FAQs

Questions about Fundraising?

General

How safe is my information?

We utilize the services of Citrix for signature information and Dealpoint for all our data storage which are both complaint.

Is your company a registered investment dealer?

Yes. All securities related activity is conducted through Loxley Financial Inc. which is a registered Exempt Market Dealer registered in all Western Canadian Provinces and we are also a proud member of Private Capital Market Association, the National Crowdfunding and Fintech Association of Canada, and the Canadian Venture Capital Association

How secure is my information on the Loxley platform?

All Loxley traffic is sent over an encrypted, ‘https’ connection. All personal information is encrypted before being stored on our secure server. We are legally required to adhere to the latest security standards.

Who is given access to my information?

Loxley.ca may share your personally identifiable information with third parties for the purpose of providing services to you, such as ID verification or data storage as well as security related to our operation of the Site. Those business partners have all agreed to uphold the same standards of security and confidentiality that we’ve promised to you in our Privacy Policy; and they will only use your personally identifiable information to carry out their specific business obligations to us.

What is the Private Capital Market and how does it differ to the Public Markets?

The private capital market allows companies to raise capital without going through the lengthy and expensive process of preparing a prospectus (A prospectus is an extensive offering document used by public companies to provide details about their business, financial situation and the investment opportunity). This allows early-stage and growth companies to expand their business with quick and easy access to capital, and it gives investors the opportunity to become an owner in the business while the valuation of the company is still relatively low. Unlike the public markets, shares in private companies can not easily be sold or exchanged for cash. Therefore, long holding periods are expected before an investor can sell their investment. Due to the volatile nature of early-stage businesses, their shares are considered high risk investments. It is important to note the relationship between risk and return – ‘the higher the risk of an investment, the higher the potential return’.

Why are businesses looking for capital?

Businesses are looking for opportunities to grow in order to serve more customers and extend their reach. Capital is an integral element for companies to achieve this in a faster way than simply relying on generating profits and reinvesting in their business. Thus, businesses have specific reasons for raising capital, but the most common purpose is to enhance their product, grow their team, or increase production or distribution.

What type of securities can you facilitate?

Loxley is a registered securities dealer in western Canada. As a result, we can support any type of financing. We facilitate all types of securities, but the most common securities include; equity, debt, convertible notes, and SAFE’s (Simple Agreement for Future Equity).

Where do I start?

The best way to initiate a capital raise with Loxley is to fill out the “contact Corporate Finance” form on our contacts page.. This will provide us with some basic information about your company. From there a member of our Corporate Finance Team will contact you to discuss your options and “get the ball rolling”.

Do you only work with Private companies?

Loxley is an Exempt Market Dealer, meaning we have a special license that allows us to work both with private and public companies to access to all applicable prospectus exemptions across Canada.

Fundraising

Do you work with companies outside of Canada?

Yes.

What do I need to do for the due diligence process?

After establishing your goals and objectives and structuring your deal, you will be assigned a dedicated member of our Corporate Finance Team to mentor and coach you through your campaign. They will bring in our due diligence team that will require corporate, financial, management, and other supporting information to perform a thorough review of your company.

Do I need audited financial statements?

Raising capital in Canada is governed by Provincial Securities Regulators. Each province has their own set of rules depending on the type of investors you are looking to bring on board. We will work with you to structure your offering to meet the goals and objectives of your raise, keeping in mind cost and efficiency, without creating any regulatory issue.
In general, if you are raising under the Offering Memorandum or the Ontario Crowdfunding (and raised over $750,000 since inception) exemptions, than you will be required to have your financial statements audited.
If you are raising under the Ontario Crowdfunding exemption (and raised over $250,000 since in-ception), then you will be required to have your financial statements reviewed.

How secure is my information on the Loxley platform?

All Loxley traffic is sent over an encrypted, ‘https’ connection. All personal information is encrypted before being stored on our secure server. We are legally required to adhere to the latest security standards.

Who is given access to my information?

Loxley.ca may share your personally identifiable information with third parties for the purpose of providing services to you, such as ID verification or data storage as well as security related to our operation of the Site. Those business partners have all agreed to uphold the same standards of security and confidentiality that we’ve promised to you in our Privacy Policy; and they will only use your personally identifiable information to carry out their specific business obligations to us.

What is required from the company in order for residents of Quebec to invest?

In order for companies to accept investments from residents of Quebec, they must make any applicable Offering Document available in French

What is the Private Capital Market and how does it differ to the Public Markets?

The private capital market allows companies to raise capital without going through the lengthy and expensive process of preparing a prospectus (A prospectus is an extensive offering document used by public companies to provide details about their business, financial situation and the investment opportunity). This allows early-stage and growth companies to expand their business with quick and easy access to capital, and it gives investors the opportunity to become an owner in the business while the valuation of the company is still relatively low. Unlike the public markets, shares in private companies can not easily be sold or exchanged for cash. Therefore, long holding periods are expected before an investor can sell their investment. Due to the volatile nature of early-stage businesses, their shares are considered high risk investments. It is important to note the relationship between risk and return – ‘the higher the risk of an investment, the higher the potential return’.

