- What does A V A C stand for?
- Is AVAC a government agency?
- Who are the shareholders of AVAC?
- Why does AVAC normally limit its investment to less than 50% of any investment?
- Does AVAC provide grants?
- If funds are provided by AVAC, what is the expected return?
- Are the royalties expected to be 'in perpetuity'?
- Does AVAC require security or collateral?
- Will AVAC make an investment in a venture from outside Alberta?
- Can AVAC make referrals to other sources of financing?
- Will AVAC assist in identifying and developing markets for our products and services?
- Does AVAC provide assistance for research?
- If a project uses existing, or "not new" technology, will AVAC still invest?
- What is AVAC's application review process?
- What types of financial information does AVAC need?
- Does AVAC require a business plan?
- What will the financial information be used for?
- What financial information should I include?
- Since this venture is pre commercial - why should I be expected to provide cash flow information?
- What format does AVAC expect for my presentation?
- My idea is so unique there are no competitors. Why would I need to assess the competitive environment?
- What management skills does AVAC expect my team to have?
- What is the difference between the Ag Research Fund and the Agrivalue™ Fund's Research investments?
- If I partner with a research performer in accessing the Ag Research Fund, who owns the intellectual property?
- Why has the IVAC Capacity Builder fund been created?
What does A V A C stand for?
AVAC Ltd. is the formal, legal name of the organization -- it is not an acronym. However early in the inception of AVAC it was referred to as the Alberta Value-Added Corporation and may be commonly, although incorrectly, referred to as such.
No, AVAC is a member-based private not-for-profit company, governed by an independant industry based Board of Directors. However, AVAC has received significant funding from both the Government of Alberta and Government of Canada, the use of which is defined in the various lending agreements.
Who are the shareholders of AVAC?
AVAC, being a not-for-profit company, does not have any formal shareholders. A Board of Directors governs AVAC, and its members participate in the strategic direction of the Company, including the election of new directors.
Why does AVAC normally limit its investment to less than 50% of any investment?
AVAC will help entrepreneurs and new venture developers pursue their ideas by sharing some of the early stage risk. Shared investment establishes commitment and increases the likelihood of success.
Does AVAC provide grants?
Yes, AVAC does provide a small number of select grants to public research and not-for-profit agencies. AVAC will provide grants to research focused on agrivalue™ with the expectation of specific tangible outcomes. All other investments made by AVAC are made on commercial terms.
If funds are provided by AVAC, what is the expected return?
Investments in private sector initiatives are made with the expectation that successful commercial ventures reinvest in the AVAC Seed Capital funds. Normally, investment return is based on a royalty approach calculated as a percentage of gross revenue of the investee business. Other remuneration vehicles may be contemplated as an alternative to the royalty approach to meet unique investment situations.
Pre-commercial investments made by AVAC are made as royalty-based investments, which are neither loans nor equity investments. AVAC expects an eventual return based on royalties earned from the commercial success of the venture. All royalties received by AVAC are returned to the investment funds and made available for future direct pre-commercial investments.
Are the royalties expected to be 'in perpetuity'?
No, the royalties are capped at an amount agreed upon in the investment contract.
Does AVAC require security or collateral?
Yes, when it is deemed prudent to do so. Also, AVAC does impose certain performance covenants in its standard business contracts. These performance covenants are clearly described in the investment agreement documentation.
Will AVAC make an investment in a venture from outside Alberta?
Yes, if the proponent can demonstrate a substantive potential economic benefit in Alberta.
Can AVAC make referrals to other sources of financing?
Yes, part of our business model is to assist applicants to reach the point where they are commercially viable, and/or become candidates for other forms of financing such as venture capital, bank debt and public share offerings. We also play a role in referring people with ideas to other suitable partners who may provide assistance or information as may be appropriate to grow that idea or service.
Will AVAC assist in identifying and developing markets for our products and services?
Not directly; knowledge sharing and collaboration are integral to any early-stage investment business. Consideration may be given to provide financing for needed market surveys and product trials. It generally is in the best interest of the applicants to establish and develop their own contacts and market access.
Does AVAC provide assistance for research?
Yes, AVAC will fund research in select agriculture research areas with the expectation of specific tangible outcomes. The research must be focused in such a manner that an ultimate commercial application could be contemplated, even if the persons/organizations conducting the research would not be ultimately involved in the commercialization activities.
If a project uses existing, or "not new" technology, will AVAC still invest?
