November 1, 2016

The Federal Government’s Advisory Council for Economic Growth has now issued its first set of recommendations to spur broad economic growth, including recommendations relating to increasing institutional investment in infrastructure, attracting foreign direct investment and enhancing our system of economic immigration.

Importantly for stakeholders in the Canadian technology sector, the Council will next turn its attention to innovation, including a review of the SR&ED program.

We wrote a blog post referencing recent press critical of the SR&ED program and advocating for direct investment. This attack appears to be part of a lobbying effort to shift government funding from a highly democratic SR&ED program (indirect investment) to a highly selective private venture capital program (direct investment). What stands out about the conversation is that it is one-sided. Small businesses who are the unsung heroes of technology commercialization in Canada have been silent on the sidelines. It is time for you to speak up!

CRA provides very little segmented data on the SR&ED program, so we’ve used exit activity as a proxy for R&D commercialization. CB Insights recently reported that Canada ranks fourth globally in terms of number of exits (behind only the US, UK and India). This impressive ranking is due in part to the success of Canadian private small businesses in commercializing R&D. Additionally, more than two-thirds of these exits have no institutional backing (i.e. venture capital), according to CB Insights. The argument that direct investment is better for Canada’s innovation economy rings hollow.

The critics of the SR&ED program focus on Canada’s global R&D rankings and generalize that the SR&ED program is ineffective. While generalizations make for good headlines, they make poor inputs for policy decisions. What these critics fail to mention is that SR&ED is comprised of two parts, approximately $1.2 billion in cash refunds to CCPCs (effectively small businesses), which as shown above, is highly effective and approximately $2.3 billion in credits against taxes payable to public and larger private corporations.

When looking at SR&ED, the more meaningful conversation is whether the public and larger private companies that receive the biggest portion of the SR&ED expenditures should continue to receive this subsidy when they, unlike small business, have access to alternative R&D funding sources.

If the debate was two-sided, supporters of the SR&ED program would highlight that 95% of small businesses are not suitable for the high stakes venture capital investment model; that this subset of the technology sector is responsible for the vast majority of the sector’s employment; and by diverting funding away from small businesses, overall R&D activity in Canada will decline dramatically, as direct venture capital will focus on supporting a small number of later stage companies with expansion capital. Shifting funding from SR&ED to a direct private investment model will not only limit the capacity of small businesses to invest in innovation but will make Canada less innovative in general.

Direct private investment is by nature focused on investing in a limited number of companies promising outsized returns. Direct public investment (i.e. grants) on the other hand is vulnerable to the vagaries of bureaucratic decision making on what does and does not deserve R&D investment. Whereas SR&ED is democratic. Any company performing eligible R&D activity based on objective criteria earns the tax credit.

We think private SMBs, and particularly small non-venture-backed companies are underrepresented in the Government’s consultations and their perspective is missing in the public SR&ED vs. direct investment debate. Founders, CEOs, board members and advisors to private businesses need to speak up, and share with the Government and its Advisory Council firsthand evidence of the SR&ED program’s effectiveness in fostering R&D, commercializing technology, creating jobs and making this segment of the Canadian economy world class.

Your Voice Counts!

Download our template letter and send an email to Minister Bains, your local MP. Include us in your correspondence by copying


Innovation Strategy Canada

In June, the Canadian government announced its vision to build a more innovative Canada, and in July the Minister of Innovation, Science and Economic Development,Navdeep Bains, provided some additional insight into Canada’s Innovation strategy in an interview with The Globe and Mail. This post highlights our perspectives on some of the key topics that promise to play an important role in shaping these consultations and the future of the Canadian technology sector.

The SR&ED Effectiveness Debate

There has been quite a bit of press recently on the SR&ED program, including some general criticisms of its effectiveness. Many commentators group the estimated $1.3 billion in refunds received by CCPCs (effectively SMBs) with the estimated $2.2 billion in tax credits to larger corporations, and point to Canada’s global R&D productivity rankings in making the case against SR&ED. While generalizations make for good headlines, they don’t make for good policy. It is important to set the record straight as these misinformed criticisms could have a long-lasting adverse impact on government policy.

The fact is that Canada’s technology SMBs outperform their global counterparts. If you look at exits as a proxy for commercialization success, Canada ranks fourth globally in exit activity (according to CB Insights), trailing only the United States, United Kingdom, and India (which has forty times our population). Interestingly, Canada ranks ahead of larger global economies, including China, Germany, and France. Given the SR&ED program’s critical role in funding SMB R&D, the evidence shows that this segment is clearly punching well above Canada’s global economic weight class.

