Category: Money

Can I Get Funding for My Startup with Just an Idea?

All startups begin with an idea. The greatest products and services on the market were at one time just a thought. Your idea has the potential to revolutionize an industry, but do you have the necessary funds to transform your idea into a business? Can you get funding for your startup with just an idea?

To prepare for success, you must understand where funding comes from and consider who can invest in your business idea. 

What is idea stage funding? 

For entrepreneurs, the idea stage is when you have to explore the feasibility of building your idea into a product or service and develop a minimum viable product (MVP) that can be tested, improved, and launched in your target market. 

Idea stage funding is the investment entrepreneurs receive before launching their product or service. The goal of this stage is to raise funds for a startup idea while developing marketing and sales plans to launch your business. 

Types of Funding for Your Startup Idea

1.Venture Capital

Venture capital (VC) is a type of private equity that provides funding to startups with growth potential in exchange for an equity stake. VC firms allow startups to expand and gain equities in the market, and typically require entrepreneurs to submit business proposals for their consideration.

2. Angel Investors

Attracting angel investors who are knowledgeable in your sector and have experience working with startups is a great route to take. They can financially invest in ideas and provide startup mentorship and business expertise to help you succeed.

To learn two other types of funding and if you can get funding without having a product, read our full blog!

3.Government Grants

There are many grants available to startup entrepreneurs and small businesses. However, grants may take time to be approved so you must plan your startup with that in mind. 

4.Loans

Financial institutions can offer various financing options for entrepreneurs and small businesses based on individual needs. Check if you are eligible for small business and micro-loans in your area. 

Can you get funding without a product?

The short answer is yes. But for this to happen, you must focus on finding investors who will invest in your ideas.

A crucial step to attract this type of investor is to be effective when networking including having an elevator pitch. If invited for a meeting with an investor, you should prepare a polished investment proposal that outlines the potential of your business idea with relevant information and research. 

You will also need a business plan with financial projections, and it helps if you have an active presence on social media so investors can see what you’re all about.

Who do I talk to if I have a business idea?

Talk to a startup incubator if you have a business idea but don’t know where to start. Their expertise can help refine your business ideas as well as connect you with the right investors.

6 Tips For Startup Business Taxes in Canada

Millions of Canadians work as employees at organizations and are used to filing standard annual income taxes —a fairly straightforward process for most people. As a new startup business owner, there are now new things to consider, know, and keep track of. 

We have provided 6 tips for startup business taxes to make this easy to navigate.

1. Know what expenses you can claim

When you are first getting your business off the ground, there are startup expenses you incur that are necessary for your business to operate. Many reasonable and legitimate expenses can be claimed as business startup tax deductions. Some of these items may include:

• Equipment and Technology
• Supplies
• Business fees and licenses
• Vehicle expenses
• Legal and accounting fees
• Insurance

2. Stay organized and TRACK EVERYTHING

One of the biggest tax tips we can provide to entrepreneurs is to always be organized. From every business expense to income earned, keep receipts and detailed records. The importance of keeping good records cannot be overstated enough for a few reasons: 

1. It is required by law to keep all records. Be aware of your responsibilities and how long you must keep records for, which is generally for a period of six years from the end of the last tax year they relate to.
2. It will make your life a lot easier and less stressful when it comes time to file your taxes. 
3. In the event you are audited by the Canada Revenue Agency, having clear and organized records will make this process much easier than if you cannot account for your business activities.

3. Be informed of all available tax credits

As a small business startup, tax credits can go a long way. Become familiar with all tax credits you are eligible for which may include:

• Canada Caregiver Credit
• Health Spending Account (HSA)
• Disability Tax Credit
• Canada Child Benefit

4. Balance your Dividend/Salary Mix 

As a startup business, you can withdraw money from your company either as a dividend or salary. Paying yourself a healthy salary provides an opportunity to maximize your RRSP, but you may also want to take out part of your pay as a dividend to take advantage of a lower tax rate. Knowing how to balance the two can maximize your earnings, but you must be aware that every startup business owner’s circumstances are different. What may be a great decision for one person may not be as smart for another.

5. Consider Income Splitting

Many startup business owners choose to pay family members a salary, as any salary paid out will count as a business deduction. However, the salary must be reasonable in relation to the position your family holds at your company. For example, a typical entry-level position should not be earning a salary that is well over the average in your region.

6. Determine what is best for your budget 

In the past you may have been an employee and taxes were deducted from every pay. This hopefully resulted in no large sum of taxes due at the end of the year. Now as a startup business owner, this does not happen. It is your job to determine what fits best within your startup budget. You may want to consider paying income taxes every month to avoid one large payment. This can be set up with the CRA and can be easier to manage throughout the year. 

