GXF invests in pre-angel-ready opportunities that have received OCE Smart Start funding or similar non-dilutive government support. From the initial application to GXF, to successfully closing a financing, can take 1 – 3 months. We encourage you to give your company latitude, and start the process as soon as possible.
GXF would typically like to obtain the following terms for its investment:
– $30,000 for a range of 1.5% to 3% of the common shares, partially redeemable at the next priced round of financing; and
– 20 Detachable Warrants (1 for each unit in GXF) entitling the holder to a 10% discount on the next angel round of financing.
GXF does not require a seat on the Board of Directors. We also offer, but you are not required to accept, a package of services from lawyers and bankers at pre-negotiated prices, to help you make your company angel-ready (see GXF Resources).
The $30,000 investment for 2% of the common shares implies a post-money valuation of $1,500,000. We believe that based on the stage of development we expect to see, that this is a fair starting point for discussions.
The use of warrants provides an incentive for each of the 16 individual investors in GXF to invest in your company at the angel round of financing. The warrants are detachable so that each investor can make their own investment decision at the angel round. We believe this is a great way to build momentum in the angel round of financing.
GXF would like to request limited redemption rights in the range of 25% of the shares subscribed for at investment at a discount to the priced round of 20%. This will help fuel future investments by GXF.
Once we have agreed on the terms of the investment, GXF will conduct a due diligence review of the information you have provided to GXF. During the due diligence review, GXF will verify the information contained in your presentation and ask follow-up questions. You will be required to actively facilitate this process, and provide access to a data room and management and possibly outside parties to expedite a final investment decision.
Concurrent with successful completion of the due diligence process, GXF will negotiate a Term Sheet that defines the structure of the investment deal. This term sheet will form the basis of instructions for your lawyer to draft a subscription agreement and shareholders agreement.