NORCAT is bringing together investors and entrepreneurs in what’s being called the “Sudbury Catalyst Fund.”
The program, worth $5 million, is funded by FedNor, Nickel Basin Development, and the Greater Sudbury Development Corporation.
Importantly, the fund also relies on “angel investors,” people with available capital to help fledgling startups.
Don Duval, NORCAT’s chief executive officer, said startups typically face five challenges.
“It’s access to mentorship, capital, talent, partners and customers,” Duval said.
The Catalyst Fund attempts to address capital needs for startups, at least at the beginning.
“We embarked on an initiative about five years ago to educate these high net worth individuals, which we call angel investors, and really invigorate and inspire them to say ‘look we have some really interesting high potential quality deals, meaning early stage tech companies, that are working to raise equity capital.'”
Duval said through a sustained effort, they were able to “invigorate” the angel investor community in Sudbury.
That, in turn, enabled them to help build the fund.
“What we discovered is we had a lot of dormant capital that could be exploited and engaged,” Duval said.
Duval said that investors were also interested in helping build the economy so their kids and grandkids wouldn’t have to leave Sudbury one day.
“Investing in a good deal is one thing,” Duval said. “But if it created an opportunity to have jobs in their community, well, then you have this interesting localization benefit.”
Start-ups will still have to “pound the pavement” to get solid capital behind their projects before being eligible for the Catalyst Fun, Duval said.
“If you’re an early stage tech company and you can raise $250,000, the Sudbury Catalyst Fund is a co-investment fund where we can come in on the same terms that the [angel investors] have come in.”
That will give startups a little more cash in the bank, Duval said.
“It could give them runway to invest more, get the foundation structure, maybe get their first reference and customers, file their patents, whatever it might be,” Duval said.
“So the idea is to be able to leverage and extend the burn rate of these early stage tech companies by coming in to match local investment.”
Companies that think they may be eligible to access the catalyst fund can visit NORCAT’s website by clicking here.