Direct (Grants, VCAP) vs. Indirect (SR&ED) Investment Debate

The detractors of the SR&ED program suggest the Federal Government should shift funding from indirect to direct investment, effectively pitting SR&ED against a future VCAP.  We believe such an outcome would represent a setback for the technology ecosystem as a whole.  By some estimates, non-venture-backed companies probably represent 95% of all technology companies, and if we extrapolate CB Insights’ global exits data to Canada, this group is responsible for generating two-thirds of all exit activity.  In addition, non-venture-backed companies play a critical role in driving innovation in our economy, provide critical mass to the industry, and help foster the experienced talent pool from which venture-backed companies emerge.

Indirect investment is also highly democratic and market driven.  Tax credit refunds can be earned by any company performing R&D work that meets objective eligibility criteria.  In contrast, direct investment is by definition a more selective and therefore subjective process, be it by granting agencies or VCAP-backed venture capital funds.  We believe Canada needs another VCAP (more on that below), but the VCAP is not a substitute for the SR&ED program.  VCAP-backed funds follow the classical venture capital model of investing in a select few companies with “home run” or $1 billion exit potential, which most VCs would tell you would represent less than 5% of all Canadian technology companies.

Canadian technology companies, both venture-backed and non-venture-backed, are underfunded relative to their US counterparts, making the SR&ED program a critical funding source for both.  A growing and thriving technology ecosystem is key to Canada’s long-term prosperity, and SR&ED has proven effective in helping Canadian technology SMBs become world class.  Of course, there is scope for improvement on how the SR&ED program is administered.  However, direct vs. indirect funding is the wrong debate.  Experience tells us that SMBs are key to driving innovation.  If we truly want to improve Canada’s global innovation ranking, we should examine shifting SR&ED incentives from large public and private corporations, which should be able to access capital for R&D through more traditional sources, to the next generation of companies that will grow to become our future technology leaders.

Expanding the Venture Capital Action Plan (VCAP) Mandate

The VCAP attracted $900 million from Canadian institutional investors and family offices into the technology ecosystem, due in part to the attractive investment framework developed by the Federal Government.  We believe a second VACP program should help accelerate interest in this asset class among Canadian institutional investors who have lagged behind their US counterparts in venture investing.  A second VCAP is needed to help fund scale-up stage companies to make the necessary investments to play on the global stage.  However, limiting the program’s mandate to late stage equity investing (as some proponents would have it) or to equity investing generally unduly limits its impact to a small subset of the broader technology ecosystem.

To foster a healthy and sustainable technology sector we need to support more than just the small number of companies that have unicorn potential and therefore the ability to attract traditional venture equity.  Such an approach ignores the other 95% of companies, many of which have enormous potential, but due to their market focus, business model, or other reasons cannot attract traditional venture capital.

We believe that if the Government wishes to maximize the impact of a future VCAP program across the technology sector, its mandate needs to include venture debt.

Venture debt plays a critical role in supporting technology companies that don’t fit the venture capital mold, providing capital that bridges the risk continuum between bank financing and shareholder equity.  This large segment of the technology sector, which employs the majority of workers and which is also the most underfunded, deserves the Government’s support in making capital more affordable and more broadly available.

Your Voice Counts!

These are important issues with the potential to have broad and long-lasting impact. Whether you agree or disagree with our perspective, I urge you to speak up and make your voice known, so as to ensure the Government adopts a balanced and effective policy to foster innovation here in Canada. Please share your perspectives in the comments below or contact us to see how you can get involved.

Download our template letter and send an email to Minister Bains, your local MP. Include us in your correspondence by copying

About the author: Alkarim Jivraj, CEO

In a finance career spanning 20 years, Alkarim has helped raise over $1 billion for more than 100 early stage and growing technology companies and has made over 50 direct investments. Before joining Espresso, he was the Founder and Managing Partner of Intrepid Business Acceleration Fund. Alkarim started his finance career at Yorkton Securities, a boutique investment banking firm, eventually leading its information technology investment banking practice and co-managing two investment funds. Alkarim sits on the Board of SCI Marketview.




Espresso Capital was excited to be involved with the 2nd annual Canadian Spotlight Awards hosted by Razor and Kari Suleman and benefiting Next Canada. This year, eight companies were honored and recognized as a Canadian Centurian ($100+ exit) or Unicorn ($1B valuations).

See below a recap of the event and mark your calendars for next year!


Toronto, ON, October 3, 2016 — Espresso Capital Ltd. (“Espresso”) is pleased to announce the addition of Caterina Papadakos as Director, Western Canada to its Vancouver team.

