - Video - 3D - this has been repeated in industries over and over again. Industries progress in a linear fashion in media - the newspaper - to telegraph - to radio - to TV - to Internet 3D.

The world of Maps is also making that transition - from paper maps now to 3D - both panorama's to complete 3D models. A mentor of mine once described it best as the "Long nose of Innovation" that any technology that is going to impact our lives today is technology that has been around for at least 10 years.

So as pre-visualization seems new to most - it has been around for almost 25 years. One of the problems was that 25 years ago - a terrabyte of storage didn't exist, internet connection was starting, and there were no mobile devices. So many of us had to wait for the technology to catch up to fix the problems that prevented technology like pre-visualization to be used by the masses.

Why Toronto?  Toronto is now one of the best mapped cities in the world. Recently Toronto placed 4th worldwide in a Global competition

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit www.ncfacanada.org.

 

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Five common options for financing your small business

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Financial Post | Danny Bradbury | Oct 10, 2017

Which method you choose depends on your company's current situation and its goals

For most small businesses, financing can be a challenge. Whether you need bridge capital to keep the business running in tough times, or structured debt for long-term growth, it pays to have a strategy for seeking out those elusive financing dollars. Statistics Canada found that just over half (51.3 per cent) of businesses requested external financing in 2014.

Equity-based financing options like venture capital often make the headlines, but less than one per cent of small businesses requested this in 2014. Debt-based financing is far more common, as is trade credit from suppliers.

Here are five financing options to turn to, depending on the type of small business you run, and its situation.

Bootstrapping

Funding yourself is a long-established and responsible way to get a small business off the ground. Bootstrappers are risk takers but also lateral thinkers. Rather than saddling themselves with debt or giving up ownership of their small company, they will use their own savings and potentially sell some assets to help finance their business in the early days.

Bootstrappers may work a side gig until they are confident that their new business idea has the legs to stand on its own. They may pre-sell products and services to help fund early-stage development. The successful ones cleave to one overarching principle: get to revenue quickly. If you’re going to bootstrap your company, the only thing that counts is the sale.

Small business loan

A small business loan is the most traditional route for those taking a debt-based approach to small business financing. Banks are often a first port of call, although they are naturally conservative, and they understand the higher risk involved with smaller operations that may have little to no credit history or collateral. This can make bank loans difficult to secure and could drive businesses toward such alternative lenders as OnDeck. Always ensure you understand the exact terms – and your payment commitments – before agreeing to a loan.

In Canada, another option is the government’s Small Business Financing Program, which provides up to $1 million in financing for purchasing or improving land, property or equipment. There are limitations though: working capital, inventory, labour and advertising are all excluded under this initiative.

Friends and family

If conditions from a financial institution are not to your liking, you could always borrow money from the Bank of Mom & Dad. Friends and family funding is a common way for small, high-growth businesses to get started, but it comes with some baggage.

See:  Current Fintech, Altfi, P2P, ICO, Crowdfunding News

It’s easy for money issues to cloud personal relationships, so small business people pursuing friends and family financing must be careful not to let emotion get in the way. Set out clear expectations around loan terms, including a percentage and payback date. Just because you were raised by those doing the lending doesn’t mean you can do away with legal advice. It keeps everyone on the same page.

Angel investors

Small business owners willing to give up some equity can go in search of an angel investor. These full-or part-time investors put their own money into early-stage businesses, hoping for future return if they succeed.

You may give up part ownership of your company to these investors, but they often bring contacts and experience difficult to find elsewhere. It also means that you aren’t saddled with loan payments that can cripple your cash flow. AngelList connects investors with startups, while Canada’s National Angel Capital Organization has a directory of potential investors.

These investors suit entrepreneurs with high-growth businesses and a clear exit strategy. Would-be Mark Zuckerbergs should apply. Owners of family-run laundromats with no plans to take over the world should look elsewhere.