Where do you find help with startup business taxes?

From year to year, there can be changes to tax law and tax credits available to startups. To keep up-to-date, we recommend choosing a CPA firm that understands startups and can advise you on what is best for your business.

In addition to acquiring the services of a tax professional, having a startup mentor is a great way to learn from someone who has been where you are in your journey, or has expertise to advise you to make smart choices. A startup incubator has experienced mentors, fantastic programs, knowledge, and opportunities to help you plan for startup taxes and aid in your company’s overall growth and success.

How to find investors for your startup business

Launching a startup business is a significant accomplishment. It takes lots of drive, commitment, and courage to transition your innovative idea into a legitimate business. But it is no secret that even the most passionate and brilliant entrepreneurs will face greater challenges if their businesses do not have proper financial support. Exploring how to find investors for your startup business, and more precisely, attracting ones that will have the expertise to take your company to the next level, is critical in your startup’s early stages to set yourself up for long-term success.

Where to find investors for your startup business

There are different types of investors for startups, each with its own set of perks. It is important when looking for investors for your startup business to recognize what stage your startup is currently in, how much funding you require, and if your company is what a particular investor will be looking to invest in.

Here we will look at three types of equity financing — receiving funding in exchange for a share of your company.

1.     Family and Friends

This avenue can be really attractive as the conditions of investment are typically more lenient and advantageous. There are many things to consider when approaching family and friends, but two of the most important are deciding whether your agreement will be a loan or an investment, and ensuring the terms of your agreement are clear.

For example, will they expect interest paid on the loan? If it is an investment, what percentage of future profits will they receive? Your terms must be clear and in writing so there is no confusion or problems down the road.

2. Angel Investors

Angel investors are people with significant disposable funds who seek promising investment opportunities. Typically, investment in your startup is exchanged for equity in your business. The difference between angel investors for startups and venture capitalists is they usually are not only interested in generating a return on their investment but are also invested in your company’s long-term future.

Angel investors not only can provide funding, but offer years of industry expertise that can be of equal value when working to grow and scale your business. Well-established angel networks like the Peterborough Region Angel Network located in Peterborough, Ontario, invest in promising startup businesses and care about helping companies achieve success.

3. Venture Capitalists

Venture capitalists are investors who provide businesses capital in exchange for benefits such as company equity, a seat on your board of directors, or a percentage of future profits. Venture capitalists can either be individuals or large firms and they gravitate toward startups with above-average growth potential.

How to get investors for your startup

With an overview of where to begin looking for investment opportunities, you may be wondering how to attract investors for startups and get them to invest.

The answer is networking.

Networking helps your startup business grow, and by attending industry events and forming connections you will gain knowledge about the best investment opportunities. Even if you do not network directly with investors, meeting other business owners and leaders opens up doors to get an introduction with an investor they may have in their network.

An effective way to increase your networking and connect with investors is through a startup incubator. Startup incubators host events and workshops, are closely connected with angel networks and offer knowledge and tips on how to successfully give a business pitch and secure investor funding.

Innovation Cluster Peterborough and the Kawarthas offers year-round networking and mentorship that helps startups find and attract investors. 

To learn more, visit https://www.innovationcluster.ca/.

How to Create a Startup Budget

Successful entrepreneurs know all too well that every dollar counts in the early stages of their business. However, only 54 percent of small businesses in the U.S. had a budget in 2021. Having a detailed and organized budget helps you be strategic with your spending and stay on track to achieve your goals. Here we will teach you how to create a startup budget that will allow your business to grow and succeed. 

What steps should you follow when creating a startup budget?

According to an October 2020 survey conducted by Shopify, startup business owners spend an average of $40,000 in their first year. However, this amount varies significantly as every startup has different needs. 

Budgeting for a small business startup can be overwhelming, but following these steps on how to do a startup budget for a small business can alleviate a lot of your stress. 

5 Steps to Building a Startup Budget:

1. Choose a budgeting tool that works best for your business

Budgets do not need to be fancy, but they need to meet the needs of your company as it grows and evolves. Microsoft Excel or Google Sheets may be sufficient right now, but you may want to consider using a startup budget template or startup budgeting software.

2. Set a budgeting goal

Set a realistic budget goal to keep you on track and quickly separate your essential expenses from wish list items.

3. Categorize and tally your expenses 

Separate your fixed costs and variable costs. 

Fixed costs include more finite expenses such as rent/mortgage, payroll, and insurance. Variable costs have some ‘wiggle room’ and include things such as materials, marketing, transportation, and travel. 

Now calculate your total. Remember that some costs may be one-time expenses and others may be recurring either monthly, quarterly, or annually.

