Practices and Patterns of Informal Investors

Appendix B: Roundtable Discussion Protocol

---

Canadian Informal "Angel" Investors: Protocol for National Discussion Groups

---

Introduction to the Discussion Group

We would like to welcome you all to this panel discussion with regard to the financing of small and medium sized businesses in Canada. My (our) name(s) is (are) __________________________, and I am a Professor of X in the School of Business at Carleton University in Ottawa. My colleague is ____________________.

We are working with Industry Canada to form a National Panel of private investors from across Canada. Industry Canada is mandated to develop public policy to best support the financing growth and development of new and small and medium businesses in Canada. So, we have organized 10 meetings comprised of informal investors across the country similar to this meeting this morning (afternoon). As important players in the financing of Canadian business, the purpose of each of these discussion groups is to collect information directly from you to inform public policy with respect to the characteristics, practices, and perspectives of informal investors like yourselves.

Today, we would like to ask each of you to do 2 things:

1. First, we would ask you each to separately fill in a brief questionnaire about yourself and your investment practices. The purpose of the questionnaire is to collect background information about each of you. We will summarize this information and it will be aggregated with the information collected from the other approximately 100 private investors that we will meet with. The information that you provide to us will be completely anonymous and confidential. We anticipate that it will take about 10 minutes to fill out the questionnaire.
2. The second part of today's agenda is to hold a roundtable discussion group focusing on your investment views and practices. We estimate that this discussion will take about 1 and ½ hours. We would like to tape this discussion and have set up a tape recorder in order to do so. Our plans are to transcribe the tape from this discussion as well as the other 9 groups we have organized. We will then analyze these tapes and summarize the results for Industry Canada. Again, we want to assure you that your comments will be completely anonymous.

Does anyone have any questions before I hand out the Background Investor Profile Questionnaires?

Please feel free to grab some coffee, juice or snack at any time as we move along today.

Hand out and collect the "Background Investor Profile Questionnaires". Say as handing out "I'll give you about 10 minutes or so to fill in these 'Background Investor Profile Questionnaires'", then we will move into the discussion group.

After collecting questionnaires, say "Let's begin today's discussions."

Encourage all to sit at discussion table. Be sure that tape is recording.

Before we begin today's discussion, could we ask everyone to introduce themselves, so we know who we are talking with. Interviewer hand out table size name tags for participants to place in front of self and make seating plan on paper.

The Major Discussion Questions

(Reminder Note to All Discussion Group Facilitators: Always try to prompt for specifics and specific examples if possible. For example, can use prompts like "Can you tell us specifically what you mean by that" or, "What do you mean when you say xxx").

1. (Spend about 30-35 minutes on question 1)

   We'd like to begin by asking about the availability of investment opportunities for you.

   1. How do you find potential investments?
   2. From your experience, are the owners of companies in which you are considering investing well prepared to attract private investment? Are they prepared to work with private investors like you? In what ways are they well prepared? In what ways are they not well prepared?
   3. Can you tell us how you evaluate potential investments? How do you conduct your due diligence process?
   4. In your experience, what are the most common shortcomings of the business opportunities that you have reviewed recently?
   5. What are the essential factors that prompted you to invest in the firms you chose? How difficult has it been for you to find investment ready firms? Have you been able to find sufficient numbers of investments?
2. (Spend about 20-25 minutes on question 2)

   We'd like to move to talking about how you work with the companies in which you invest:

   1. What level of involvement do you have with your investee businesses? Can you give examples of the non-financial contributions that you make to your investee firms?
   2. Can you tell us how you typically work with the companies in which you invest?
   3. Can you tell us about the ways that you try to exit from the businesses in which you have invested? What exit strategies have worked very well for you? What strategies have not worked well?
3. (Spend about 10-12 minutes on question 3)

   Are you involved in syndication or networking groups with regard to placing investments?

   1. Can you tell us about how these groups function? (PROMPT FOR "How stable are these groups over time" are they stable and loose, or do they shift frequently?).
   2. Do you find these groups to be useful to you? How are they useful? How are they not useful?
4. (Spend about 20 minutes on question 4)

   Moving towards the last of the questions we would like to discuss with you, we'd like to talk a bit about tax measures. Do you have any suggestions about what the Government of Canada could be doing to encourage more private investor activity?

   1. Last year, the federal government introduced a number of measures to stimulate angel financing. These included reduced taxes on capital gains and tax-free rollover. What are your views on how these tax measures will stimulate equity financing in Canadian small businesses?
   2. What are the three most attractive features about investing in your region (NAME IT)? What are its 3 least attractive features?

Conclusion and Debriefing

Thank you very much for meeting with us today. We really appreciate learning from your experiences and look forward to passing on your views to the public policy analysts in Ottawa. We look forward to meeting you again. If anyone wants to receive the document summarizing these cross Canada discussion groups – just check the appropriate box on the paper that we are passing and if you provide your name and address (either mail or email) we will send one out to you.

Again, Thanks so much.