Crowdfunding

If your business idea is that good, why not spread it around? Crowdfunding is a growing financing model, with $133 million raised in 2015 alone, according to a report from the National Crowdfunding Association of Canada. Consumer-focused businesses with some digital element to their products or services tend to do well with this model.

See:  VanFUNDING 2017 - NOV 28 Vancouver:  Raise Funding for Your Business leveraging All the Latest Methods

You can crowdfund using two broad approaches: reward/donation-based models, or debt/equity funding. The former are unregulated outside of traditional consumer protection and business laws. Selling equity in the company or taking loans with some promise of payback will bring you under regulatory scrutiny, but is still possible in some regions.

The Government of Canada’s Canada Business Network says equity crowdfunding is currently an option in British Columbia, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia. Conditions vary between provinces and depend on exactly how your crowdfunding process works.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit www.ncfacanada.org.

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Where is technology taking the economy?

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McKinsey&Company | By W. Brian Arthur | Oct 2017

We are creating an intelligence that is external to humans and housed in the virtual economy. This is bringing us into a new economic era—a distributive one—where different rules apply.

A year ago in Oslo Airport I checked in to an SAS flight. One airline kiosk issued a boarding pass, another punched out a luggage tag, then a computer screen showed me how to attach it and another where I should set the luggage on a conveyor. I encountered no single human being. The incident wasn’t important but it left me feeling oddly that I was out of human care, that something in our world had shifted.

That shift of course has been going on for a long time. It’s been driven by a succession of technologies—the Internet, the cloud, big data, robotics, machine learning, and now artificial intelligence—together powerful enough that economists agree we are in the midst of a digital economic revolution. But there is less agreement on how exactly the new technologies are changing the economy and whether the changes are deep. Robert Gordon of Northwestern University tells us the computer revolution “reached its climax in the dot-com era of the 1990s.” Future progress in technology, he says, will be slower.

So in what way exactly are the new technologies changing the economy? Is the revolution they are causing indeed slowing—or is it persistent and deep? And if so how will it change the character of the economy?

I argued a few years back that the digital technologies have created a second economy, a virtual and autonomous one, and this is certainly true. But I now believe the main feature of this autonomous economy is not merely that it deepens the physical one. It’s that it is steadily providing an external intelligence in business—one not housed internally in human workers but externally in the virtual economy’s algorithms and machines. Business and engineering and financial processes can now draw on huge “libraries” of intelligent functions and these greatly boost their activities—and bit by bit render human activities obsolete.

See:  The Age of Artificial Intelligence in Fintech

I will argue this is causing the economy to enter a new and different era. The economy has arrived at a point where it produces enough in principle for everyone, but where the means of access to these services and products, jobs, is steadily tightening. So this new period we are entering is not so much about production anymore—how much is produced; it is about distribution—how people get a share in what is produced. Everything from trade policies to government projects to commercial regulations will in the future be evaluated by distribution. Politics will change, free-market beliefs will change, social structures will change.

We are still at the start of this shift, but it will be deep and will unfold indefinitely in the future.

The third morphing

How did we get to where we are now? About every 20 years or so the digital revolution morphs and brings us something qualitatively different. Each morphing issues from a set of particular new technologies, and each causes characteristic changes in the economy.

The first morphing, in the 1970s and ’80s, brought us integrated circuits—tiny processors and memory on microchips that miniaturized and greatly speeded calculation. Engineers could use computer-aided design programs, managers could track inventories in real time, and geologists could discern strata and calculate the chance of oil. The economy for the first time had serious computational assistance. Modern fast personal computation had arrived.

The second morphing, in the 1990s and 2000s, brought us the connection of digital processes. Computers got linked together into local and global networks via telephonic or fiber-optic or satellite transmission. The Internet became a commercial entity, web services emerged, and the cloud provided shared computing resources. Everything suddenly was in conversation with everything else.