Espresso is a leading provider of growth capital to the Canadian technology sector. Since its inception in 2009, Espresso has funded over 200 companies across the country.

As Director, Western Canada, Caterina will be responsible for leading Espresso’s business development activities in the region and managing existing client and partner relationships. “Espresso is a recognized and respected brand in the Canadian technology ecosystem” says Caterina. “I am excited to join a team with a proven track record of providing clients innovative and timely funding solutions to support their growth objectives.”

Before joining Espresso, Caterina held the role of Director, Technology and Innovation at BMO, leading the bank’s technology sector coverage in the Vancouver market. Caterina’s experience also includes roles with Trade and Invest BC where she worked with companies to develop their export development and foreign investment strategies focused on Europe, India and the Americas.

“Caterina will be a great addition to the Espresso team” says Alkarim Jivraj, Espresso’s CEO. “She shares our passion for helping entrepreneurs find the right funding solutions for their businesses, and adding value beyond capital.”

For more information please contact:

Alkarim Jivraj, CEO
Espresso Capital Ltd.

About Espresso Capital Ltd.

Espresso was founded in 2009 to provide innovative financing solutions to early and expansion stage technology companies. We have provided over $130 million in loans to over 200 companies since inception. Our financing solutions bridge the gap between equity and traditional sources of debt financing. We’re proud to provide fast, fairly priced and user-friendly growth capital to help entrepreneurs and investors reach their strategic and financial objectives.


Espresso Capital Katie Paterson

We are excited to introduce you to our newest member of the Espresso Capital team: Katie Paterson, who has returned to Canada after five years in Silicon Valley. Katie will be leading marketing at Espresso Capital and be an active part of the tech community.

To learn more about Katie and her background, we sat down for an Espresso Roasting (well more like an interview actually!) to ask her some questions and introduce her to the Espresso Capital community.


Tell us about your experience before joining Espresso. Have you been in marketing for your whole career?

I’m not your traditional marketer. By education, I’m an engineer. I began my career as a manufacturing engineer working on the automotive production floor but saw an opportunity to use my process driven and mathematical education in a different way. As I started my marketing career, the business was changing with the induction of social media and the evolution of digital and analytics. This was a launching point and an exciting opportunity to apply my engineering background in a creative way. I discovered my blended skills were a perfect fit for startup SaaS B2B companies that needed lean and process-driven thinking marketers to drive their business with minimal budgets. I developed my skills as a B2B marketer for SaaS startups in the HR and marketing sectors in Canada and the U.S., before moving back to Toronto and joining the Espresso Capital family.

Why the decision to join Espresso Capital?

Joining Espresso Capital will let me give back to the growing tech community that took a chance on me when I shifted careers from engineering to marketing. I’m excited about how much the Canadian tech ecosystem has expanded since I moved to San Francisco five years ago. I believe Canada can play a global role if we continue to find ways to support early and expansion stage companies. Working with Espresso Capital, I plan to be an active player in ensuring companies in Canada know about their financing options and can attract the funds needed to drive growth at home and abroad.

What are your goals? What are your short-term priorities?

I’m focused on two key areas: community building and education. It’s important to listen to your customer: be it a company founder looking for financing, or an investor who wants to participate in the tech ecosystem. In my experience, being active within the community is the best way to listen and be part of the conversation. Communities provide feedback, challenges are shared, and marketers can understand their customers. They also deliver opportunities to help people learn new skills and gather knowledge.

Now that you’re back in Canada, what’s your take on the startup scene?

I’m pleasantly surprised by the tech sector’s growth over the past five years. But I feel the Canadian startup scene has a PR problem versus our US counterparts. While I was in San Francisco, I heard little about Canadian successes, which led me to believe there weren’t any. Clearly, this is not the case! I think our humble Canadian nature gets the better of us because we don’t share our homegrown successes on a global scale. In Silicon Valley, they are not shy to shout from the rooftops; it’s time we in the north start shouting too. Celebrate, Celebrate, Celebrate.

Any thoughts about how startups should approach marketing?

For any growing company, budgets are tight and need to be focused on driving a high-quality product that solves a problem. This leaves very little for marketing. As a result, you need to exploit cheap and cheerful options. For example, there is a lot you can do with social media without spending a dime and still make an impact. It is important to build an online community and create a plan to grow with a meaningful and consistent engagement strategy. Marketing opportunities also need to be leveraged throughout your customer journey. You need to ask yourself how can your product drive leads? I’ll leave you to think about that.

