New TCBC report examines best practices for Financing Cloud Businesses

Expert guidance de-mystifies the options available to cloud entrepreneurs, providing expert advice on a wide range of funding sources

The Toronto Cloud Business Coalition – a group of more than 70 Canadian experts drawn from the IT management, cloud services provider, channel, academic, VC/corporate finance and consulting communities – has published a new document examining best practices in funding cloud businesses.

The document was developed by a cross-functional working group with deep, unique perspectives on funding requirements and options. The group included:

  • Derek van der Plaat, managing director at Veracap M&A International, whose firm specializes in providing M&A and private equity advisory services to private companies
  • AJ Byers, who built the data centre operation which became BLACKIRON Data and later, the core of Rogers Data Centres, and whose JEDTech group provides mentoring on key issues, including financing, to technology startups
  • Brandon Kolybaba, who has both been an investor in and pursued outside investment for Cloud A, an innovative Canadian IaaS provider that he launched in 2013
  • Oscar Jofre, founder and president/CEO of KoreConX, a Canadian leader in the equity crowdfunding space, who has experience with international business development and as a senior executive with multiple cloud businesses.
Financing team
From left: Derek van der Plaat, Veracap; AJ Byers, JEDTech; Brandon Kolybaba, Cloud A; Oscar Jofre, KoreConX

The essential guidance contained in Financing Cloud Business is shaped by the complementary insights and experience of the working group members. The document begins by identifying and defining the different financing options available to cloud businesses at various lifecycle stages, including start-ups, early stage growth firms, larger firms that are building a track record of success, and established, profitable corporations, distinguishing as well between short term working capital solutions and longer-term growth funding options.

Lifecycle funding options

The main part of the report provides details on a dozen financing options. Each includes a definition of structure (the basis on which capital is made available), magnitude (the amount of funding available to cloud firms – in some cases, with recent deals as examples), Canadian sources, and advice to executives considering pursuit/use of the funding source. This section wraps with “additional guidance” dealing with what should be included in a pitch deck (and why and how it is important to presenting a case to potential investors) and practical guidance on constructing an elevator pitch.

As with other TCBC Best Practices reports, Financing Cloud Businesses concludes with a section on “metrics and milestones.” While stating that with respect to financing, “the reality is that this type of guidance can’t be provided on an abstract basis,” the report does provide some useful guidance linking investment-readiness to business milestones, and adding commentary on issues (such as looking to the US for funding) that Canadian cloud executives should consider as they develop their financing strategies.

About Financing Cloud Businesses

Financing Cloud Businesses is available immediately to TCBC members through the site’s library. Non-members can purchase individual copies for $995, or can instead consider joining the coalition as individuals or as corporate members.

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