In 2016, just under $2 billion was invested in Canadian startup businesses. This level of funding has been relatively stable for the past several years, and the number continually inches upwards. Canada, particularly Toronto, is becoming a hot market for all things startups. With human capital, a surging economic hub and strife occurring south of the border, many venture capitalists and angel investors are parking their money in Canadianstartups. It’s up to you to grab those loonies and toonies.
Here are seven tips to be successful in your first round of startup funding:
1. Get to Know Your Audience
Before you step into the lion’s den, you will want to know your audience. This may consist of everything from perusing their social media accounts to reading interviews they may have done. Like any good comedian or politician, it is always best to know your audience.
2. A Business Model That Posts a Profit
Although it may look like Wall Street loves unprofitable companies – just take a look at Snap! – the ultimate goal for any investor is to make a profit. It is up to you to design a business model that makes money and doesn’t constantly bleed red ink or doesn’t have any profit projections.
3. Capital is Finite – be Savvy with it
Here is something to consider: the world is awash in money, but capital remains finite. Investors are looking to park their money in a business that will make them dollars and cents and not cost them too much. In order to get your first round of funding, you need to show how savvy you can be with this investment – always behave as if your first round of financing is your last.
4. Get Some Startup Traction
Prior to seeking out financing, it is likely that your startup is already up and running. If so, highlight what you have achieved thus far: email subscriptions, quarterly sales and media focus.
5. Advisors Not Investors
On one hand, you want investors to give you plenty of dough. On the other hand, you want an advisor who can guide you to the path of profitability. A common problem with investors is that they are constantly intervening without great advice. An advisor, however, can provide you with the necessary advice to thrive and survive.
6. Fine Line Between a Yes Man & a Negative Nancy
This can be difficult to deduce, but you will have to cross a fine line between having investors who are the typical Yes Men and investors who are Negative Nancys. You need to strike the right balance if you want to move beyond that first round of financing.
7. Be Wary of the ‘Wrecking Ball Effect’
Matt Barber, a co-founder and CEO, wrote in Entrepreneur magazine about the dangers of the Wrecking Ball Effect. Once you receive money from investors, you’re on their schedule and you concede some of your personal control to them. This can impact you emotionally and mentally. As long as you and your team are aware of this in advance, you can get through this turmoil.