Frequently Asked Questions

Accredited investors of any size (individuals, family offices, trusts, corporations, small institutions) can invest with us.

There is no “process” to becoming an accredited investor. No registration, exam, form or application is required, and no certificate is issued to confirm your accreditation. To meet the criteria, you simply need to meet one of the following criteria:

• You earned a net income before taxes exceeding $200,000, or $300,000 combined with a spouse in each of the two most recent years;
  
  
• You, alone or with a spouse, own at least $1 million in financial assets before taxes;
  
  
• You, alone or with a spouse, hold at least $5 million in net assets;
  
  
• You are investing as a corporation, limited partnership, trust or estate that has net assets of at least $5 million;
  
  
• You currently are, or once was, a registered advisor or dealer, other than a limited market dealer.
  

If you do not meet the criteria of an accredited investor, you are still eligible to continue receiving our newsletter (unless you choose to opt out, of course). 

Regarding investment eligibility: Canadian regulations are always evolving and adapting to the advancements of tech and the economy. We will make sure to keep you informed if the regulations and/or your access to our investment opportunities change. Additionally, we are continuously exploring new ways of investing in venture capital. It is very possible that in the future, Brightspark could offer investment opportunities that are suitable for non-accredited investors.

Yes, granted that granted that you are the authorized signatory of that corporation and that the corporation itself is accredited.

Yes - we partner with leading wealth management firms to make the VC asset class accessible to their clients.

If you are a wealth manager interested in working with us, please send us a note at invest@brightspark.com. 

Deal by deal investments:

The minimum investment is C$10k per investment, and the average individual investment size is $35k-$50k.

When deciding how much to invest, take into consideration that we suggest you diversify your risk by investing in multiple deals and plan to reserve some capital for a follow-on strategy.

Deal by deal fees:

• Management fees (1.5 to 2% per year for the first 3 years) is used as compensation for Board seating, due diligence, legal paperwork, etc.
• Admin Reserve fee (one-time 2.5 to 4%) is reserved for external out-of-pocket fund expenses such as legal fees, tax, and accounting costs
• When there is an exit, Brightspark first returns your contributed capital, and 85% of the returns are distributed amongst Limited Partners. 15% goes to Brightspark as carry.

All the companies that are presented to the Brightspark investor network are sourced and vetted by the venture team at Brightspark Capital. This team has 20 years of experience as venture capitalists and a top quartile track record.

Meet our team

No, our investments are structured as Limited Partnerships. Investors are Limited Partners and they own units in the Limited Partnership Fund, which own shares of one or multiple companies. 

Deal by deal Limited Partnerships

Every time Brightspark invests in a new company, we create a new Special Purpose Vehicle (SPV) Limited Partnership Fund that is open to accredited investors. These Funds only invest in one company.  

Brightspark Canadian Opportunities Fund

The Fund is structured as a traditional VC fund (Limited Partnership) that will invest in a diversified portfolio of 15-35 companies over a few years. 

We currently invest in approximately 5 to 7 new early-stage companies per year.

All companies are vetted thoroughly through the Brightspark due diligence process. We commit to only invest in what we think are the best early-stage companies in Canada. This means that the investment cadence may vary, depending on the quality of the deal flow we are seeing.

As for timing - usually, our investments are fully subscribed in 5 to 20 days. Sometimes, our investments get oversubscribed and it happens quickly, so we encourage investors to let us know if they want to participate in the investment as soon as possible to secure allocation room.

We share information about the company and technology, the management team, competitive landscape, industry data, use of funds, as well as any other information that can help you make an investment decision. Often, we post a video pitch featuring the company's management team and Brightspark's investment team. Note that some information might be confidential and covered by a Non-Disclosure Agreement.

Brightspark negotiates rights for investors such as tag along, drag along, and anti-dilution for every investment. Most of our investments are in preferred shares with standard VC terms. 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.

Because Brightspark usually invests at an early-stage, companies will often raise additional funds in their lifetime - these are referred to as follow-on rounds. A new round of funding increases the value of the company.

As a Limited Partner in the fund, you will have the opportunity to invest additional capital before any new investor if Brightspark participates in a follow-on round. That’s because when we initially negotiate the terms of the investment, Brightspark ensures that the fund has protective and preemptive protections to allow them to do so.

