Startups always need access to capital. Raising capital requires searching for different sources, and having knowledge of the various options available to a tech startup.
If you’re looking for funding, here are five tips to get you started:
1. Leverage your relationships – Identify the ecosystem that you are a part of, and identify the best type of investor that would allow your startup to accelerate to the next stage. If you are a client with the RIC Centre, we have a strong partnership with the Angel One Investor Network. When our advisors think that you are ready to pitch to a group of angel investors, they will refer you! And referrals make a difference. Staying local can sometimes be a great advantage.
- Experts from the National Angel Capital Organization, and three other booming startup communities across Canada, identified that in 2015, there is greater public interest in local entrepreneurs and the Canadian high-tech scene.
2. Think about your valuation – Your startup needs to be able to defend your valuation. Investors can help you grow your business with their industry connections and expertise. The deal should be fair and of value to both parties.
- When you’ve determined a valuation for your business, make sure you have the financial data to back it up. Be ready for due diligence if your idea catches interest with an investor!
3. Maximizing value from government programs – Most startups need working capital and growth capital. There are many programs offered by the Government of Ontario for entrepreneurs looking for financing.
- You can leverage the Ontario Centers of Excellence where multiple funding programs are available for entrepreneurs.
- The Canada Revenue Agency administers the Scientific Research and Experimental Development Program (SR&ED), a tax incentive program for encouraging Canadian businesses to conduct Research & Development in Canada.
- The FedDev Investing in Business Innovation program matches investment from Angel Investor Networks to attract more investment in innovative and high-growth potential startups.
4. Getting sufficient capital to build your product, go to market, and expand your sales – It’s difficult to attract both working capital and growth capital. This is when you can use temporary venture debt in combination with other type of creative financing options (tax credits, government incentives, etc) to provide significant contribution to your growth plan.
5. Build your startup’s credibility by delivering results – If you’ve successfully received investment from an angel investor, or a venture capitalist, congratulations! But now, you need to deliver on your business plan. While it’s important to spend time trying to raise capital, it’s also critical to ensure that milestones are being met. This will establish credibility among your investors, and they will recognize the growth of the business and the strength of the team.
Want to know more? Attend RIC Centre’s April 9th Growing Your Business seminar on Creative Financing and Angel Investments! Our expert panel of speakers includes Karen Grant, Executive Director at Angel One Investor Network, Alkarim Jivraj, Managing Partner at Espresso Capital, and Miriam Tuerk, a serial entrepreneur who just raised $600K from government programs!