4. Calculate your total revenue

As a startup, you may not have past sales to help forecast your revenue. For this reason, you should consider forming two sets of projections: One you hope for and the other more realistic. Potential sources of funding may include product or service sales, loans, savings, or investment income.

5. Compare your expenses and revenue

Have a detailed look at your expenses and compare them with your revenue. If your budget is far off from the goal you set in step # 2, decide which variable expenses you may not need at this point in time. These items can always be reintroduced as your revenue increases.  

Startup costs to consider

Every startup business is different and therefore no budget will look the same. However, there are some common startup business costs that every entrepreneur should be aware of.

8 Budget Items to Consider 

1. Office or Workspace: Rent/mortgage, furniture, office supplies, utilities, internet etc.
2. Equipment: Technology/Machinery
3. Incorporation Fees
4. Low-Cost Marketing
5. Website: Development & Maintenance
6. Payroll & Consulting Fees
7. Taxes
8. Emergency fund

If you are not confident with budgeting, the good news is you don’t have to navigate it alone. A full-service startup incubator can help you build and manage a budget that sets you up for success. 

Contact Innovation Cluster Peterborough and the Kawarthas to get started!

Angels: the "Secret Sauce" behind Ontario’s High-Growth Start-Ups

Our friends at the Network of Angel Organizations – Ontario (NAO-Ontario) in Toronto have just unveiled their “Angel Network Activity” report for 2012-13.
Download the 2012 Report on Angel Investing Activity in Canada in full here.

This 2012 report indicates a 41% increase in direct member investment into 77 new Ontario-based early stage companies.

An angel investor or angel is an affluent individual who provides capital for a business start-up, usually in exchange for equity – an ownership stake. Sometimes angel investors organize themselves into angel groups to share research and pool their investment capital, as well as to provide advice to their portfolio companies. Angel groups bring together their members for educational seminars and networking events, and conduct community outreach, bridging the information gap between investors and entrepreneurs. The organized Angel investors in these groups have significantly helped many early-stage companies fill their initial round of financing.

In fact, since 2007 members of the network have invested and leveraged $255 million of private direct investment into 169 Ontario companies, creating and sustaining more than 2,200 jobs. This $255 million is composed of $91.6 million in direct member investment and $163.3 million in co-investment and follow-on investment by other investors.

According to Jeffrey Steiner, Executive Director of NAO-Ontario: “Entrepreneurs still need the private sector for the capital and expertise needed to commercialize. By supporting the [Angel] network, the government provides entrepreneurs an opportunity to attract growth capital from private investors province-wide.”
“Angel-backed companies illustrate small business job creation at its finest and catalyze significant economic development throughout Ontario,” NAO-O board Chair, Dr.Patricia Lorenz told us.
Because Angel investors are indispensable catalysts of economic growth by helping early-stage companies fill their initial round of financing, the findings of the report will be of particular value to the Cluster’s start-up clients and Members, many of which rely on Angel investors for early-stage investments.

This is the main reason that the Innovation Cluster has formalized a strong strategic partnership with PRAN, the Peterborough Region Angel Network (PRAN is supported by NAO-Ontario).
Today, the Cluster and PRAN are actively collaborating to help raise investment for innovative Peterborough-based start-ups and early-stage entrepreneurial companies.
If you have a pitch you want to make to the Angels, start here:  https://gust.com/r/signup.
If you are interested in learning more about The Cube: Peterborough’s first best-practice technology business incubator for high-growth, high-potential technology start-ups, click HERE.

About NAO – Ontario
NAO – Ontario, a member of the Ontario Network of Entrepreneurs, is the Administrator of Ontario’s Angel Network Program, on behalf of the Government of Ontario. Since 2007 its mission has been to create and grow non-profit Angel investor groups for all the regions of Ontario. Building the membership and best practices of these groups builds a more potent combination of mentorship and capital for innovative start-up companies in the province. Angels are accredited investors who directly contribute both their money and their expertise into early-stage companies seeking growth in Ontario, leading to job creation and an expanding economy.

About PRAN

The Peterborough Region Angel Network is a privately driven initiative that brings together individual investors from the area. Peterborough Angels combine their wealth of knowledge and experience to collaborate and invest in early stage growth companies. Particular areas of focus for investment are green technology and life-science. Members are seeking involvement in challenging business situations and truly assisting client and community success. If you are an entrepreneur looking for funding, or an individual interested in joining the Peterborough Angels, please click HERE.