It’s here that the virtual economy of interconnected machines, software, and processes emerges, where physical actions now could be executed digitally. And it’s also here that the age-old importance of geographical locality fades. An architecture firm in Seattle could concern itself with the overall design of a new high-rise and have less expensive workers in Budapest take care of the detailing, in an interactive way. Retailers in the United States could monitor manufacturers in China and track suppliers in real time. Offshoring took off, production concentrated where it was cheapest—Mexico, Ireland, China—and previously thriving home local economies began to wither. Modern globalization had arrived and it was very much the result of connecting computers.

The third morphing—the one we are in now—began roughly in the 2010s, and it has brought us something that at first looks insignificant: cheap and ubiquitous sensors. We have radar and lidar sensors, gyroscopic sensors, magnetic sensors, blood-chemistry sensors, pressure, temperature, flow, and moisture sensors, by the dozens and hundreds all meshed together into wireless networks to inform us of the presence of objects or chemicals, or of a system’s current status or position, or changes in its external conditions.

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These sensors brought us data—oceans of data—and all that data invited us to make sense of it. If we could collect images of humans, we could use these to recognize their faces. If we could “see” objects such as roads and pedestrians, we could use this to automatically drive cars.

As a result, in the last ten years or more, what became prominent was the development of methods, intelligent algorithms, for recognizing things and doing something with the result. And so we got computer vision, the ability for machines to recognize objects; and we got natural-language processing, the ability to talk to a computer as we would to another human being. We got digital language translation, face recognition, voice recognition, inductive inference, and digital assistants.

What came as a surprise was that these intelligent algorithms were not designed from symbolic logic, with rules and grammar and getting all the exceptions correct. Instead they were put together by using masses of data to form associations: This complicated pixel pattern means “cat,” that one means “face”—Jennifer Aniston’s face. This set of Jeopardy! quiz words points to “Julius Caesar,” that one points to “Andrew Jackson.” This silent sequence of moving lips means these particular spoken words. Intelligent algorithms are not genius deductions, they are associations made possible by clever statistical methods using masses of data.

Of course the clever statistical techniques took huge amounts of engineering and several years to get right. They were domain specific, an algorithm that could lip read could not recognize faces. And they worked in business too: this customer profile means “issue a $1.2 million mortgage”; that one means “don’t act.”

Computers, and this was the second surprise, could suddenly do what we thought only humans could do—association.

The coming of external intelligence

It would be easy to see associative intelligence as just another improvement in digital technology, and some economists do. But I believe it’s more than that. “Intelligence” in this context doesn’t mean conscious thought or deductive reasoning or “understanding.” It means the ability to make appropriate associations, or in an action domain to sense a situation and act appropriately. This fits with biological basics, where intelligence is about recognizing and sensing and using this to act appropriately. A jellyfish uses a network of chemical sensors to detect edible material drifting near it, and these trigger a network of motor neurons to cause the jellyfish to close automatically around the material for digestion.

Thus when intelligent algorithms help a fighter jet avoid a midair collision, they are sensing the situation, computing possible responses, selecting one, and taking appropriate avoidance action.

There doesn’t need to be a controller at the center of such intelligence; appropriate action can emerge as the property of the whole system. Driverless traffic when it arrives will have autonomous cars traveling on special lanes, in conversation with each other, with special road markers, and with signaling lights. These in turn will be in conversation with approaching traffic and with the needs of other parts of the traffic system. Intelligence here—appropriate collective action—emerges from the ongoing conversation of all these items. This sort of intelligence is self-organizing, conversational, ever-adjusting, and dynamic. It is also largely autonomous. These conversations and their outcomes will take place with little or no human awareness or intervention.

See:  For Canada’s tech to thrive, startups must grow up

The interesting thing here isn’t the form intelligence takes. It’s that intelligence is no longer housed internally in the brains of human workers but has moved outward into the virtual economy, into the conversation among intelligent algorithms. It has become external. The physical economy demands or queries; the virtual economy checks and converses and computes externally and then reports back to the physical economy—which then responds appropriately. The virtual economy is not just an Internet of Things, it is a source of intelligent action—intelligence external to human workers.

