Startup Financing from Seed Round to Institutions
Finding capital for startups is no easy feat. Our team works with them on a daily basis to help them find, and support, the right funding options.
We like to support these companies in finding financing for their immediate needs so most of the financing will be smaller numbers with a larger objective of $10MM as the final amount.
We only work with private companies and find that raising capital of $500–700k at a time works for them and is relatively easy to accomplish. The process is pretty typical. We utilize the family and friends network for initial rounds then accredited investors and Offering Memorandums (OM) to fill the need.
Angel investors are in good supply in Vancouver but they are looking for the unicorn in the group they manage while most of their investments may perform ok or simply fail while they attend to the star company. Our goal with the companies that we work with is to make sure after all the early rounds of financing they still retain control of the business until liquidity.From my experience Angels and Venture Capital guys want a board seat and a big chunk of shares for their investment. We rarely use that model and go instead for the accredited investor route.
We choose the companies we work with very carefully so they usually follow our thoughts on where to go for funding being family and friends, accredited investors and OM’s. It’s a matter of preference for us as well as our persistence that our clients retain majority ownership. We also don’t like debt financing at any point in the process.
Our thoughts are that people and equity are the two most important things to our clients. Taking care of the client so the founder retains ownership is paramount.
Sure there are advantages for taking money from Angels and VC’s. Financing a needed expansion quickly is very appealing to the first time founder who is going for the dream. However, if he’s been down that rabbit hole before he knows the disadvantages too. He’s tried the banks but without a track record and a big sales number they are not interested and family and friends resources are limited. The VC’s money seems like a great deal.
The downside to VC investment is not so much a bad thing as it is meant to protect…