So, to wrap things up. What is your caffeinated beverage of choice?

I am a tea drinker, have been since I was a child. There is always a freshly steeped cup of David’s Tea on my desk and I drink 5 to 6 cups a day!

If you have questions about how you can help jump-start your company’s growth, brand awareness or build a community around your product or service, you can contact Katie at or @katiepaterson on Twitter.


OUTSIDEIQ gets creative to raise Growth Capital

One of the realities facing many Canadian startups is the challenge to attract growth capital, particularly to develop leading-edge technology. This was a fact of life for Toronto-based OutsideIQ, which spent several years developing technology that uses artificial intelligence and cognitive computing to automate due diligence reports for large financial institutions and insurance companies.

Looking for Alternative Growth Capital

Dan Adamson, OutsideIQ’s founder and CEO, said the lack of capital from Canadian investors meant R&D was fueled in three ways: tapping into angel networks, accessing venture debt, and leveraging financing from the federal government’s FedDev program. OutsideIQ’s approach to raising capital saw it embrace angels and venture debt at the same time. It worked with the Angel One Investor Network, one of the most active angel groups in Canada, and Espresso Capital, the leading provider of venture debt to startups. Adamson said dealing with Angel One and Espresso not only provided OutsideIQ with much-needed capital but also allowed it to qualify for funding from the FedDev program. “Part of the FedDev requirement is that we needed an organization behind us that was approved and accredited by the federal program” he said.

“The angel network worked because we could show we had enough money from Espresso. Espresso worked because we could leverage the Angel One network. It was a nice synergistic loop.”
– Dan Adamson, Founder & CEO @ OutsideIQ

Adamson said the mix of angel investors and venture debt succeeded because Angel One and Espresso recognized the strengths that both sides brought to the table. “Espresso and Angel One realized the quality folks involved, and they have become trusted partners. Another benefit in working with Espresso” Adamson said, is having a business relationship that delivers valuable insight. He said Alkarim Jivraj, Espresso’s president and CEO, has provided valuable feedback and advice because he has a combination of operational, startup and financing experience.

“OutsideIQ is typical of many Espresso customers. A super smart team that has developed and validated a disruptive technology. It has attracted initial funding and pioneering customers, but it is not quite ready for prime time venture capital. That’s where Espresso comes in, providing, the funding needed to scale revenue and traction necessary for a Series A or B [as the case may be].”

– Alkarim Jivraj, CEO @ Espresso Capital

Fueled by capital from Angel One and Espresso Capital to develop its technology, OutsideIQ was able to raise a $7-million series A round last year.

Venture Debt Plays a Key Role

While the company plans to raise additional capital this year, Adamson said venture debt will continue to play a key role in OutsideIQ’s financing activity. “When you are looking at a company growing at a certain rate, it is healthy to have a certain amount of debt and not have further dilution in raising capital as straight equity” he said. Debt is often the smart way to go, and Espresso has been helpful in helping us structure our financing. OutsideIQ is a great example of how fast-growing companies can leverage a combination of equity and debt financing to successfully drive product development and attract customers, while minimizing dilution for shareholders and setting the foundation for the next milestone financing.


January 10, 2016

Espresso is pleased to announce the launch of Fund V, significantly expanding the recurring revenue (SaaS) financing program we pioneered over three years ago. The new fund aims to capitalize on the growing demand from North American technology companies for venture debt. The fund also extends our working capital solutions beyond tax credit financing to include receivable and contract financing.

Since 2009, Espresso has provided over 200 technology companies with fast, fairly priced and user-friendly risk capital. Please contact us to learn more about Espresso’s innovative funding solutions.


We sat down with Karen Grant, Director, Angel One Investor Network, to talk about the key trends impacting angel investors and the opportunities and challenges facing angels in today’s investing environment.

Is this a good time to be an angel investor?

I think it’s a great time to be an angel investor. The start-up environment is very active and there are so many government programs that work well with angel investors across the country. The angel’s investment is augmented by government funds so the company has more working capital, and it’s not dilutive. It helps de-risk their investment, which is all any angel is looking for.

What’s important for angels these days?

One of the biggest issues within the angel community is how you exit your investments, and how you exit well. A lot of people are putting together fairly sizeable portfolios of angel investments. And how many significant Canadian exits have there been? It’s important to find  other ways to help investors see a return, and move on to do more investing.

Are there more angels around?

Without a doubt, I think we are definitely seeing more of them because there are more formal angel groups forming across the country. They have always been there but they’ve been less structured and not as visible.  With the formation of more formal angel groups, and federal and provincial government programs to bring them front and centre, angel investors are becoming more accessible for start-ups and are coming to represent a more prominent source of capital in the ecosystem.

