Founders & Funders: Nov 18, 2014

It’s that time again – to bringing together the people that start emerging technology businesses and the people that fund them, early.

Who should attend?

Uhm, yeah. Founders & Funders.

Founders

You are a founder of a emerging technology company or a technology-enabled company. You are actively raising a round of capital or starting to think about raising your next round. Feels like we’re leaning to Seed and Series A – basically if you’re name is Tobi or Ryan most investors know who you are ;-)

Funders

Space for funders will be limited. We have room for approximately 60 people. And we like to keep the ratio of 3:1 founders to funders. This means we roughly have room for 15 funders. We’re going to be picky, the target will be Seed and Series A.

Why should you attend?

Relatively small and intimate gathering of other emerging technology company founders and the people that fund them. The funder mix ranges from individuals that write first and very small cheques to larger institutional funds.

Social event – no formal pitches
Community is the framework – chance to talk to other founders about the current fundraising climate

What to expect?

It is a chance to have a bite to eat and a drink with other founders and investors that are actively investing in Toronto companies. It’s a chance to figure what has worked for others, to figure out which investors you want to spend more time with, and just connect.

How do I attend?

Submissions will end on Nov 10.

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How we raised a $2MM seed round in 2 weeks

This is a guest post by Mike Katchen, founder of Wealthsimple, Canada’s first online investment manager. He recently moved back from San Francisco where he led marketing at 1000memories (YC S’10, acquired by Ancestry.com).

In May, we raised a $2MM seed round for Wealthsimple (and didn’t really tell anyone). It took us 2.5 weeks to raise from 15 amazing investors in Toronto including David Ossip, Dan Debow, and Roger Martin. Here are a few tips based on what I think we did right.

Note: Table stakes for seed rounds are a good idea (in a massive market) and a killer team.

1. Find your lead investor early.
Most first-time founders I know make the same mistake. They think that fundraising is about convincing investors of the merits of your idea and the strength of your team. Unfortunately, that’s bullsh*t. Investors follow the herd. They care more about who else is investing than what you do as a company. When you start to fundraise, laser-focus on getting your first investor. Don’t go broad until you have your lead lined up.

I met our lead investor the day we started fundraising. He is an icon in the financial services industry. We got him on board through a combination of special terms and appealing to him emotionally about building his industry “legacy”. It took 2 meetings over 1 week to get him to sign. Once he was in, it took 1.5 weeks to close the round.

2. Your angel investors don’t have to be in tech.
We closed our round with 14 angel investors, only 5 are from tech. The other 9 are from financial services. I see lots of entrepreneurs focus exclusively on local tech angels and VCs like those listed in this great post by David Crow. That’s a mistake. Look for successful entrepreneurs and executives in your industry – you’re likely to find a sizeable group of potential investors that actually know your business. A few industries with strong local investors include real estate, financial services, professional services, and healthcare.

3. Most decks suck. Make yours good.
A compelling deck is short, clear, and well designed. If you have a solid story (don’t forget the table stakes above), then tell it in 4-5 pages: (1) what you do, (2) market size, (3) team, (4) growth plan, (5, optional) competition. Here’s our pitch. You can also find great examples at bestpitchdecks.com. Keep it short, pretty, and exciting.

4. Set a deadline.
Fundraising has a nasty habit of dragging on. As soon as you have your lead investor, set a closing date (2-3 weeks out) and use that to drive urgency with other investors. You don’t have to stick to it, but you’ll find that things move way faster with a deadline.

5. Put some money in yourself (if you can). It goes a long way.
The Wealthsimple team were the first investors in our seed round. If you can afford it, investing in your own round goes a long way. It signals to investors that you are committed, aligned, and will be a responsible steward of their capital. Surprisingly few teams invest in their own rounds so it can also help you stand out.

Let me know if you have any tips to add or want to discuss fundraising strategies – always happy to chat. You can reach me at mike@wealthsimple.com or @mkatchen

The children are our future

CC-BY-20 LicenseAttribution Some rights reserved by regan76

We’ve been talking about how much support and infrastructure has changes for young entrepreneurs. When I graduated from the University of Waterloo, I did not know about startups. I looked at places like Interval Research Corporation, Xerox PARC, Advanced Technology Group as where new technology and innovative products were built and launched. When I thought about becoming an “entrepreneur”, it looked more like owning a sports store or being a consultant. I did not have role models or experiences that showed me the path to becoming an entrepreneur.

I have been lucky to be a part of the creation of UW VeloCity. VeloCity happened because of a generous donation by Ted Livingston, the vision of Bud Walker and the leadership of Jesse Rodgers. For me, VeloCity was that thing I wish I had as an undergrad, beyond the cooperative education. The simplicity and support that high potential growth, technology companies were something that I could do (sure I had a degree in Kinesiology, but I was building software on NeXT machines). I did not have context or exposure to founders and the “startup” mindset.

It is great to see the support that IAF continues to offer Ontario entrepreneurs. The announcement of the Youth Investment Accelerator Fund is amazing. It was launched in 2013. We haven’t talked a lot about it as a funding source. But it is unique. The program invests up to $250,000 per company in technology-based startups founded by entrepreneurs under the age of 30.

The program has announced it first investments that include:

Go read Ian Hardy’s BetaKit piece for more details on the companies.

I continue to be surprised at the level of support for Canadian entrepreneurs with the government programs. There are conversations that need to be had about the efficacy of the direct versus indirect investing and services model. And it seems like this is happening at many levels from the Venture Capital Action Plan. (This is a conversation that needs much social lubricant – bring on the whisky).

I love seeing the changes and support of entrepreneurship as a career path with programs like UW VeloCity, Ryerson’s Digital Media Zone, UofT Creative Destruction Lab and others. The additional support of programs like the Youth IAF (and the IAF proper) where capital is deployed by real VCs to companies is fantastic.

Keep up the good work Barry, Michelle, Scott, Jared, Rob and the whole team.