This shift from internal to external intelligence is important. When the printing revolution arrived in the 15th and 16th centuries it took information housed internally in manuscripts in monasteries and made it available publicly. Information suddenly became external: it ceased to be the property of the church and now could be accessed, pondered, shared, and built upon by lay readers, singly or in unison. The result was an explosion of knowledge, of past texts, theological ideas, and astronomical theories. Scholars agree these greatly accelerated the Renaissance, the Reformation, and the coming of science. Printing, argues commentator Douglas Robertson, created our modern world.

Now we have a second shift from internal to external, that of intelligence, and because intelligence is not just information but something more powerful—the use of information—there’s no reason to think this shift will be less powerful than the first one. We don’t yet know its consequences, but there is no upper limit to intelligence and thus to the new structures it will bring in the future.

How this changes business

To come back to our current time, how is this externalization of human thinking and judgment changing business? And what new opportunities is it bringing?

Some companies can apply the new intelligence capabilities like face recognition or voice verification to automate current products, services, and value chains. And there is plenty of that.

More radical change comes when companies stitch together pieces of external intelligence and create new business models with them. Recently I visited a fintech (financial technology) company in China, which had developed a phone app for borrowing money on the fly while shopping. The app senses your voice and passes it to online algorithms for identity recognition; other algorithms fan out and query your bank accounts, credit history, and social-media profile; further intelligent algorithms weigh all these and a suitable credit offer appears on your phone. All within seconds. This isn’t quite the adoption of external intelligence; it is the combining of sense-making algorithms, data-lookup algorithms, and natural-language algorithms to fulfill a task once done by humans.

In doing this, businesses can reach into and use a “library” or toolbox of already-created virtual structures as Lego pieces to build new organizational models. One such structure is the blockchain, a digital system for executing and recording financial transactions; another is Bitcoin, a shared digital international currency for trading. These are not software or automated functions or smart machinery. Think of them as externally available building blocks constructed from the basic elements of intelligent algorithms and data.

See:  Beyond cryptocurrency: There are new blockchain opportunities for SMBs

The result, whether in retail banking, transport, healthcare, or the military, is that industries aren’t just becoming automated with machines replacing humans. They are using the new intelligent building blocks to re-architect the way they do things. In doing so, they will cease to exist in their current form.

Businesses can use the new opportunities in other ways. Some large tech companies can directly create externally intelligent systems such as autonomous air-traffic control or advanced medical diagnostics. Others can build proprietary databases and extract intelligent behavior from them. But the advantages of being large or early in the market are limited. The components of external intelligence can’t easily be owned, they tend to slide into the public domain. And data can’t easily be owned either, it can be garnered from nonproprietary sources.

So we will see both large tech companies and shared, free, autonomous resources in the future. And if past technology revolutions are indicative, we will see entirely new industries spring up we hadn’t even thought of.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit www.ncfacanada.org.

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Why Does Sweden Have So Many Start-Ups?

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The Atlantic | Alana Semuels | Sep 28, 2017

 

How a tiny country with high government spending bred a large number of vibrant young businesses

STOCKHOLM—This is a high-tax, high-spend country, where employees receive generous social benefits and ample amounts of vacation time. Economic orthodoxy would suggest the dynamics of a welfare state like Sweden would be detrimental to entrepreneurship: Studies have found that the more a country’s government spends per capita, the smaller the number of start-ups it tends to have per worker—the idea being that high income taxes reduce entrepreneurs’ expected gains and thus their incentive to launch new companies.

And yet Sweden excels in promoting the formation of ambitious new businesses, on a level that’s unexpected for a country whose population of roughly 10 million puts it at 89th in the world in population size. Global companies like Spotify, the music-streaming service; Klarna, the online-payment firm; and King, the gaming company, were all founded here. Stockholm produces the second-highest number of billion-dollar tech companies per capita, after Silicon Valley, and in Sweden overall, there are 20 start-ups—here defined as companies of any size that have been around for at most three years—per 1,000 employees, compared to just five in the United States, according to data from the Organization for Economic Cooperation and Development (OECD). “What you see is that start-ups have a high survival rate in Sweden, and they have relatively fast growth,” Flavio Calvino, an OECD economist, told me.

