LaBarge Weinstein Quarterly: Fall 2014

November 4, 2014

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It’s hard to believe that October is over and that we’re heading into the final stretch of 2014. Since late-July, the team at LaBarge Weinstein assisted companies and investors in closing over $70 million in financing transactions! We also finalized two M&A deals.

As usual, our clients have also been busy. Here are some highlights from the past few months.

Ottawa-based GymTrack was among 29 companies selected from across the globe to participate in 500 Startups highly-regarded accelerator. With over 1,000 application received for the latest program, this was already quite the accomplishment. Being named one of TechCrunch’s 4 favourite companies at Demo Day last week was a well-deserved bonus!

Dr. Sue Abu-Hakima, CEO of Amika Mobile, was recently named as a Top 25 Women of Influence™ for 2014 by North America’s leading organization dedicated to the advancement of women. Sue was one of five women acknowledged for their contribution and influence in business.

Earlier this month, TinyMob Games launched Tiny Realm Battlegrounds, which quickly skyrocketed to the top of the Apple Store becoming “Best New App” in 100 countries.

In mid-August, Health Canada granted Park Lane Farms of Niagara-on-the-Lake permission to grow medical marijuana under the “Marihuana for Medical Purposes Regulations (MMPR). Having been acquired by Tweed Marijuana Inc. back in June, this approval makes Tweed the first geographically diversified, multi-licensed producer in the country.

Scribble Technologies recently completed the acquisition of rival CoveritLive from Demand Media, effectively bringing together two of the most innovative content engagement technologies into one. This acquisition makes ScribbleLive the leading end-to-end content engagement platform, helping technology companies with all of their content marketing needs.

Deal Flow Report

Here is a sample of recent publicly-announced transactions that we’ve worked on over the past three months:

Firm and Staff News

We are pleased to announce that two of our founding partners, Debbie Weinstein and Randy Taylor, were recently named to the Best Lawyers in Canada list by Best Lawyers International®.

After being nominated by clients Picatic and Keshet Technologies, as well as our friends at CazaSaikaley, the team at LaBarge Weinstein took the ALS Ice Bucket Challenge. In additional to everyone’s individual contributions, the partners generously donated $100 per person for those who participated.

LW’s involvement with a number of business accelerators and startup organizations throughout North America really keeps us on the move. Over the past few months, we ran a legal workshop for the current cohort at Planet Hatch in New Brunswick; hosted the official Grow Conference after party in Whistler; met with some of Canada’s most promising tech companies at C100’s CEO Summit in Silicon Valley; held our annual “Suits Off Social” during the Banff Venture Forum; and attended the Techtoberfest activities in Kitchener-Waterloo.

The next two months will be no exception! Before the end of the year, we will be in Toronto for a number of events surrounding the Canadian Innovation Exchange, including our sponsorship of Communitech’s Hyperdrive 401 series. We are also hosting the Launch36 Demo Day after party in Fredricton and sponsoring FounderFuel’s Demo Day in Montreal.

Version One Ventures Closes $35 Million Second Fund

Vancouver-based early stage investment fund Version One Ventures has raised $35 million for Fund II. Led by Boris Wertz, the venture firm secured the funding from Northleaf Venture Catalyst Fund, BDC Capital, as well as existing investors who participated in their original $19 million fund.

Second fund investments are set to start right away, with approximately 20 to 25 Seed and Series A investments planned. Individual investment sizes will range between $500,000 and $1 million per opportunity.

According to Wertz, the first fund was more narrowly focused on companies in the SaaS and mobile spaces, whereas Fund II will branch out to new markets including healthcare, cryptocurrency, and government 2.0.

The collective valuation of Version One Venture’s current portfolio is over $600 million, with Fund I startups raising over $130 million since Version One Ventures’ initial investment.

What is a Family Trust?

The concept of a family trust is often raised to founders of a startup as an alternative to holding their shares in their new company personally, but what is a family trust?

A family trust is generally a legal relationship among three parties: the Settlor, the Trustees and the Beneficiaries. It is typically described in a document called a trust settlement. A trust can be used to separate legal and beneficial ownership of assets so that the person in control of the asset is not necessarily the person who benefits from the use of, or income from the asset. Still confused? Let’s break it down:

A trust is created by a person called a “Settlor” who creates the trust by providing property to the “Trustees” who become the legal owners of the property, which they manage on behalf of the Beneficiaries. The Settlor and the Trustees sign the trust settlement which outlines what the Trustees are permitted to do with the property held in trust. Once a Settlor provides the property to the Trustees and signs the trust settlement, the Settlor often has no further involvement with the trust.

The “Trustees” are the legal owners of the property settled on the trust by the Settlor, and they make all decisions with respect to the trust and the property held by the trust, within the parameters of the trust settlement. The Trustees must act in the best interests of the “Beneficiaries” at all times.

The “Beneficiaries” are those individuals and entities who will benefit from the property held by the trust. The trust settlement may provide that each Beneficiary gets a certain share of the trust property, or the trust settlement may provide the Trustees with broad discretion, such that the Trustees can distribute the trust property among the Beneficiaries as they see fit.

There are a number of special tax rules that apply or can apply to trusts, depending on what the trust is used for, that should be considered when the trust is put in place. As a result, it is important to consult your tax and legal advisors if you are considering using a trust.

Trusts can be used in many different contexts, but one popular use of trusts is to hold shares in a private corporation for tax and estate planning purposes. We’ll talk about the benefits of using a trust in this context in an upcoming blog post.

If you have questions or require further information about family trusts, please contact us and we will put you in touch with a member of our Taxation team.

Information Worth Sharing

The Funding Portal Launches New Cleantech Platform – The Funding Portal provides a comprehensive view of all private financing and government funding sources that are available in Canada. Every month, more than 17,000 Canadian organizations visit The Funding Portal.

Back in September, The Funding Portal announced the launch of their new Cleantech portal. “The new Cleantech portal will create a common destination and systems for matching cleantech investment opportunities into sources of financing,” said Teri Kirk, CEO of The Funding Portal. “Our partnerships with investor groups including NACO, NAO, and industry, play an important role in building out the portal as an investment hub for Canada’s innovations sector.”

According to the press release issued, cleantech ranks third in terms of attracting private sector investment, according to the findings of The Funding Portal in 2013. It is one of Canada’s highest growth sectors, attracting 187% more venture capital investment in 2013 than the year prior.