You’re an early-stage startup in Canada. What venture capital firms can help you grow?

I advise early-stage startups to explore options beyond venture capital for their initial funding. During my time managing large-scale programs at Google for Startups, we awarded up to $100,000 in equity-free cash to selected startups. Similar initiatives are also offered by Microsoft and occasionally AWS. Early-stage founders should definitely consider these opportunities!

In the Canadian VC landscape, there are several prominent venture capital firms known for supporting early-stage startups. From my experience, firms like OMERS Ventures, Real Ventures, and BDC Capital stand out. OMERS Ventures is known for its diverse portfolio and strong support network. Real Ventures focuses on tech startups, often investing at the seed stage and providing valuable mentorship. BDC Capital, the investment arm of the Business Development Bank of Canada, offers a wide range of financing options and is particularly supportive of innovative startups. These firms have a reputation for nurturing early-stage companies and can be instrumental in helping startups in Canada grow.

As a startup founder with a globally applicable solution, your focus should extend beyond the local VC landscape. While Canada's VC ecosystem is strong, with over 800 active firms and significant investments in various sectors, your global reach means you can consider venture capital firms from around the world. The size and scope of your target market allow you to explore a wide range of funding options, not limited to Canadian VCs, to support your growth and expansion.

As an early-stage startup in Canada, several top venture capital firms stand out for their track record and support for growth. Based on my experience and knowledge, firms like OMERS Ventures, Real Ventures, and Inovia Capital are highly regarded. OMERS Ventures is known for its significant investments and a wide network of resources. Real Ventures focuses on early-stage tech startups, providing not just funding but also mentorship. Inovia Capital, with its hands-on approach, supports startups from seed to growth stage. These firms are recognized for their expertise and commitment to nurturing startups, making them great choices for early-stage companies in Canada.

While Canada boasts several top VC firms like OMERS Ventures, Relay Ventures, and iNovia Capital, specializing in various sectors and stages, it's noteworthy that Canadian deep-tech startups can also find significant support abroad. A prime example is Eaves Technologies, a prominent Canadian startup, which secured funding from a VC firm in Singapore, illustrating the potential for global investment opportunities beyond the Canadian VC landscape.

When assessing startups for VC investments, typically we look at 1) Problem: Is the problem large enough and people are willing to pay for it. 2) Solution: Is the solution better than others? Is it scalable and potentially defensible? 3) Traction: Are there any indications that there is a demand for such solution? Can be revenue, pilots, etc. 4) Team: Does the team have the right skillsets to uniquely build this startup? Has the team done it before? Team is extremely important for early stage startups. 5) Business model/GTM: Is the business model sound and scalable? What's the go-to-market strategy? Lastly, a startup investment should align with a VC fund's investment strategy.

As an early-stage investor and managing director of an angel club, I have also served as a partner in accelerators and venture capital funds many years ago. To me, the most important characteristics of fundable entrepreneurs include their insight of the market and customers, and the ability to hire and manage employees and consultants who are better than themselves, as well as the attributes and resources of investors to work closely with to create long-term partnerships and trust. I only invest in entrepreneurs that I can help.

When considering what VC firms look for in startups, the paramount factor is a solution that addresses a very large problem. This focus on solving significant issues is crucial because it presents the potential for the startup to scale and become a billion-dollar company. Other aspects like market opportunity, team strength, product validation, and business model are important, but the core of a VC's interest lies in the startup's ability to tackle a major problem with its solution.

Canada or not. That doesn't matter. You need to research who's most likely going to invest in you. Know everything about them. Then, you're good to go.

When approaching VC firms, whether in Canada or globally, the key is not to limit yourself geographically. If your startup is addressing a need that resonates with people, remember that the entire world is your potential market. While researching and preparing to pitch to Canadian VCs is important, also consider reaching out to international VC firms. Your startup's appeal isn't confined by borders if your solution has a global impact. Keep your options open and target VCs that align with your vision and goals, regardless of their location.

Securing VC funding in Canada, or any specific country, can offer certain benefits like capital, expertise, and credibility. However, it's important to consider that limiting your startup to funding from one country may not always be advantageous. The benefits of VC funding are not confined to a single country, and as a startup, you have the potential to access a broader range of resources, networks, and opportunities by considering investors from various global regions. The key is to find the right fit for your startup's needs and goals, regardless of the geographical location of the VC firm.

Many Canadian startups eye the US market, acknowledging the potential for smooth market entry due to the similarities between these neighboring countries. For those aiming to penetrate both the Canadian and US markets early in their journey, the US offers a broader and richer landscape teeming with business opportunities. If this aligns with your business strategy, we encourage you to connect with us. Let's discuss how we can assist in your expansion and growth in these promising markets.

Many active US/European VCs and CVCs do invest in Canada. For growth in Canada, CVCs with existing sales/customers in Canada may offer potential revenue growth on top of the financial investment.

Two hard facts. Canada's population is just over 40 million. USA's population is 10x that number. When a VC considers an investment, the nature of the game is that they're looking for outsized returns. A small(er) market automatically means lower TAM/SAM/SOM. Therefore, if you're a startup focused just on Canada, you better have something that has tremendous scalability or mass appeal such that it is attractive to the largest potential cohorts of the population or businesses or government. If not, it should be at least scalable to the US market. Most VC funded Canadian startups are able to cater to either or both those scenarios. If neither of those two are true, more often than not, a startup may be considered VC non-fundable.