Brightspark Capital is an active VC investor. Typically, a Brightspark partner will sit on the board of directors of portfolio companies, meets regularly with the management team, and works closely with the CEO.

We update our investors regularly through Quarterly Reports and statements. 

You will not have a direct line to the company - Brightspark usually takes a Board seat and follow the company closely - meeting and speaking on at least a monthly basis. This approach benefits the company, who doesn’t have to manage multiple Limited Partners. Occasionally, the Brightspark team will make connections that they think will be beneficial to the company.

Every quarter, we send you a report containing updates and commentary on all of your Brightspark investments. We also issue quarterly and early financial statements - a summary of all of your current investments and their current unrealized value.

We also send monthly newsletters, which include news and updates on all of our portfolio companies.

As an investor, you make money when (and if) a company in your investment portfolio goes through a liquidation event. You will then receive your initial investment back as well as your allocated portion of the profit.

Brightspark also offers the option to sell your position to other accredited investors through its Secondary Transactions Program. Contact us to learn more.

You should know that:

- Usually, a liquidation event takes the form of an acquisition or an IPO
- The average time before a company exits is 5-7 years, but this varies
- Returns are not guaranteed. VC investments are very risky, and you could lose your entire investment.
- A successful sale through the Secondary Transaction Program is not guaranteed.

Note that returns distribution is managed differently depending on whether you're investing in a Special Purpose Vehicle (SPV) or in a traditional VC fund structure.

A liquidation event can take anywhere from a few months to several years – the industry average is 7 years. Just like a fine wine, you should expect your investment to slowly age over time before achieving its full potential.

You should know that:

• Usually, a liquidation event takes the form of an acquisition or an IPO
• There is currently no secondary market for Brightspark investments, making them illiquid
• Returns are not guaranteed. VC investments are very risky, and you could lose your entire investment

For each investment, you will receive a T5013 - Statement of Partnership Income by March 31st of every year.

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

We recommend that you talk to your tax advisor for more information.

You have the option to send your funds online through your bank, send them via wire transfer, or send a cheque (delivered by mail or in-person at our Toronto or Montreal offices).

We go to great lengths to keep all account information safe and private on our investor platform. All of our investor's account details are stored on our servers using AES-256 encryption, the same level of security as the world's largest commercial banks. In addition, all traffic goes over Secure Socket Layer (SSL) security to prevent third parties from accessing connection to the platform.

Investing in venture capital involves a high degree of risk. Early-stage investing in technology companies is a risky endeavour, and many early-stage companies fail (and investments are lost). Additional risks include changing economic conditions, difficulty in valuing startup investments, absence of liquidity, and more. We encourage you to read our complete risk disclosure.

Before investing with Brightspark, you should carefully review the risk factors. In addition, you should consult your own counsel, accountant and other advisors as to legal, tax, business, financial, and related aspects of an investment with Brightspark.

Brightspark vs investing directly in a company as an angel investor

• You will not own any direct equity/shares in the company. Rather, you will own units in a Limited Partnership Fund.
• Your investment will benefit from venture capital terms, giving you preferred terms and protective provisions.
• Your investment will be sourced, pre-screened and vetted by our team of VCs.
• You do not need to be actively involved with the company after you invest. Your investment is completely managed by the professionals at Brightspark.
• We provide professional quarterly reports and account statements to investors.

Brightspark vs other VC Funds

• Team & track record: The Fund is led by one of the most experienced teams in Canada with a proven ability to generate strong financial returns. Through our network and connections, our team has access to proprietary deal flow in Canada.
• Lowered barriers to entry: $100k minimum investment threshold (10% due on commitment, capital calls of approximately 20% per year for 5 year thereafter).
• Unique and unprecedented incentive: Downside protection and improved timing of returns.
• Ability to flex up in a specific investment with our deal-by-deal investment model.

Brightspark vs equity crowdfunding

• Brightspark investments are available to accredited investors only.
• There is no membership fee to join our network, and we never charge the company.
• You will not own any direct equity/shares in the company. Rather, you will own units in a Limited Partnership Fund.
• Your investment will be sourced, pre-screened and vetted by our team of VCs.
• Your investment will benefit from venture capital terms, giving you preferred terms and protective provisions.
• Your investment is professionally managed by venture capitalists. Brightspark usually take a board seat, and we dedicate our time to ensure that the company – and your investment– grows to its maximum potential. Brightspark will work to maximize your investment.
• We provide professional quarterly reports and account statements to investors.

