Get new investment opportunities, VC news and Brightspark updates in your inbox! Subscribe to our mailing list.

FAQ

Here are the answers to some frequently asked questions. Can't find what you're looking for? Contact us and we'll be happy to help.

What is Brightspark?

Brightspark, founded in 1999, is an innovative venture capital firm based in Canada with offices in Montreal, Toronto, and Halifax. Our managing partners have decades of experience investing in, growing and exiting early stage tech companies. For the past 3 years, we have invested in companies based on a new model where accredited investors are invited to invest alongside the managing partners and other institutional investors. We are building a vibrant community of investors for tech start-ups in Canada.

Who are the people behind Brightspark?

Mark Skapinker and Sophie Forest are Brightspark’s managing partners. They are both veterans in Canada’s venture capital industry and have decades of experience in investing and growing early-stage companies.

Visit the team page to see the rest of the Brightspark folks and the CEOs we collaborate with.

What is Brightspark’s investment model?

We invite accredited investors to invest with us in our portfolio companies. For each deal, we create a Limited Partnership (LP) Fund unique to that investment. Our investor community can then review the company’s information and decide to invest as little as $10,000. The average accredited investor investment is $25,000 to $50,000 in each deal.

Brightspark takes on the role of Managing Partner and works closely with our companies to grow them to their full potential and fill in gaps where needed. We keep our investors informed of any developments in the fund via quarterly and annual reports, as well as monthly newsletters.

How does Brightspark make money?

Brightspark receives a small (1.5% for 3 years) fee from investors to cover some of its overhead, as well as a 15% carry from profit.

We also take an expense reserve of 4% of each Limited Partner’s contribution to cover the Fund expenses if needed. None of the Expense Reserve shall be paid as compensation to Brightspark. Any monies remaining in the Expense Reserve at the end of the Fund is redistributed to Limited Partners. Examples of expenses covered by the reserve may include legal fees, auditing, insurance, investment banking, tax returns, etc.

This means that Brightspark only makes money if investors make money. Brightspark is not paid for “financing a deal” like many other financial dealmakers – Brightspark is completely aligned with its investors to focus on profit from deal exits.

How can I get in touch with Brightspark?

You can reach us by email or by phone at 416-488-1999. We also have offices in Toronto, Montreal and in the Atlantic.

For media enquiries, please contact Emilie Jones.

What is an accredited investor?

At this time, only accredited investors can sign up and invest alongside Brightspark.

An individual Canadian accredited investor is:

  • An individual who, alone or together with a spouse, owns financial assets worth more than $1 million before taxes but net of related liabilities; or
  • An individual, who alone or together with a spouse, has net assets of at least $5,000,000; or
  • An individual whose net income before taxes exceeded $200,000 in both of the last two years and who expects to maintain at least the same level of income this year; or
  • An individual whose net income before taxes, combined with that of a spouse, exceeded $300,000 in both of the last two years and who expects to maintain at least the same level of income this year; or
  • An individual who currently is, or once was, a registered advisor or dealer, other than a limited market dealer.

Not sure if you qualify? Check with the Ontario Securities Commission.

How can I become an investor with Brightspark?

Sign up to have access to Brightspark’s deals and industry information. It’s free, and you’ll get access to our Members’ Area, where you can review investment opportunities and signal your interest to invest in open deals.

Do I have to pay a fee?

Signing up to become an investor with Brightspark is free.

When you make an investment, management fees of 1.5% of your investment for each of the first three years are included in your investment (never more than 4.5% total irrespective of the length of investment).

Most traditional Venture Capital firms take a fee of 2% per year for up to 10 years.

How do I invest in a Brightspark deal?

If you’re interested in investing in one of our portfolio companies, contact us directly or let us know in the Member’s Area of the website. Simply send us a note with the amount you’d like to invest, and we’ll follow up with the paperwork and answers any questions you have about the transaction.  

How much do I have to invest in a deal?

Our investors can choose to invest as little as $10K per deal. Typically, investments range from $50K to $75K. All deals are in Canadian dollars.

Does Brightspark co-invest in every deal?

