|Date Published||September 28, 2014|
|Company||Catch Resources Inc.|
|Article Author||Dale Galbraith|
|Article Type||September 2014 Issue|
|Tags||Accredited Investors, Capital Markets, Equity Crowdfunding, Exempt Market, Micro Juniors, Raising Capital, S&S|
Seemingly, Catch Resources doesnâ€™t fit of that shift in our perspective: within either camp when it comes to capital raise potential. Public tells us we are too small. Private says we need to be â€œprovenâ€ before coming on board. The rubbernecking we encountered might have caused whiplash had we let it continue. Instead, we decided to get off the money-raise treadmill to regroup and sort things out.
THIS IS WHAT WE CONCLUDED:
In the new paradigm of raising capital, â€œcreativity is king,â€ at least, it is in our minds. Micro juniors â€“ you are on your own. We are ships setting sail in uncharted territory. The seas are often rough, and at critical times through this journey, the sails may be blown from their tethers entirely. Now with just a rudder as your only hope, you are left to somehow rebuild the sails. In these situations, you are faced with two choices: get creative or drift aimlessly. You know the old saying, â€œNecessity is the mother of invention.â€
While we havenâ€™t reinvented new ways of raising capital, we did recognize the need to re-adjust our expectations. For us, this meant getting creative. To do this, we threw out all our preconceptions and started with a fresh view point. We seriously needed to reinvent the way we approached this challenge. Itâ€™s been said that, â€œwhen all think alike, no one is thinking.â€ This was true in our case. Once we entered the realm of creativity, the fog cleared, and we were able to set a new course. One that was better suited to our goal, and yes, far more imaginative in its implementation.
I donâ€™t mind mentioning I was intimidated byÂ our final capital raise number. It was big by first acquisition standards, so we had to truly BELIEVE it was achievable. However, as many in the industry are coming to realize, there is a fundamental shift taking place in the micro-junior category so that reality played a large part inÂ our final number. Once the belief hurdle was overcome, we quickly understood we needed to change our approach if we hoped to achieve our objectives. The following represents the outcomeÂ of that shift in our perspective:
1: HAS OUR SPACE DISAPPEARED?
The capital raise space in which we currentlyÂ reside has largely been forgotten by the big capital markets. I realize I am not saying anything new here, but what we have to do as juniors is to get over it! Letâ€™s get our head out of our proverbial you-know-what and tackle the challenge straight on.
2: IF IT IS TO BE, IT IS UP TO ME.
You must take charge of your capital raise destiny.Â If the current market situation does not favour your initiative, get creative. The facts will not change because you hope them to. If your business requires new capital to grow or prosper, then it is our duty tofindawaytogetit.Ifyouagree,asIdo,that being properly capitalized is as important to the success of your early-stage business as all other aspects combined, then you must commit as much, or more, effort on it as you do the other matters. We currently spend as much time on capital raise creativity as we do on studying acquisitions, forming corporate culture, and building the foundation strategies and principles we will require to grow a strong and prosperous company. These are equally important factors in building a successful entity; therefore, each deserves the proper attention and commitment, and that includes capital raise.
3: YOU ARE EXCUSED FROM THE TABLE UNLESS YOU ARE EXEMPT!
Aside from the traditional methods, there are multiple ways to raise capital. Really there are! One I strongly recommend is within the exempt market. In my opinion, this option is poised to be a major contributor of capital for the micro-juniors now and in years to come. There is an added benefit to this approach which is Calgary-grown. Under the guidance and recommendation of the Exempt Edge, a local organization dedicated to strengthening the exempt market from within, those of us entering this market can be assured this sector will only strengthen and become more powerful in the future. As a shameless sales pitch, we have formed a Mutual Fund Trust (MFT), Catch Resources Income Trust, we intend to launch within the exempt market in September.
4: EQUITY CROWDFUNDING.
This is a new area we are currently participating in and watching with great enthusiasm. It is so newÂ it still solicits confusion and misrepresentation. However, I believe without hesitation it will grow by leaps and bounds over the coming years. My belief has been enhance recently by the passing of the JOBS bill in the US, which essentially clears the way for Equity Crowdfunding to become far more mainstream for investors. Look for more on this initiative in future articles.
5: CANADIAN EQUITY MARKETS.
They are starting to get the picture. As early asÂ this summer, the TSX was openly discussing the possibility of building a parallel stock market to facilitate the exempt market space. It appears now this will in fact take place (please view the news release at TSX Exempt Market). This is a major about- face for the TSX and a sure sign the exempt market is gaining strength. Not one to let a dollar go by without grabbing some of it, it seems the TSX intends to position itself to receive their pound of flesh.
6: ACCREDITED INVESTORS.
We all know how important these investors are to the success of any venture. Do not overlook this group. They are by nature exceptionally talented, business-savvy, and offer more than just investment dollars.
7: LASTLY, PRIVATE EQUITY INSTITUTIONS.
They are not without their value in this equation; however, in most instances, they should be approached from a position of strength. Production, team, and strategy are generally paramount before they come on board, so be sure to position yourself accordingly before expecting results from any of these groups.
Strength in numbers and not just financials ones. From a strategic perspective, we continue to gain momentum and strength from aligning ourselves via acquisition and mergers within the micro-junior sector. There are many talented and viable assets available within this sector. Some require better Â management to grow, while others have technical talent and good assets but lack the ability to move the asset from a small BOPD player to a larger entity.
At present, this is the space we occupy andÂ feel most comfortable in. Our target acquisition provides an excellent starting point. At 150 BOPD of production, this asset provides us the revenue and flexibility required to execute our primary strategy.
This is where things get interesting and where strength in numbers, other than financial ones, becomes critical. We believe the sum of the whole is greater than the parts, so weâ€™ll continue to look for like-minded owners and or assets as we execute our strategy.
In the meantime, however, a good deal of our focus remains on our capital raise requirements. After all, in this business that is the one constant, isnâ€™t it?
This article originally appeared in the Â