Investment Banking for Startups – Q1 Capital launches Private Investor Network

Raising funds for a startup is a full time job. As Craig Hayashi of Maple Leaf Angels pointed out in his recent posts, it can easily take 6 months to raise an angel round. Fortunately, there are options for entrepreneurs who want to focus more of their attention on building the business and less of their precious time on the next financing.

Golden KeyMeet Frances Fast of Q1 Capital. She specializes in getting startups funded… fast. There is such a thing as a startup investment banker. Frances recently joined Q1, to lead their Private Investor Network, but she is not new to the industry; Frances has been working with angel groups in Canada for nearly a decade, talk about a golden Rolodex.

If your startup needs to raise over $750,000, you might want to consider the services of an investment bank. They’ll put together your pitch book and get you in front of an interested audience; of course you’ll still need to sell it.

Investment banking for startups… sounds fancy, what’s the catch? Well, an investment bank’s services are not free. At the close of financing they get a 7% success fee and along the way charge a retainer to keep everyone’s eye on the ball and moving toward closing a deal.

Sure you can do it yourself. Put together your own private placement memorandum, hunt down angels and vcs, try and get a meeting, etc. But if this is your first time down the startup financing road or you have more vital things to focus on, bringing on an experienced deal maker can keep everything on track and moving forward… fast.

Contact: Frances Fast, Q1 Capital
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JobLoft makes an exit

JobLoft2JobLoft, the Toronto-based company at the center of the Dragon’s Den soap opera last year has finally been paid their due. In a move that both shows how much you do not want investment from the Dragon’s Den, and which shows how a little hard work pays off, JobLoft is being acquired by OnTargetJobs.

OnTargetJobs runs a network of job boards including Hcareers, which caters to the hospitality industry. Our guess is that JobLoft’s map functionality will be brought to Hcareers. OnTargetJobs is backed by Warburg Pincus. No word yet on the acquisition details, but we’ll try and scoop TechCrunch.

Congrats to the JobLoft crew on a successful exit.

Angel financing – What angels look for in a company: Product and pain point (part 1 of 6)

In the next series of articles, I will walk through the main areas that angels evaluate when assessing a company for investment. As discussed in a previous article, there are distinct phases you will need to go through as you work through the funding process. However, the same evaluation areas will be used at each stage of the process – the only difference is in the level of detail. The areas I will cover are:

  • Product / pain point
  • Market potential / revenue model
  • Competition / barriers to entry
  • Management
  • Execution strategy
  • Investment potential

So lets start with product / pain point. In order to engage investors in the funding process, you will need to clearly explain what your company does and what problem or pain point its product/service is addressing. This sounds simple to do but you would be surprised how many applications or pitches I have gone through and at the end have walked away without having a clear idea what the company does.

In describing your company, it often helps to describe the problem you are trying to address. As an example, lets say you are starting a company to make cases for iPods. In this case, you would want to portray the pain point along the lines of:

  • Apple is renowned for making products that have great industrial design and part of the reason people buy them is how they look
  • iPods are made to be carried around so can take a lot of abuse
  • The casing on iPods is prone to scratching
  • Higher end iPods are expensive

    We therefore feel there is a market to provide people with an external case system for iPods that protects the iPod from scratching yet does not detract from the overall look

Having described the pain point, you now must clearly explain how your company is addressing the pain point. With the example above, how many different ideas can you come up with to build a company to address the pain point? For example, maybe you try to develop a revolutionary ‘micro film’ that can cover the iPod and give it greater scratch resistance. Or maybe you look to hire well known artists and have them come up with very fashionable cases and sell them at high prices as limited numbered editions. Or maybe you will develop low cost cases made of 100% recycled materials that look plain but do the job of protecting the iPod in an environmentally friendly manner.

Each business model has its own unique challenges so this is why its important to clearly define what your company is doing so investors know what they are investing in. Most investors will use this as a high level filter. If they do not think the idea is viable or marketable, they will probably not pursue things further. i.e. why would anybody want to invest in something they do not understand or do not believe is a good idea.

One other tip is to keep things very focused. With any company there are probably opportunities for adjunct products, different revenue streams, etc. If your company is just starting out & looking for its first financing, resist the urge to try jam all of this into your company description thinking it will impress investors more to see how broad your company can be. With a start up with limited resources it is going to be hard enough to launch the initial product. Trying to do multiple things at the same time will probably not be feasible and will end up confusing investors as to what your company is.

In my next article I will cover the next and closely related evaluation area which is how you show the market potential and revenue model for your company’s product/service. As always, if you have any questions, comments, or suggestions for future articles feel free to contact me: craig at