Our team is available to answer any questions you have. You can reach out at invest@brightspark.com and we will put you in contact with a member of our team. 

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

And while, our investments tend to cluster around tech, consumer, hardware, and SaaS, that’s not where our curiosity ends. Get in touch if you’re building something different - we still want to hear about you and your vision!

We usually invest at the pre-series A stage. Our perfect middle ground is a company that has already delivered a product to market and has some customer feedback. We don’t want to always take a risk in whether the market will like the idea, and at the same time, we prefer not to pay the higher price associated with scale-up financing.

Our investments are at a stage where companies have very positive market feedback, and need to finalize a few things: exact pricing, finesse the sales process, determine the exact cost of sales etc.

Typically, our investments range anywhere between $500k to $1.5m.

Not at this time.

Due diligence and term sheet

Brightspark’s investment team source deals, conduct due diligence and negotiate term sheets with entrepreneurs in the same process traditional venture capital funds do.

Our network is not involved nor aware of that part of the process. No one in our network is informed that we are looking at an investment opportunity before the term sheet is signed.

The closing

Once the term sheet is finalized and agreed upon with the company and other co-investors, we open the opportunity to our network.

This happens at the same time as the Brightspark investment team finishes the financial, legal, and technical due diligence. While the legal documents are being drafted, investors in our network are given a predetermined timeframe to confirm their participation in the investment.

During this process, we collect the funds from investors and close the Limited Partnership prior to closing the single-purpose fund with the company. The shareholder of your company will be “Brightspark MM-YY L.P”.

Once the investment is closed, Brightspark will wire the funds to you as per agreed in the term sheet.

Our network of investors is comprised of Canadian high-net-worth individuals. Most of these individuals have a background in business or tech, and an interest in investing in early-stage companies. Some are sophisticated startup investors, and most are somewhat new to startup investing.

All investors are vetted by Brightspark for accreditation at the time of investment.

Brightspark shares information about your company and the investment round in order to explain the opportunity to our network. You should discuss what information you feel comfortable sharing with your us in advance. The information is organized in three levels depending on its nature:

Level 1: Public information

This information will be used to notify our network of the investment and can be posted in the notification email, in our newsletter, and on the homepage of our website.

This information includes your logo, a short description of the company, as well as the names and pictures of the management team.

Level 2: Investment information

This information is used to educate our investors on the investment opportunity. It resides on the password-protected area of our website, in private email communication with select investors in our network, and includes the pitch video posted on our private YouTube account.

This information is similar to the one used in pitch meetings (your product, market opportunity, competition, strategy, use of funds), and details on the investment (why Brightspark is investing, high-level terms, who the co-investors are in the round). Every piece of information at this level is accompanied by a confidentiality disclaimer. At this level, no detailed financial information or “secret sauce” is shared.

Once the round is closed, the details of the investment will be stripped from our website and only high-level, public information will stay published.

Level 3: Highly confidential information

Information such as financial metrics, competitive data, results of our due diligence process, etc. will not be openly shared with our investor network.

In special circumstances, Brightspark investors might request more information about the company to inform their investment decision. On a case-by-case basis and with your permission, we share certain due diligence information with select investors after they have signed an NDA.

These documents are hosted on a secure, private network in an application called OneHub. The documents are watermarked, set to “view only” (meaning that no one can download or print the documents), and the ability to take electronic screenshots is disabled.

In general, individuals in our network are simply driven by a return on their investment, and are not looking to be actively involved in growing the company. We have found that this benefits our portfolio companies, who appreciate having a network of investors they don’t necessarily need to manage.

Exceptionally, when we see value and all parties agree, we will connect our investors with our portfolio companies. For example,  some of the investors in our network are executives in large CGP companies who can provide guidance and meaningful connections to entrepreneurs selling in that space.

You will also have the opportunity to connect with the network and the LPs in your company at exclusive Brightspark events such as our annual AGM and investor meetups.

The best introductions come through someone we know, and we highly recommend that you first look for a referral. If you can’t find one, please email dealflow@brightspark.com.

Include in your intro email:

• A short elevator pitch
• Pitch deck or business summary doc
• Tell us how you heard about Brightspark
• Your contact information

We receive many submissions and review every single one – but we will only contact you if we see a potential fit.