Sweden also ranks highest in theFor Canada’s tech to thrive, startups must grow up developed world when it comes to perceptions of opportunity: Around 65 percent of Swedes aged 18 to 64 think there are good opportunities to start a firm where they live, compared to just 47 percent of Americans in that age group.

Producing start-ups matters for any economy that strives for efficiency, job creation, and all-around dynamism, but it is especially relevant for countries, such as the U.S., where new-business creation has slowed. Despite the current cultural fascination with start-ups, only 8 percent of all firms in the U.S. meet that definition today, compared to 15 percent in 1978. In Sweden the trend is reversed: The pace of new-business creation has been accelerating since the 1990s. As the U.S.’s GDP growth remains sluggish, Sweden’s economy grew at a rate of 4 percent in 2015 and 3 percent in 2016—a big jump, even considering that its economy is a lot smaller than the U.S.’s to begin with. And Sweden’s GDP has also outperformed that of other major European countries since the mid-1990s. So, what has Sweden been doing right?

See:  For Canada’s tech to thrive, startups must grow up

There are several dimensions to answering that question, many of which involve changes that took place in the past 30 years. Since 1990, Sweden has made it easier for upstarts to compete with big, established firms. The 20th-century economist Joseph Schumpeter theorized that economies thrive when “creative destruction” occurs, meaning new entrants are able to replace established companies. Sweden used to have a heavily regulated economy in which public monopolies dominated the market, which made it difficult for such replacements to occur, but regulations have since been eased. While Sweden was making it harder for monopolies to dominate the market, the U.S. was changing its regulatory landscape to favor big companies and established firms (largely through overturning anti-monopoly laws and permitting industry consolidation), argues Lars Persson, an economist at Sweden’s Research Institute of Industrial Economics who has studied new-business creation in Sweden.

Sweden’s reforms were a response to a financial crisis in the 1990s, when GDP growth sank, unemployment spiked, and the government, in an effort to avoid devaluation of its currency, raised interest rates to 500 percent. To jump-start economic growth, the government deregulated industries including taxis, electricity, telecommunications, railways, and domestic air travel to increase competition, according to Persson. Deregulation helped lower prices in industries such as telecommunications, which attracted more customers. Some public services such as elder care and primary education were outsourced to private firms. So-called “product market reforms” made it easier to license new companies, and helped force inefficient legacy firms out of the market, Persson said. A new Competition Act in 1993 sought to block big mergers and anti-competitive practices. “The general lesson is that if you make it more difficult for monopolies to dominate the market, then you will have new firms entering the market,” according to Pontus Braunerhjelm, a professor of economics at Sweden’s Royal Institute of Technology.

Sweden also gives some credence to the controversial idea that cutting corporate tax rates can help stimulate entrepreneurship. The reforms of 1991 lowered corporate income taxes from 52 percent to 30 percent. (Sweden’s corporate tax rate today, at 22 percent, is much lower than the U.S.’s 39 percent, though few companies actually pay a rate that high.) Before the reforms of the 1990s, Sweden favored established companies over individuals who wanted to start a business in a number of ways: Individuals in Sweden had to pay taxes on their firm’s income and their own income from the business, while established businesses had a number of ways to reduce this double taxation.

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The reforms “considerably” leveled the playing field, Persson said. “Until 1991, the Swedish tax system disfavored new, small, and less capital-intensive firms while favoring large firms and institutional ownership,” Persson wrote in a paper last year. In the 2000s, Sweden also got rid of its inheritance tax and a tax on wealthy people, which further incentivized people to earn large sums of money and, often, invest it back into the economy. “There was more capital available, so angel investors started to appear,” Braunerhjelm said. Today, there are significant tax breaks for starting and owning a business; for example, entrepreneurs can now have a larger share of their income taxed as capital income, which has a lower tax rate.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit www.ncfacanada.org.

