Location, location, location…

After a few weeks of quiet while we focused on product launch, the fundraising roadshow is kicking off again next week with a trip to Boston.

One of the big decisions every Canadian startup faces is if / when to raise US venture capital. Canadian VCs seem to do a good job early on, but they look for deeper pocketed, more focused VCs with potential exit / strategic relationships to come in sooner or later.

We are pretty early into our story, but with a direct-to-consumer business model, we need strong backers. We also needed backers who understand this go-to market. For these reasons, we’re speaking to select US VCs as well as most of our local potential funding partners.

The big challenge with the US VCs is location and trust. They are really the same issue. Do they trust the current team in its current location or do they only trust the current team if it’s in their backyard? This is an understandable risk factor for an investor. If the CEO sucks, its much easier to replace him/ her if the company is located in the VC’s area / network.

Ultimately, location will come up in your discussions with US VCs. Anticipate this by considering what is best for the business. Some factors to keep in mind:

Do you have the t-shirt? Did you have success with a previous startup? Do you have a solid track record?

Local strengths: Can you build a world class company in your space in your current location? If so, then you should resist moving. If not, then you need to move.

Both of these factors were at play with my last company. The team had not taken a startup all the way before. So were not a proven commodity. Also, the company was in storage, one of 2 storage companies in the country (by my count). There was strong pressure to move.

It’s a different story this time. Montreal is a strong location for building IP communication plays. Still, I know the question will come up. I believe we can be successful here, so I’ll be pushing for no move.