Venture capital continues to be the engine for innovative growth across the world. Nearly 300 billion dollars made its way into the global funding market as venture capital funding in 2023. Of which over $100 billion went to early-stage startups.

Closer to home, in 2023 Canada saw at least 27 mega deals! Two of which were at $100 million+ – Trentsorrent raised CAD $133 million, and DalCor Pharmaceuticals raised CAD $108 million dollars.

The Canadian Venture Capital Private Equity Association (CVCA) has tracked CAD 55 billion ($41 billion) in venture capital deals across more than 2,500 companies since 2013. Ontario alone accounts for close to 50% of that total – $25 billion raised by 1091 companies in that period. 

It’s a great time to be in the city of Brampton, Ontario, if you’re an entrepreneur. Touted as the fastest growing of Canada’s 25 largest cities, Brampton is home to over 92,000 businesses, and the city is being hailed by experts as the next tech mecca after Toronto and Waterloo.

 

What is Venture Capital, and How Does it Work?

Venture capital (VC) is a form of financing designed to support companies with high growth potential but significant capital needs. Unlike traditional funding sources, VC is typically provided by institutional investors or specialized venture capital firms, focusing on high-risk, high-reward investments. This approach differentiates VC from other early-stage funding methods like angel investing and “love money”.

  • High-Risk, High-Reward Focus:
  • VC investments target companies with the potential for rapid growth and significant market impact. This focus on high-risk opportunities is driven by the pursuit of high rewards, typically through the acquisition and later sale of equity stakes in these companies.

 

  • Equity Ownership and Exit Strategy:
  • Venture capitalists are primarily interested in acquiring equity ownership, such as stocks or securities, in the companies they invest in. Their goal is to sell this equity for a significant profit at a later date, differentiating their approach from investors seeking steady, income-based returns.

 

  • Expertise and Networks:
  • Venture capital firms bring more than just financial resources to the table. They offer a wealth of experience in growing businesses, access to extensive networks of industry contacts, and a rigorous approach to scaling innovations. This combination of financial and strategic support helps nurture startups into successful enterprises.

Peter Thiel’s investment in Facebook, made famous in the popular movie The Social Network, was about $500,000 for a 10% stake when the company was valued at $4.2 billion. Thiel eventually sold his stake a few years later, for a reported sum of $1 billion.

Similarly, Canadian maverick investor, Kevin O’Leary famously invested $125K into a pet DNA company which later sold to a larger firm and reportedly netted O’Leary up to 20x on his original investment!

 

So, are you VC Investable?

The first step to being attractive to a VC is to ensure you are, in fact, the right fit for VC funding. Before considering pitching to a VC – we encourage you to ask yourself these questions.

  • Scalability

Can your business scale significantly? VCs want to invest in companies that have the potential to expand their market reach, product lines, and revenue at a fast pace.

  • Market Size

Is the market size large enough? VCs often look for ventures addressing million/billion-dollar markets because these provide a clear path to generating the returns they’re looking for.

  • Unique Value Proposition

Do you have a unique value proposition or competitive advantage? Your business should offer something distinctly valuable or solve a significant problem in a way that is not easily replicable by competitors. This could be in the form of technology, intellectual property, or a unique business model.

  • Traction

Do you have traction? Evidence of traction, like revenue growth, customer acquisition, or strong user engagement, can significantly increase your attractiveness to VCs.

  • Team

Is your team capable of executing the plan? A strong, experienced, and committed team is crucial. VCs invest in people as much as they invest in ideas.

  • Exit Strategy

Is there a clear exit strategy? Venture capitalists are looking for a return on their investment, typically through an acquisition or an initial public offering (IPO).

  • Financial Health and Projections

Are your finances in order? Healthy gross margins, a clear path to profitability, and realistic financial projections are important.

  • Product/Market Fit

Have you achieved product/market fit? A product or service that meets the market’s needs and has been validated by early adopters is more likely to attract VC investment.

  • Legal and IP Considerations

Are there any legal or IP issues? Ensure that your intellectual property is protected and that there are no legal encumbrances that could deter investors.

If you can confidently address these areas with positive answers, you may be well-positioned to consider pitching to a VC!

 

The VC Pitch Checklist

Pitching to any type of investor is not easy – there is always the uncertainty that comes with what the investors’ mindset is, what questions they may ask, how they may interpret the numbers, the market, and the mission behind the product or service being presented. However, it’s helpful to remind yourself that these factors are all genuinely outside your control – what is in YOUR control is – putting together the most amazing pitch EVER!

Inspired by Guy Kawasaki’s legendary 10-20-30 Rule of PowerPoint, the checklist below is a helpful tool in your planning before a meeting with a VC fund.

