in Angel Investors, Canada, Investors

Show me the money

Canada $5 Bill and Snow - Some rights reserved by Bruce McKay~YSP CC-BY-NC-ND
AttributionNoncommercialNo Derivative Works Some rights reserved by Bruce McKay~YSP

I love when entrepreneurs tell me that raising capital in Canada is hard (it is). I love it even more when they tell me that they think “they should move to Silicon Valley” because raising money will be easier (it isn’t). It helps me determine which entrepreneurs are too egotistical, too delusional, too uninformed to really be effective raising money.

There is a venture capital scene in Canada. It’s different than the scene in Silicon Valley or New York City. But there are people making investments in entrepreneurs. According to the CVCA in 2010, there was $484MM invested in IT in Canada (2010 Q4 VC Data Deck from CVCA [PDF]) with $271MM going to software & internet companies. There are issues like US Funds making larger investments than Canadian funds (looks like $2.5MM vs $1.1MM average deal size) or that US companies raise more ($8.2MM vs $3.6MM). But these are just the nature of the game. There are structural issues. It could be better. But to say it is nonexistent, that’s just wrong or lazy. And both are bad qualities in early stage entrepreneurs.

I was asked by an entrepreneur about who where the funders in Canada. Here is my short list of companies that are writing cheques or are in the process of doing diligence on companies, i.e., prepared to write a cheque. There are a lot of companies like OMERS that are stage agnostic, but I’ve put them in the growth side given their deal history (in the case of OMERS it’s $1.5MM in WaveAccounting).

So if you think it’s easier raising money in NYC, Boston or California. My advice is get your ass on a plane and try. Because it isn’t as easy as you might think.

But don’t say that there is no Canadian VCs or venture capital money. Because that just makes you look like a moron.

Suck it up, it’s hard raising money. Maybe you should talk to the Canadian investors and figure out why they don’t want to write you a cheque!

Seed ($25k – $500k)

Growth ($500k – $5MM)


Who else is actively placing money with Canadian startups? No grant money, we’ll do that in a separate post, but who else is actively doing convertible debt or equity placements? How to define active? Either >3 deals in diligence or has deployed more than $50,000 ($25,000/placement * 2 placements). That seems fair.

Who did I miss?

 Some rights reserved by tao_zhyn CC-BY
Attribution Some rights reserved by tao_zhyn


  1. Such a valuable post and I am glad to see you putting the spotlight on the folks who are really doing deals these days. I think the profile of “who” is an investor in Canada has shifted for the better. A lot of the chaff is being shaken off.

  2. I would add York Angels ( into the Seed category.  Maple Leaf Angels and York Angels were our two main investors in our seed round of financing.

    Of course in the Seed category, you should also put individual angel investors who are not part of any group.  

  3. Great idea getting this out there David.  Also love the straightforward tone towards those who say there you can’t raise money in Canada.  Trust me in that it is much easier to stick out from your peers and get an investors attention in Canada than in a place like the Silicon Valley.

    Another very active seed fund: Initio (Vancouver)

    A few more Growth funds: Yaletown (Vancouver), BDC

  4. David, Love the last paragraph.  “Suck it up. … figure out why they don’t want to write you a cheque.”  For the last two and a bit years I’ve worked with a small group of investors reviewing business plans and fund raising requests. The assumptions made and the lack of research into the market and / or competition, are astounding.

  5. I started a Quora thread for VCs actively investing in Montréal at

    I would love to see a similar list for other Canadian cities.

  6. Thanks for doing this David. Real Ventures is very much a seed investor. Our smallest deal so far was $50K. But unlike pure seed, we can back our companies all the way into expansion and beyond. 

  7. Thanks Mark. There were a few companies like Real that I know the environment is so complex that you make investments independent of the stage or the amount. It’s hard to explain to the uninitiated sometimes, or I make it more complex.

    With the rise of FounderFuel & GrowLabs there are 2 new players. But there is money. And great people like yourself, @jscournoyer and the teams in Montreal, Vancouver that are here. Fighting the good fight.  

  8. BDC should be on the list, though like the IAF fund, they are more of a trailing fund than a lead investor. 

    Missing from your list is a mention of quality. Dealing with the IAF, for instance, is a stunningly disappointing experience. One gets no sense that they know what they’re doing.

  9. David – great points and a great resource for CDN startups.

    From my perspective, tech startups in Canada should spend less time whining about “no capital” and more time on ramping up their companies and gaining traction.  If you have a solid business model and are attracting paying customers, you can find investors!

  10. That’s a great list. Another cut should be by a) Aggressive investors vs. b) Conservative. 

    Although there is more money around, what I’m not seeing is a change in Canadian VC’s making bolder and bigger investments.

  11. Chris,

    Without details about the “changes”, I am going to call bullshit. The market is the same. There are a few new players, but it remains essentially the same as it was 12 months ago.

    List the more options please.

  12. Agreed, but like @wmoug:disqus’s comments this could be construed as the “aggressive” vs “conservative” nature of Canadian investors. One of the bigger challenges is that we have a lot of conservative investors, and this isn’t to blame them. It’s ok, they are beholden to their LPs. And they are in the business of making more money. So sometimes that conservatism works well.

  13. I like notion of conservative vs aggressive. We have a lot of fast followers who don’t always want to be the first money in, but a large part of that is we have entrepreneurs that aren’t exploring scalable business models, they are dinking around trying to find product-market fit. And because of the large amounts of non-dilutive capital available for R&D they get their valuations out of whack with reality.

  14. Lets define “recently” first – I had meant years, not months.  There appears to be a lot more early-stage options available (and more popping up).