Yes, Brightspark’s partners co-invest in every deal and acts as General Partner.

What kind of companies does Brightspark typically invest in and work with?

We specialize in software, mobile, and Internet companies with a strong focus on repeat entrepreneurs. We look for portfolio companies with significant upside – meaning market leaders that have the potential to have a 5-20X return on money if they are very successful.

To ensure only the best exit potentials for our investors, we stick to our very high standards of selection. In fact, less than 1% of the companies we meet make it to our portfolio.

Does Brightspark commit to a specific deal volume?

No, we focus on the quality of deals, not the quantity. Typically, we meet with hundreds of entrepreneurs but only choose and invest in 5-7 companies a year.

What happens if I invest in a deal that doesn’t close?

In the unlikely event that you invest in a deal that doesn’t close, your entire investment will be refunded in full.

What level of involvement is expected from investors?

The level of involvement in growing the company is up to the investor’s discretion. Many of our investors choose a hands-off approach, while others invest some time and expertise to help grow the companies they choose to fund. Brightspark’s partners are deeply involved in each portfolio company that they support.

What level of involvement does Brightspark commit to?

Brightspark is an active VC investor. Typically, a Brightspark partner sits on the board of directors of portfolio companies, meets regularly with portfolio company’s management team and works closely with the CEO.

If I invest in a company, does that mean that I will become a shareholder of that company?

When you invest with Brightspark, you purchase units in a dedicated Limited Partnership (LP) Fund that funds the portfolio company (PC). The fund, in turn, invests in the Portfolio Company.

For example, if the LP Fund raises $1,000,000 (after fees) for 10% of the company’s equity and you invest $100,000 in the LP fund, you will indirectly own 1% of the company’s equity (at that time) through your part-ownership of the fund.

How are returns calculated?

For each successful investment, investors are paid back their initial amount in full and receive 85% of the profit at the time of the exit. This is higher than the industry average of 75-80%.

What is the tax treatment on investments and gains?

Every year, Brightspark gives all of its investors full tax info and forms.

The tax treatment on your investment and gains will be calculated on a case by case basis. Typically, gains are treated as capital gains. Your investment might be eligible for the small business exemption.

How long do exits take?

Deal exits can take anywhere from a couple of months to several years. Sometimes as much as 7-10 years.

Are returns guaranteed?

Venture Capital is considered a high-risk investment and a return is not guaranteed. You will get money if a company is sold or IPO.

Financial and operating risks confronting early-stage companies are significant. While targeted returns should reflect the perceived level of risk in any investment situation, such returns may never be realized and/or may not be adequate to compensate an Investor for risks taken. Loss of an Investor’s entire investment is possible and can easily occur. Moreover, the timing of any return on investment is highly uncertain.

Does Brightspark co-invest with other VCs?

Brightspark often shares its deals with top VCs in Canada and the US and is often part of a larger VC syndicate. This gives our individual accredited investors access to deals that were previously only available to institutional VCs.

What shareholder rights does Brightspark get in its deals its investors?

Usually, Brightspark negotiates rights such as tag along, drag along, anti-dilution in its deals. We also negotiates for pre-emptive rights – which means that, as an investor you get to invest more if you choose very successful companies in subsequent rounds.

How is investing with Brightspark different from investing independently?

Brightspark often has deals that are not available for direct investment. The top deals that are often scooped up go to the experienced VCs, like Brightspark. You get access to deals that, to date, have only been available to institutional VC investors.

Brightspark manages the deal for you. It sits on the board of the company, works with the management team and guides new companies “through a maze” that it has been through many times.

Brightspark’s experience lets you invest in startups with ease. Brightspark’s quarterly and annual reports keep you fully up to date with your investments.

You gain the benefit of being part of a large investment group. Your $25k investment in a $1.5m Brightspark fund gives you the full leverage of the $1.5m instead of being treated as a “small angel early stage $25k investor”.

 

Can't find what you're looking for?

No worries, we’re here to help. Contact us and we will be happy to answer your questions.

Talk to us – we’d love to discuss this with you further.