  1. Define the Problem you are seeking to solve
  2. Define the Solution you are proposing
  3. Explain your Business Model
  4. Highlight your USP or Unique Selling Point; Kawasaki calls this “Your Magic
  5. Showcase your Marketing & Sales Plan
  6. Identify your competition
  7. Introduce your Team
  8. Display your Financial Projections and Business Milestones
  9. The current status of your company and plot future Timelines
  10. Summarize the presentation and talk about the next steps in a Call-To-Action

 

How to Optimize Your Fundraising Process

Vision and Mission: VCs seek founders with clarity in both vision and mission. They look for those with high integrity, a penchant for risks, and an indomitable desire to work through roadblocks.

Progress matters: For a business that has already hit the ground running, demonstrating traction and momentum is key. From acquiring early adopters, and generating revenue – however insignificant, achieving defined milestones, to evidence of progress validates the potential and displays a reduced perception of risk to a potential investor.

Doing the homework, and being realistic: Be realistic about the valuation of your company, and the funding it needs. Do not skimp on conducting thorough market research and analysis to determine a fair valuation. You want to help the investor see immediate financial value when looking at the numbers. Accuracy also enables you to raise capital to achieve key milestones without diluting equity excessively.

Team and Leadership: A strong team is not one with the most skills; instead it is one with complementary skill sets. Credibility from past projects or companies aids trust and brings confidence in potential investors. Passion, resilience, and adaptability are better indicators of a team’s ability to navigate the challenges of entrepreneurship and execution of the business plan effectively.

Relationship building: This may sound obvious, but it cannot be stressed enough. Actively engage in Brampton’s vibrant business community. Attend networking events, participate in industry meetups, and join local entrepreneurial forums. These gatherings are golden opportunities to meet potential investors and like-minded entrepreneurs. Understanding value exchange, negotiation, and rapport building is a game of time and persistence which can significantly increase the likelihood of securing funding. Mentorship from industry leaders is also an underutilized manner to build relationships and get funding.

 

Brampton, Ontario – Building a VC Destination in Canada

An entrepreneurial journey is a hard one as it is, so why not make it easier by setting yourself up in a location that offers an ecosystem that has been specifically planned and built keeping the entrepreneur and their needs, struggles, and story front and centre?

Brampton is that ecosystem.

Rated AAA by S&P Global, and believed to be incubating the world’s future economy, Brampton has a plan in place for the next decade. Everyone from the city’s mayor to its business community is laser-locked in on making the city the hub for innovation – in advanced manufacturing, agriculture, cyber security, F&B, health & biotechnology, logistics & transportation, renewable energy, and SAAS – and incredible growth in value for the near and foreseeable future.

134 private equity firms are located in Ontario – more than three times that of second place, Quebec. With nearly 14,000 new residents calling Brampton home every year, the city is the chosen destination for a young, innovative, enterprising crowd seeking to find, build, and sustain venture-funded businesses.

Brandishing an average age of 36 years, Brampton is located in the heart of Canada’s Innovation Corridor, and conveniently connected by train to Toronto, while also being connected to 7 transcontinental highways, making it accessible to nearly 160 million North Americans. Its connectivity puts it in a position to attract highly skilled talent from across Canada – particularly in the tech space.

The city also boasts of the unique Brampton Innovation District, a thriving business ecosystem located in the heart of Ontario. The district aims to fuel collaboration, encourage creativity, and boost entrepreneurship. Anchored by Ryerson University’s Cybersecure Catalyst, it attracts tech startups, research facilities, and accelerators, becoming a hub for driving innovation and economic growth in the region.

The Innovation District features over 300 enterprise offices, with major companies such as Coca-Cola Bottling, Dynacare, and Medtronic also engaged with the District, connecting young enterprising companies with established experienced business houses.

 

What are Some Alternative Options for Finding Funding in Brampton?

The journey toward securing funding is rarely straightforward, but the ability to pick yourself up and persist through the startup journey is necessary to succeed in the competitive startup environment.

This same determination can also guide you to explore a variety of alternative funding sources beyond venture capital in Brampton. Here are some funding programs available to startups directly from the government:

Other Helpful Links:

Brampton Entrepreneur CentreBrampton Entrepreneur Centre is a 4,500 sq. ft. co-working space and resource centre to fuel creativity and productivity.

Government of Canada’s Business Benefits Finder: Enter details about your business – who, what, when, where, why, and how much – and get a filtered list of grants, subsidies, tax credits, and funding options that fit your requirements.

 

Want to Start a Business in Canada?

We are BHive, a startup incubator located in Brampton, Ontario. We offer international startups the tools, resources, and space to establish – and quickly scale – their businesses in Canada and North America. To apply to our Global Entrepreneur Incubation Program, click here!