What are the benefits of being part of an angel group?

Operating independently, you have access to your particular clique. But if one of your group does not get approached, there are deals that you miss, and a lot of that depends on where you are geographically located.  The structured groups create a channel for angels; that is what joining an angel group does. It creates a channel for your interest. We have 90 people in our group with a wide range of expertise – that is a large network to attract and evaluate deals.

Are there more new angels?

Yes. There are more first timers coming into angel groups.  Five, eight years ago when the approach was you invested with your small group of people you knew and trusted, and the angel community as a whole was less visible, I just don’t think there were as many newcomers to the practice. From the viewpoint of start-ups, it has been a huge boom – you just need to look at the dollars. Not too long ago, it was hard to find angel investors for a startup company. Going to a VC with a startup idea was ridiculous, and trying to find someone with enough money to support your wild idea was hazardous work. Now you can put together a due diligence data room on Dropbox, and then you can go out and apply to 13 angel groups within an easy drive of downtown Toronto. That is a big change. And the founders don’t even have to do all that work. In our group, 70% of investments are syndicated with other groups, so we do the work for them.

Are there any challenges facing the angel ecosystem?

One of the problems in Canada with the angel community is that most of the angels are mature. It is different in the U.S., particularly Silicon Valley and New York. In Canada, specifically Ontario, a large portion of the angels are more mature. When you hit 60-years-old and you have eight companies in your portfolio, it may take 14 years to see a return. The problem with this picture is succession planning, and what to do with your portfolio has become top of mind for more mature members of angel groups.

Jim Estill, for example, has a phenomenal personal portfolio of angel investments. He is now admitting to more than 150. Here is what he has been telling people – his average hold period is 14 years. You often hear people talk about investment periods of five to seven years but that is from a VC’s perspective. If an angel gets involved in a seed round deal, it may take as many as five to seven years before the company attracts the attention of VCs. The VC investment period adds another five to seven years, which is 14 years. One guy in my group has been involved in a company since 2008, and he’s still holding the investment.

Looking ahead, are you optimistic for the continued role of angels?

Absolutely. I think angels will continue to play a key role in the ecosystem, not only by providing much needed capital at early – and critical – stages in a company’s growth, but also by providing mentorship and guidance to founders as they build their businesses. Their numbers are growing but what we need to see is more younger angels involved in supporting the tech ecosystem. Angels will often be the first partners on a company’s long and successful journey from idea to exit – and that is an exciting role to play.

Blog post by Mark Evans, Author and Marketing Consultant at ME Consulting.


January 7, 2016
When Nancy Peterson, Founder and CEO of home renovation contractor marketplace HomeStars, approached Espresso Capital for venture debt, she refused to take “no” for an answer.

Espresso reviewed the opportunity but declined to invest. Notwithstanding, Peterson convinced Espresso CEO Alkarim Jivraj to become an advisor to HomeStars.

“I was thinking about making structural changes to the team,” she said. “Not knowing Alkarim well but based on the questions he asked, I felt he had the expertise to provide valuable guidance to us, so I went out on a limb to see if he would be willing to join our advisory board.”

Jivraj’s first piece of advice to Peterson was to hire an experienced SaaS CFO to help the company better understand its unit performance metrics. This led to HomeStars hiring Steve Wilson, who has played a key role in retooling the company’s sales coverage model, revamping its financial reporting, improving cash flow management, and ultimately helping HomeStars to get to a stronger financial footing.

Four months after their initial meeting, HomeStars had demonstrated enough progress to convince the Espresso team to provide funding to support HomeStar’s ambitious plans.

The financing was completed in less than a month. The company explored other options, including VCs and bank financing, but ultimately selected Espresso because it could move quickly, the terms were more flexible and did not involve dilution for shareholders, and equally as important, Espresso had proven its capacity to add value beyond just financing.

While HomeStars received much-needed capital from Espresso to grow their business, Peterson said Espresso has also become a strategic partner: “They meet a lot of companies and are constantly connecting the dots, and so have been very helpful in making strategic introductions. They’re also very knowledgeable about what makes companies valuable, and in particular have a deep understanding of SaaS businesses at the operational level.”

Peterson says Espresso has helped HomeStars think like a software company and positioned it for strong growth going forward. “We now have a strong foundation, are profitable, and still growing at a double-digit rate. Working with Espresso was a big jump for us.”

Blog post by Mark Evans, Author and Marketing Consultant at ME Consulting.