HOT — Buyout and mezzanine funds: They’re loaded with cash and ready to deal as institutional investors pursue higher returns from established growth companies rather than the early-stage long shots most venture capitalists seek.
HOT — Angel capital: Risk-oriented angel investors are forming syndicates to share leads and spread the risk of investments in early-stage companies, making it easier to find and pitch to several angels at once. If you’re really good, you may persuade more than one to ante up.
HOT — Public venture capital: A new generation of junior public companies is raising startup and expansion capital via the TSX Venture Exchange. In 2005, TSXV companies raised $6 billion, almost triple the 2003 total. The exchange’s Capital Pool Company program enables ambitious young firms to avoid costly IPOs by listing on the Venture Exchange for just $60,000. And a surprising number are graduating to the TSX itself.
HOT — Venture debt: Early-stage high-growth companies can now qualify for subordinated-debt financing in lieu of equity-devouring venture investments. Restricted mainly to high-tech market leaders.
HOT — Asset-based lending: ABL is an increasingly attractive option for mid-market firms with solid collateral. The market is growing fast and becoming less costly as Canadian banks and U.S. specialists try to muscle into a long-overlooked sector.
COLD — Venture capital: VC investment in 2005 finished almost flat against 2004, as industry fundraising languished and U.S. VCs reduced their activity in Canada. The industry was also shocked by Ontario’s decision to phase out its 15% tax credit for investments in labour-sponsored funds.
COLD — Commercial lending: Observers expect the banks to tighten up on credit this year in the wake of high energy prices and the strong loonie, both of which are hurting exporters, manufacturers and those who sell to them.