Small and Medium-sized Enterprise Financing in Canada — Part IV: Profile of Risk Capital Financing

Part IV examines four types of financing used by small and medium-sized firms at various stages of development, and discusses their economic importance:

• informal financing
• venture capital financing
• initial public offerings (IPOs)
• quasi-equity financing (also known as mezzanine financing or subordinated debt)

The first section describes the spectrum of risk capital financing, discusses the type of companies that typically receive it and outlines firms' financial needs from seed to expansion stage.

The second section describes informal investment (love money and angel financing), and the current state and future direction of research in this area through the SME Financing Data Initiative.

The third section explains the state and the economic impact of venture capital in 2001 and 2002, by sector, region, stage of investment, type of investor and first-time versus follow-on financing, and compares Canada and US venture capital activity over the 1996–2002 period.

The fourth section discusses research on the costs, issues and regulations associated with raising first-time capital on the Canadian stock market, and evaluates the short- and medium-term success of Canadian IPOs.⁹¹

The last section discusses the state of quasi-equity financing in Canada in 2002.

•  1. Risk Capital Financing — An Overview
•  2. Informal Investors — Friends, Family and Angels
•  3. Venture Capital Financing
•  4. Initial Public Offerings (IPOs)
•  5. Quasi-Equity Financing

91. Cécile Carpentier, Maher Kooli, J.M . Surêt, "Les Émissions Initiales au Canada: Bilan, Anomalies, et Dysfonctions," 2003 (http://strategis.ic.gc.ca/fdi).