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How to Think About Your Business Model and Pitch It to Investors

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Greylock Partners Blog | Sarah Guo | Aug 15, 2017

What do Investors look for in a pitch?

Founders will often ask me, “Do you want to go through our deck?”

It’s not about the slide deck. We have made the decision to invest in entrepreneurs without slides, whose ambition, passion, depth of understanding of a opportunity and compelling vision come through crystal-clear in conversation.

But…that’s a high bar for communication. Most of the time, putting a business plan on paper helps you structure a conversation and spread knowledge without having the same conversation repeatedly. Most importantly, it clarifies your own thinking as a leader, and is a great way to get your team on the same page — with a singular vision for your company and a shared plan for execution.

After giving this talk to several groups in our network, I’m sharing the slides here in an attempt to demystify one of the most common questions founders have and spread some tribal knowledge — what do I look for in a pitch?

Each stage of company building carries different risks, from a maniacal focus on defining an initial product and just shipping it, to the iteration of finding product-market fit. Next comes figuring out how to grow the user or customer base efficiently and consistently — and then when you have that growth formula, pushing as fast (often much faster) than you can manage — in order to achieve market leadership and establish your defensible moats. If the customer base grows, then you suddenly need to build a company that can support that growth — an executive team of leaders and an organization that can operate and adapt effectively without the founder driving every decision. Finally, if you’re right, lucky and have executed exceptionally well, you prepare to face the public markets, navigating the IPO process and becoming an enduring, public company.

The company-building path rarely looks as up-and-to-the-right as this chart above. I think of it more like climbing mythical Space Mountain — one with constant landslides, at log-scale, in 4-dimensional space.

We have enormous respect for the founders who attempt this climb. Few other jobs require you to scale like a startup does — growing and remaking yourself as a leader and your organization 2x, 5x, 10x per year, for multiple years on end. Without breaking it completely. We don’t expect people to have all the answers. But in this post, I’m going to focus on what I look for, especially in Series A companies.

See:  The Michael Hyatt Method for Growing and Selling Companies

What’s the difference between a great idea, and a early-stage VC-fundable business?

Before you try to raise venture funding — confirm that option makes sense for you. Success in partnership with investors is about aligned incentives, vision, and personal chemistry. More on that here.

Ok, so let’s say you think you have a venture-backable idea. One of the first things I will try to do is understand if there a market need for the product you are building.

Some entrepreneurs validate customer need through years of having lived the problem. Others go native with users — survey and interview them, show mocks and prototypes, do demand testing by “selling” or advertising a product they haven’t built yet, even get customers to partner and co-develop with them. There’s no replacement for shipping a product and getting adoption, engagement and revenue data. But that is often expensive (especially for an enterprise-quality product), and getting feedback and direction along the way is incredibly valuable. What’s your feedback cycle? How will you convince yourself, and a VC, that the opportunity is real? You don’t need that much money to get useful feedback.

I don’t expect founders to go through each bullet in the above chart at the Series A, but they should have a point of view on how they’ll reach and convince customers to use and buy what they’re offering. “Winning on product” alone is a rare, minority case. At Greylock, obsess about distribution as much as product.

The transformative technologies of the past two decades — the internet and mobile — are new forms of distribution for technology, and huge companies have risen with them. Many of the internet and enterprise giants today are hard to attack because of their distribution and reach to the customer, not because no engineering team can build something better. If you are thoughtful about distribution, you’ll immediately gain my confidence.

There’s a lot of information out there about how to get a meeting with a VC, so I won’t focus on that here — suffice it to say, cold pitches are viable. At Greylock I read cold emails, and take referrals, and meet founders serendipitously. Meeting entrepreneurs is a core part of my job, and if opportunities happen to arrive in my inbox without any work on my part — all the better.

Unfortunately, most cold emails aren’t very compelling. I’m much more likely to read through a 20-slide deck a founder emails me than a 200-page document. Invest in telling a clear story at different lengths. Your intro should either be a short deck, or 2 paragraphs that introduce the team, the idea, and why it’s special.

