An Introduction to Canadian Start-up and Growth Businesses

Abstract

Chapter one of Start-up and Growth Companies in Canada: a Guide to Legal and Business Practice 2nd ed. (Lexis/Nexis Butterworths, 2013). The chapter describes the life-cycle of growth companies in Canada, as well as empirical research on how they tend to develop over time. It introduces certain themes in succeeding chapters such as the importance of founder-proofing early-stage companies and the use of legal structures to bridge valuation disputes.

The book is the only Canadian text on start-ups and entrepreneurial finance. It covers everything from choosing a legal structure to the various methods of protecting directors from liability risk. It discusses the legal terms used in venture capital investments, mezzanine debt, stock options, public venture markets, angel investors and allocating shares among founders. Empirical research from economists and finance scholars are introduced to show how various legal structures tend to function over time and in different circumstances.

Keywords: start-ups, growth companies, gazelles, stock options, venture capital, mezzanine debt, subordinated debt, angel investments, IPOs, initial public offerings, founders