How will I manage all of my new investors?

Bringing on new shareholders who are excited about your company can be great for your marketing efforts, but can seem overwhelming to manage on the day to day. Based on our experience, the overwhelming shareholder involvement is very rare, most investors are just excited to invest and be owners in companies they believe in.

We recommend that you communicate frequently with your new shareholders. Be proactive and provide them with information updates on the company to get them excited to help share and spread your messages! This isn’t time consuming, just smart marketing.

If you are offering shares with voting rights, you can implement a ‘Voting Trust Agreement’ for the smaller investors. This will transfer the voting rights to a trustee who will vote on behalf of these investors and allow you to retain control of your corporate governance without the headache. We have templates that you can use to save you time and money in preparing this agreement.

What happens if I go over 50 shareholders?

There is a misconception that going over 50 shareholders is a bad thing for private companies. Fact is, going over 50 shareholders doesn’t change very much at all.

Once a company has over 50 shareholders, they are required to file a two page Report of Exempt Distribution with the Securities Commision after any subsequent financing.

Working with Loxley, we will help guide you through this process and provide you with the completed forms to submit.

What is required for the close of a campaign

Loxley removes the complexity of processing your investors and closing your campaign. We help prepare all of the legal closing documents for your campaign. These documents include, Subscription Agreements, Voting Trust Agreements, Directors Resolution, Share Certificates, and Report of Exempt Distribution. This will save you a significant amount of time and money from a traditional financing.

All investors and the businesses authorized signatories will sign their investment documents electronically making the closing a smooth and seamless process.

What is the best way to market my campaign?

Your campaign should be as unique as your product or service and the message should be clearly conveyed across all mediums. To assist, Loxley will provide you with a dedicated Campaign Coach who will work with you to strategize the most effective way to reach your supporters. Fundraising requires time and hard work; you need to be fully prepared.

Your campaign manager will work with you to identify the key groups who are most likely to invest in your company. These often include personal networks of you and your team, current customers, and potential customers. Once you have these groups established, open a dialogue with them and invite them to become an owner in your company. The sooner you start the conversation, the more likely you are to be successful. Don’t be afraid to make the ask!

Who determines the valuation?

Loxley does not determine a company’s valuation. Companies develop their own methods (we provide some material and guidance based on your industry) for determining their valuation prior to our due diligence process. All valuations are reviewed and discussed while in the due diligence phase in order to ensure a fair valuation is established for both the company and investors.

How much does a campaign cost?

The basic fees consist of an due diligence and listing fee (payable upfront) and a trade fee (payable upon successful closing of the raise). The due diligence and listing fee starts at $4,000 and the trade fee starts at 6% cash and warrants.

What type of securities can you facilitate?

Loxley is a registered securities dealer in western Canada. As a result, we can support any type of financing. We facilitate all types of securities, but the most common securities include; equity, debt, convertible notes, and SAFE’s (Simple Agreement for Future Equity).

Where do I start?

The best way to initiate a capital raise with Loxley is to fill out the “contact Corporate Finance” form on our contacts page.. This will provide us with some basic information about your company. From there a member of our Corporate Finance Team will contact you to discuss your options and “get the ball rolling”.

Do you only work with Private companies?

Loxley is an Exempt Market Dealer, meaning we have a special license that allows us to work both with private and public companies to access to all applicable prospectus exemptions across Canada.

What type of industries does Loxley work with?

Loxley is more concerned with the quality of the management team and the viability of the offering than the industry the company operates in. We review each business individually based on its merits. We believe in creating a mutually beneficial partnership that serves everyone in order to have the greatest success for all.

How much money can my company raise?

This is entirely up to you. There are no overall limits to how much your company can raise.

However, there are specific limitations within exemptions that each company can raise depending on the structure of the offering.

There are no limits on how much you can raise using the Offering Memorandum, Accredited Investors, Family, Friends, and Business Associates exemptions.

How much money can investors invest?

Investor limits are determined based on the exemptions that you are using to raise capital. Here is a brief summary of the exemptions, for a full explanation please refer to our Securities Regulation Page.

The Offering Memorandum exemption investors depends on the provincial residence of the individual. BC investors have no limit, investors who live in the rest of Canada have a limit of $10,000 unless they satisfy additional investor criteria.

There are no investor limits for investors who are investing under the Accredited Investors, Family, Friends, and Business Associates exemptions.

How do I know if I will need to file a Report of Exempt Distribution after my campaign?

If you choose to use the Offering Memorandum, or have more than 50 shareholders after a successful campaign, you will need to file a Report of Exempt Distribution.

This report will need to be filed with each province from which you accept new shareholders. Loxley will help guide you through this process and provide you with the completed forms to submit.