See:  Canadians need to come together to take our startup community forward

How do you introduce your company once you get a first meeting? I hesitate to show an outline, because investing isn’t a checklist decision, but I often get asked for one. The most important takeaway from this slide was that there are only a few key questions that make or break an investment. Some of the best pitches I’ve experienced have only lasted 20–30 minutes.

Do you deeply understand the user problem you’re solving? Who are you and why do you care? Can you explain your unique and compelling value proposition? Do you understand the landscape of what’s out there? Do you have some way of distributing that solution, positioning to that customer why they should care, and why it’s better and worth adopting vs. the competition? If and when others come after you, what are your moats?

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit www.ncfacanada.org.

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Beyond cryptocurrency: There are new blockchain opportunities for SMBs

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FinancialPost | By John Lorinc | Sept. 19, 2017

When the Bank of Canada and payments giant Moneris last spring threw cold water on a blockchain trial as a potential clearance system, Canadian startups could have been forgiven for feeling deflated.

But Canadian blockchain entrepreneurs might have cause for renewed optimism with the emergence of potential applications in a range of industries – beyond such cryptocurrencies as Bitcoin — as well as new investment vehicles.

In late August, blockchain guru Alex Tapscott told Bloomberg that NextBlock Global Ltd., a blockchain-directed venture capital fund, plans to raise $50 million in an IPO on the Toronto Stock Exchange later this fall. Meanwhile, four Canadian blockchain industry groups in June applied to the federal government for funding to establish a “supercluster” that would finance new R&D and attract startups.

See: Blockchain Will Disrupt Every Industry

While Bitcoin is almost a decade old, there’s been a surge this year in the issuance of new cryptocurrencies, including one in August by Montreal-based Impak Finance, according to Coin Market Cap data, which estimates there are over 800 in circulation now. Much of this activity depends heavily on the maturation of blockchain technology and platforms, such as Switzerland-based Ethereum, and has fuelled this sector’s wild west reputation as a haven for speculators.

Blockchain systems are digital “ledgers” that store encrypted transaction information in networks of specially designed servers. While the technology originally emerged to support Bitcoin, a growing number of startups are looking to adapt blockchain for use in such sectors as fintech, securities, insurance, natural gas, and supply chain applications. The technology is designed to create distributed databases of information that can expedite a wide range of transactions with greater speed and security than more centralized processing systems can offer.

“Within a few years, we’re going to be seeing practical applications for blockchain beyond cryptocurrency,” predicts Jeff Hindle, managing director of finance and commerce for MaRS, adding that these uses are more suitable for corporate customers. “That’s a different prediction than even a year ago.”

There’s lots of interest in Canadian blockchain firms, Hindle says. He points to Toronto startup Nuco.io, which this spring established a partnership with the TMX’s natural gas exchange to test a blockchain algorithm that expedites the verification of service agreements between suppliers and consumers. Nuco’s founders, he says, “understand the practical advantages and limitations of blockchain, which has allowed them to advise on the types of experiments that are suitable for the technology.”

See also: Don Tapscott Announces International Blockchain Research Institute

Another startup, Bluzelle, is looking to develop data-storage services based on blockchain techniques and expects to eventually raise capital through ICOs, according to founder Pavel Bains. The idea is to allow far-flung networks of specially configured servers to provide storage as a less expensive alternative to centralized cloud-based systems, which, the company says, are prone to downtime and vulnerable to data theft.

“A lot of these ventures are already interesting to investors from an R&D perspective,” says Hindle.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with both investment and social crowdfunding, blockchain ICO, alternative finance, fintech, P2P and online investing stakeholders across the country.  NCFA Canada provides education, research, leadership, support, and networking opportunities to over 1600+ members and works closely with industry, government, academia, community and eco-system partners and affiliates to create a vibrant and innovative online financing industry in Canada.  Learn more About Us or visit www.ncfacanada.org.

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