According to Alex Norman, if you’re a Toronto startup trying to raise money, now might be the time to get on AngelList. He’s one of the people leading the platform’s charge into Canada, and was recently at the DMZ to give entrepreneurs advice on using the platform.
He says investors from around North America are actively looking at Toronto as a place to invest. But we’re different than the states, where you’ll see more people writing consistent cheques, many Canadian investors are a bit more erratic, and those who do consistent deals don’t usually publicize them. This is part of what AngelList is trying to change.
Norman’s goal is to create a public list of Canadian angels and what industries they want to invest in. His hope is that if you say “I’m a music startup” he can say “You should connect with person X.”
While that’s a long way away, AngelList can still help your company today. Here’s Norman’s top tips for Canadian companies:
AngelList is a good platform to top your round off. If you’re raising $750,000 and have strong lead investors, you should be able to find the final $200,000-300,000 on the platform. While U.S. companies raise full rounds on the platform, Norman doesn’t think that will be possible in Canada for the next few years.
You can use AngelList to find investors in Canada and see what deals they’ve made in the past. Most investors on the platform have public profiles with this information. Use it to find people interested in your industry.
Norman says a good profile includes:
- Links to all founders profiles;
- Key employees profiles filled out;
- Eye catching imagery;
- A clear explanation of the problem you’re solving and how you’re doing it; and
- If possible, have a couple customers or advisors listed
Don’t go too detailed on your profile. Get your main message across as concisely as possible.
Each company trying to raise writes up a short thesis about themselves. Even at a seed round, most investors want to see a strong thesis, team and go to market strategy. Most companies’ tech is their baseline, show what unique insights and market strategy you have. Think of what questions investors might have and answer them in your thesis.
People are going to invest in you, not necessarily the company itself. The longer they know you, the more likely they are to invest. Don’t be afraid to connect with potential investors and build relationships way before you’re trying to raise. The more Norman knows a founder, their story and what drives them, the more likely he is to invest when the time comes.
Having a Fortune 500 company lead your round can be negatively viewed by other potential investors, because these companies are often scared of disruptive tech and can overvalue your company, but also limit your potential. If a giant company is your main investor, they probably really like you and may buy you out in the future. Having these players as a minority is a safer bet.
Investors look for how much time you’re giving yourself post-close to raise a next round. Most companies give themselves 18 months runway, but in Canada Norman’s sees companies listing only 12. This makes it harder for companies to raise, because this is the time you’re using to create value for the next round.
After you raise funding, it usually takes 6-9 months to actually start seeing a difference because you have to hire people, then get customers, then show value you’re creating for the customers, and finally another 6 months to raise again.