The TSX-VX: A Great Startup or Emerging Investment Vehicle

Being an Angel/Venture Investment Fund, the Fund-House is always on the look-out for new investment vehicles to assist in acquiring the funding necessary to spur-on promising businesses. This allows Fund-House to evaluate larger dollar opportunities and broaden our investment scope.

One such funding vehicle is the Toronto Stock Exchange's Venture Exchange.  The TSX-VX is a fully regulated public exchange which is used as a stepping stone for junior issuers/corporations through the use of Capital Pool Companies (CPCs).

A CPC is a shell listed on the TSX-VX for the purposes of completing a "Qualifying Transaction" with a business that will become the assets of the public company. A CPC must have, at least, three individuals and a minimum of $100,000 or 5% of total funds raised.

The CPC prepares a prospectus that outlines management's intention to raise between $200,000 and $4,500,000 by selling CPC shares at typically twice the issuance price of the seed shares, and to use the proceeds to identify and evaluate potential acquisitions.

For Fund-House investments (which fall under the Industrial, Technology, or Life Sciences categories) the TSX-VX requirements are as follows:

- Net Tangible Assets of $750,000 or Total Revenue of  $500,000 or Arm's Length Financing of
   $2 million.
- Issuer MUST have significant interest in the business
- Requires a history of operations or validation of business
- If no revenue, than a TWO-YEAR management plan demonstrating reasonable likelihood of               revenue within 24 months.
- MUST have a public float of 500,000 shares, with 20% of Public Shares in the hands of Public
   Shareholders.

For an Angel Investor, such as Fund-House, the opportunity to engage local high-net worth investors is very good for business and reputation. Additionally, finding emerging businesses in the health care and clean-tech industries (which are Fund-House priorities) in the Greater Phoenix will not be difficult.

The TSX-VX is a great alternative vehicle for Fund-House in satisfying established businesses that are growing into larger organizations and require venture funding but through a public forum. 


Stay in touch,
Jim Lavorato
Principal, Fund-House Ventures, LLC