Raising a Seed Round in Canada

I stopped by Notman House yesterday to visit the current Founderfuel cohort and share some thoughts on how to raise their seed rounds.

I thought I’d share some of the insights from yesterday for those of you thinking of raising your own seed round.

The VC Funnel

CB Insights recently looked at 1,027 companies that raised seed funding and tracked them to death/ exit. Continue reading Raising a Seed Round in Canada

Make your pitch stand out

The blogosphere is littered with posts on how to prepare an investor pitch. Many VC firms have even posted their preferred format. As an example, here is Sequoia’s.

Source: https://docsend.com/view/p8jxsqr
Source: https://docsend.com/view/p8jxsqr

Imagine if you’re a VC hearing 3 pitches/ day, 5 days per week. That’s over 700 pitches per year! If every one followed the same format, you’d tune out.  Continue reading Make your pitch stand out

The long, windy road to a closed deal

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The typical way that startups raise capital is to wait until they have 6 months of runway and then start a roadshow. They put a slide deck, model and pipeline together and hit the road.

Sometimes, this approach is unavoidable. Especially early on when you have less time and runway to be strategic. The problem with this approach, however, is that you are more than likely to get lots of “no”s.

The reason is that you’re asking relative strangers to enter into a multi-year, illiquid, risky relationship with you. You have to raise now. You leave no time for potential investors to track your progress. So, they will probably just pass. Continue reading The long, windy road to a closed deal

The Spotify debt deal: A cautionary tale

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Techrunch reported yesterday that Spotify has raised a whopping $1B debt deal. This is on top of the $1.1B in equity that the company has raised to date. As I read about this deal I noted some terms that raise concerns and serve as an important lesson for the rest of us as we think about how to capitalize our companies:

TPG and Dragoneer get to convert the debt to equity at a 20% discount of whatever share price Spotify sets for an eventual IPO. And if it doesn’t IPO within the next year, that discount goes up 2.5% every extra six months.

Spotify also has to pay 5% annual interest on the debt, and 1% more every six months up to a total of 10%. And finally, TPG and Dragoneer can sell their shares just 90 days after the IPO, before the 180-day lockup period ends for Spotify’s employees and other investors.

Continue reading The Spotify debt deal: A cautionary tale