About the Greater Peterborough Innovation Cluster
The Innovation Cluster is a not-for-profit organization that exists to bridge the gap between scientific research and business by bringing together talent, knowledge, and investment to drive innovation-based economic growth and high-tech job creation in the Peterborough region.
We support our clients with partnership development; intellectual property protection; publicity; and access to public and private investment.
We also partner with academia and industry and provide support to start-up technology companies and entrepreneurs to help take innovative ideas and processes to market and to foster an environment fueled by innovation.

About The Cube: “incubating innovation, developing entrepreneurs”
The Cube is Peterborough’s first best-practice technology business incubator for high-growth, high-potential technology start-ups. With a mission to drive entrepreneurship, The Cube is Peterborough’s only incubation facility offering full residential and value-added business support services exclusively for early stage-stage and start-up technology companies. Helping new companies to get established, become sustainable, and then accelerate their growth, The Cube incubator program is aimed specifically at helping Peterborough’s entrepreneurs take the first step towards start-up success in the innovation and technology sector. To help these companies in their journey, the incubator provides access to office accommodation in a full-service suite; while also providing the tools, connections, training, education, coaching, mentorship, and professional expertise and services needed to be successful.
Interested in becoming part of this exciting new initiative?
Please contact the Innovation Cluster’s Commercialisation Officer, Joseph Miller at: jmiller@innovationcluster.ca or direct on tel. no.: (705) 748-1011 x 7081, for a confidential discussion and to request an Application Form.

Getting the Right Grant Funding for your Business

Finding the right funding programs for your business can be a challenge – to say the least!

As The Funding Portal points out: “There is a vast array of industrial stimulus programs offered by Canada’s federal, provincial and municipal governments”.
According to The Funding Portal’s “Industrial Stimulus Index”, Canada’s three branches of government disburse approximately $24 billion each year in funding to businesses and non-profits through grants, contributions, loans, vouchers, wage subsidies, and tax incentives.

Well, the good news is that the Greater Peterborough Innovation Cluster has launched its own “Grant List“: designed to help companies navigate their way through the complex world of applying for the right grant at the right time. The Cluster’s Grant List helps companies of all sizes dramatically reduce wasted effort and increase their chances of success in the application process.

For further information about the Grant List, or for guidance on applying for grants, please contact our Commercialisation Officer, Joseph Miller at: jmiller@innovationcluster.ca or direct on tel. no.: (705) 748-1011 x 7081.
For the purposes of clarifying some of the confusing terminology:

Grants are non-repayable financial contributions awarded by government.
Contributions are often repayable.
Although loans are more commonly associated with private financing, funds can also be loaned by a government agency to an organization, often with favourable repayment terms.
Vouchers are pre-paid funds flowing from a government agency to a research institution to conduct R&D, e-business or commercialization services on behalf of a business.
Wage subsidies represent funding to support all or part of an employee’s salary, and are generally applicable to persons with certain characteristics, such as students, interns, graduates, unemployed workers, people with disabilities, or aboriginal persons.
Finally, tax refunds and credits are a type of funding administered through the tax system to provide refunds or credits on eligible investments. The best-known tax incentive program is the $3.5-billion Scientific Research and Experimental Development (SR&ED) tax incentive, which supports R&D undertaken by Canadian businesses of all sizes and from all industry sectors.

Each of the more than 4,000 programs available to Canadians through these different funding instruments has its own set of objectives and eligibility criteria. While some funds may be open to all provinces and territories, others may focus solely on economic development in a certain region or even a certain city. Similarly, some funds may be open to businesses from all industry sectors and at all stages of growth, while others may be open only to innovative new tech start-ups, for example.

The Cluster’s Grant List is designed to help applicants overcome some of this confusion!

Companies can also make use the Portal’s free online search tool to perform a keyword search. To learn more: visit the Funding Portal website HERE!

About the Greater Peterborough Innovation Cluster
The Innovation Cluster is a not-for-profit organization that exists to bridge the gap between scientific research and business by bringing together talent, knowledge, and investment to drive innovation-based economic growth and high-tech job creation in the Peterborough region.
We support our clients with partnership development; intellectual property protection; publicity; and access to public and private investment.
We also partner with academia and industry and provide support to start-up technology companies and entrepreneurs to help take innovative ideas and processes to market and to foster an environment fueled by innovation.

Securing Investment for Start-ups

Here is a great article for entrepreneurs on securing investment dollars for their start-ups from The Biz Fix.
Summary: Entrepreneurs will be more attractive to investors if they are likable, deliver a crisp presentation and demonstrate some degree of traction. (“Traction is important because anyone can have an idea,” says Rishi Prabhu, one of the founders of Bespoke Post. “But to execute on it – that is what really shows that idea will work.”)

Check out the full story here: http://cnb.cx/15HeF42