Yes. AVAC is interested in projects that ultimately increase value-added industry activity, even if they do not use a proprietary technology. Examples are better access to end customers, new customer driven products or superior product formulation.
What is AVAC's application review process?
An initial review is initiated when a completed proposal is received. The proposals are reviewed internally. This initial review can take anywhere from 2-4 weeks for Pre-Commercial proposals.
Additional supporting information included in the investment proposal (e.g. executive summary, proposed use of funds, and supporting information).
- Personal and corporate credit bureau checks.
- Discussions with the applicant.
- A report is provided to the applicant, as well as a letter outlining the application status and next steps.
Following a favourable review, AVAC will undertake appropriate due diligence. The level of investigation is determined on a case by case basis, but will usually include:
- A review of financial statements (historical and projected).
- A review of the business plan.
- Personal discussions with client references and business contacts.
- One or more site visits.
- Evaluation of sample products.
- Market and competitive assessment.
- Assessment of management, partners and advisors.
- Fit between proposed sources and uses of moneys.
- Technology due diligence.
- Test to ensure full disclosure has been made including all applications to others for funding.
- Other information as appropriate.
At the conclusion of the due diligence supporting a favourable investment opportunity, a Term Sheet will be provided and negotiated with the applicant. Upon mutual agreement to a term sheet, AVAC will initiate the final approval phase. If successful, final execution documents will be prepared for execution by all pertinent parties.
What types of financial information does AVAC need?
Financial information is an important part of the due diligence component. The type and degree of financial information detail required by AVAC varies and is dependent on the specific or unique attributes of each investment opportunity.
Does AVAC require a business plan?
Yes, in most cases. However, there are exceptions, especially in the early stages of the application. Since many ventures are pre-commercial in nature, a complete business plan may not be applicable. However, the process of completing a business plan can provide the applicant with some valuable information for proceeding with the commercial venture.
Initially AVAC will expect interested persons or organizations to complete an AVAC investment proposal. A business plan should be included as part of the supporting documents if available, and will normally be required as part of the due diligence phase of the project assessment process.
What will the financial information be used for?
Financial information will be used to support the application, identify terms and determine appropriate project investment milestones as well as to assist with the development of the investment agreement. The information remains confidential and is not shared externally.
What financial information should I include?
Any historic financial information available that is relevant to your business. This may include: Past several years of financial statements, pro forma budgets for the next three years, cash flows, finance needs and balance sheets. Further information will be requested during the due diligence stage.
Since this venture is pre commercial - why should I be expected to provide cash flow information?
Cash flow information helps AVAC determine the appropriate budget, the matched funding status, identify the need for funds and assist with the valuation of the enterprise.
What format does AVAC expect for my presentation?
AVAC expects requests for financial assistance to be presented as a formal proposal, which includes a specific reference to moneys requested from AVAC.
My idea is so unique there are no competitors. Why would I need to assess the competitive environment?
Substitute products or alternative products often prove to be more foreboding than initially anticipated. A complete competitive environment assessment is intended to identify threats or opportunities for further consideration. A complete competitive assessment is an integral component of the due diligence process.
What management skills does AVAC expect my team to have?
AVAC recognizes that a strong set of strategic and operational management skills is critical to an enterprise's success. AVAC looks for a management team and/or advisory team with mastery in the following areas: strategic business planning, production, technical, marketing, finance, and human resources.
AVAC recognizes that some of these skills can be sourced externally, but expects the management team to consider its own strengths and weaknesses and ensure all required managerial skills are accessible at the appropriate times to increase the projects likelihood of success.
What is the difference between the Ag Research Fund and the Agrivalue™ Fund's Research investments?
The Ag Research Fund is focused on building research capacity in defined areas with a 'line of sight' for commercialization opportunities, while the Agrivalue™ Fund is primarily focused on commercialization.
If I partner with a research performer in accessing the Ag Research Fund, who owns the intellectual property?
The AVAC intellectual property policy states that for research and strategic investments, the research performer will normally own the intellectual property, unless otherwise negotiated in writing. As a guiding principle, AVAC shall expect that intellectual property benefits shall be commensurate with the contribution of each party in its creation, and in accordance with the respective policies of the institutions involved.
Why has the IVAC Capacity Builder fund been created?
The fund was created in order to help early stage technology companies in life sciences (non-ag), ICT, and other industrial technology sectors in Alberta get to the investor-ready stage, where they can attract a third party to invest risk capital.
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