Like everything these days, equity investment in early-stage tech Canadian companies is a little different than it was before the COVID pandemic. Here are the trends that we have noticed:
1. Small angel investors are just a little harder to find as they run for cover in these uncertain times, while well-funded, government-backed and evergreen funds are more aggressive. Focus on funders that are indeed active in this environment.
2. E-commerce, biotech, COVID equipment providers, and other COVID adapted niche businesses are doing well, while restaurant, traditional retail, event, and many capital-intensive businesses are suffering in these days of social distancing. If you are not in a business that is well adapted to the COVID environment, consider delaying your fundraising efforts or changing your business plans.
3. Few new venture capital firms are successfully setting up, and existing ones are going a little slower, as it is hard to bring in limited partner investors over Zoom calls. As a result, a lot of venture capital firms are approaching the end of the life cycle of their existing fund and not raising their next one. Make sure to understand where the investors you are approaching stand in the life cycle of their fund.
4. It is more challenging for young entrepreneurs to serendipitously meet new investors without live events or networking opportunities. Be picky about the online events you attend and ensure that, if you are attending events, you are learning from the best on the internet or networking with people you know you need to meet.
5. The most active investors are found in big cities like Montreal (BDC, Real Ventures, Inovia, Panache), Toronto/Waterloo (CDL, Velocity, MaRS, Relay), and Vancouver (Telus) according to Crunchbase. Fortunately, in the virtual world, your distance from a potential investor is less important. As such, don’t let geography deter you from seeking out the best investors for your business, but also take into consideration the fact that a smaller, local fund raise is always ideal in the long term.
6. Your network has become even more important during the pandemic, as it is reliable way to get introduced to the right investor. Lean on it as much as possible.
7. Government money is flowing these days. Make sure to maximize it, but be aware of stacking limits. Carefully review the limits and rules to avoid acquiring funds that cannibalize each other and, in the big picture, cost you time and money.
To assess your funding options beyond equity investments, visit Fundica.com.