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Too Many Demands, Too Little B.C. Venture Financing

Even as B.C.'s venture financing industry languishes, the requests for money keep coming.  Interesting timing. As this month's edition came out with Andrew Findlay's wonderful story on venture financing in B.C., a few of us consultants were gassing about something very similar. But our talks focused on the other end: That's the inevitable overture for help from companies looking for financing.

By Tony Wanless /

Too Many Demands, Too Little B.C. Venture Financing

Even as B.C.’s venture financing industry languishes, the requests for money keep coming. 

Interesting timing. As this month’s edition came out with Andrew Findlay’s wonderful story on venture financing in B.C., a few of us consultants were gassing about something very similar.

But our talks focused on the other end: That’s the inevitable overture for help from companies looking for financing.

In B.C., which is very much a region overloaded with start-up or early-stage companies, this is a common pursuit.

Unfortunately, it’s a pursuit that’s commonly done wrong.

First, let’s apply a rider here. I’m not in the business of getting people money. I’ll leave that to fellow BCBusiness blogger Brent Holliday and others who are actually in that business. 
 
I may be able to show entrepreneurs how to prepare themselves to go looking for money, and guide them on where to look, but actually helping them navigate the fund raising process is a specialty art. Other people know a lot more about it than I do, so I don’t usually step into their areas of expertise. 
 
But people still call me anyway. And often the conversation usually follows the same lines. 
 
Here are some typical excerpts, with comments attached.
 
I’m ready to shop my idea to venture capitalists. Who do you think I should approach first?
 
Whoa there, fella. Is this an idea or an actual business? How big is your company? What stage are you at? Do you have revenue? Do you need at least a million so you can build out on a larger stage? Do you have a plan, backed up with some solid evidence, on how you’re going to do it? If not, don’t even think about going to a VC operation.
 
I’m thinking big. I don’t want to bother with the local people. I want to go right to Silicon Valley. Can you hook me up with someone down there?
 
No, I don’t have that kind of juice. And, unless you’re really exceptional, which I doubt, neither do 99% of the people in this town. Except for probably one person (“The Guy”), anybody who says differently is full of it. And even if we did have that kind of juice, why would we use it without knowing anything about you? 
 
How do I protect my idea? Should I get a financier to sign an NDA? I don’t want them stealing my idea. 
 
Your answer lies in the question: It’s clear you don’t know much about finding money. Real financiers aren’t in the business of starting companies. They’re in the business of financing their growth so that you both can make some money. If you go in worried about their stealing your idea, you’ll be laughed out of the office. Besides, your idea is almost certain to not be unique. You can bet that 20 other people have thought about it, and much earlier than you did. In fact, the investor may already be backing companies working in the same area. 
 
What’s the most important part of getting money? The idea?
 
Hardly. As we said, there’s not much new in this world and, if you actually happen to have an idea that is, it will be very difficult to develop and launch. The most important thing to someone who is backing you with money is whether you can make an idea a reality, or in a word, execute. If you have identified a solid niche, can clearly explain why it’s a good opportunity, and can demonstrate the ability to execute on a plan to access the opportunity (which includes picking the right financier), you may get a hearing. 
 
At this stage, I’m probably looking at angel financing. How do I get it?
 
Congratulations on the reality check. I presume you’re past the friends, family and fools fundraising stage, and now have an actual operating business. I further presume that this business had great potential for expansion, and isn’t just a lifestyle business. Another presumption is that you’re young enough to put in the time and energy required, but not so young that your eyes are full of stars. And that you can handle the possibility of failure and bounce back. If you haven’t tried the angel financing route before, you’ll probably have to get onto the radar of some of the angel networks around, and find someone who specializes in your business space. 
 
A good way to do so is to join the BC Angel Forum, which offers courses on how to present (Tip 1: No 50-page business plans; get it down to a two-page summary. Tip 2: Your slide deck should be 10-12 slides and to the point.) It may also put you in front of investors, if you’re ready. 
 
Another way is to join competitions such as the New Ventures BC competition, which will train you in the intracacies of business planning and navigating the financing assessment process. 
Tony Wanless

Tony Wanless