  15. I do agree that the investment market has changed since the funding crash of 2009 that coincided with the economic crash.  Toronto was a wasteland for early stage funding as VCs ran out of money on their current funds and couldn’t obtain funding for new funds and angels were scared of the recession.

    Now it no longer is a wasteland with several new players entering the investment market plus real examples of startups obtaining seed or A round funding this year.  I’ve heard through the grapevine that there are still 10 or more startups with term sheets closing in the next couple of months, although some from US firms.

  16. Sure, makes sense. But the notion of quality is an important concept for entrepreneurs to absorb. Not all funders are created equally in terms of their experience, insight and wisdom. Far from it, in fact. Relatively speaking, I’d argue we’re in a down period for “quality” investment, with some obvious exceptions. The reason I say this is that a new crop of investors has emerged to replace large chunks of the old guard, but a lot of these new folks haven’t yet demonstrated an ability to produce positive returns above and beyond their risk profile. They need more experience and that means the market has to endure their short term selection errors (bad picks + overlooked opportunities) while they get their aim in. 

    Entrepreneurs need to remember to ask funders about the investments they have made that have gone well. By that I mean deals in which the funder was the lead, not was part of the team running due diligence. Ideally, you want a funder who knows your space (and can therefore add value beyond dollars) and who has a track record of good decision making. 

    Not an easy combo. 

  17. Nice to see an updated list. Great idea to compile one here David, thanks.

    Would love to see it supplemented by the number of checks written in the last 6 or 12 months, particularly to Canadian companies.

    I think there are some on your list that haven’t written a check to Canadian company in a long time, especially if you exclude follow on rounds. Summerhill VP, for instance, only lists one transaction on the news section of their website for a company called Blinq… but a visit to that company’s site shows they list their Texas headquarters address before their Canadian one. So does Blinq count? Has Summerhill VP done anything else in Canada in the last year?

  18. Still, I maintain…A lot of money with conservative investment practices doesn’t help. VC’s can’t wait to have all the answers in front of them. They have to believe they can move the needle for the entrepreneur/start-up and go from less certainty to more certainties of success. 
    We need to see the investment attitudes loosen up at the same time as the purses are getting larger. Otherwise, it will get very frustrating for the start-ups. There is more start-up activity and Venture foreplay than actionable supply.

  19. Hard to argue with that, other than both Summerhill and BrightSpark did take a big flyer on Radian6. So it does buy them some leeway in my books.

    I wonder if the @CVCA:twitter numbers that are coming for Q2 lists the actual firms doing the investing. It’s also hard with angel investments so many folks are below the radar, but have led huge angel investments. 

    With @foundersfunders:twitter the requirement is that you’ve written 2 cheques totalling $25,000 in the past 12 months which isn’t a lot to be considered on the funder side. I think you’re right @twitter-1800911:disqus we need to start holding the line on ACTIVE investors.  

  20. Plus, this is the perfect “STFU Crow”, because rather than argue with me about it being easier in theory, you ACTUALLY went to the Valley and raised. That was one of my points, if you think it is easier, then go do it.

    PS Congrats @georgefavvas:disqus 

  21. Agreed. 

    But this is risk capital. There are no certainties but if all signs are pointing towards failure, it is probably best not to make the investment but try to derisk it further. This is what drives the conservatism. Canadian VCs are not bad people. It’s not like they don’t understand what is going on in Boston, SF, NYC. They are playing by slightly different rules and they are trying to make it work for their LPs, themselves and the entrepreneurs they invest in. 

    My arguments have always been that we as entrepreneurs should stop complaining about the environment. We should learn to adapt to the rules and work to be more successful. 

  22. “recently” in LP terms in on the scale of a decade. So anything that has happened in the past 10 years is recent.

    I think I misunderstood your previous comment, if it is just a comment that there are more early stage capital in the past 10 years. Yep, @realventures:twitter @extremevp:twitter @mantellavp:twitter @growlab:twitter @UWVelocity:twitter @founderfuel:twitter  are all examples of changes in the early capital that is now available. It’s great to see. 

    Seed has been an ugly spot in Canada. I’m guessing there is a $250k – $1.5MM gap that is emerging. 

  23. It’s all about convincing someone with money that you understand your market, your product opportunity, your go-to-market plan, your competition and everything else. I agree, I am often shocked. 

  24. Do you think Canadian VCs would be too conservative to make the type of investment USV did with Twitter?  When even the VC said they had no idea what the business model is?  They had the eyeballs – but people still remembered bubble 1.0.

    Edit – not whining or a complaint – just curiousity. I think the investment opportunity in Canada is better it’s ever been.

  25. I think many Canadian startups fail to understand revenue growth or a proxy for revenue growth, see McClure’s Startup Metrics for Pirates for an example of consumer web metrics around Acquistion, Activation, Revenue, Retention and Referral. 

    I think that when USV invested in the series A in 2007 Twitter still had ~350,000 unique accounts and was growing at 2000 accounts per day. 

    There is no question that this investment was early, but show me a startup that is targeting 2000 new DAILY signups and has over 250,000 registered users. I’m sure @spelton:twitter @startupcfo:twitter @rogerchabra:twitter and others would invest in that startup in a drop of a hat. 

  26. Isn’t the final R for Revenue?  

    Anyways – perhaps the frustration on the “other side” (the investors) is that some entrepreneurs think they are the next big thing, pointing to stats that are an order of magnitude lower than twitter and feel it’s just cash that will get them there. So if Twitter is 350k signups and 2k/day new visitors and they get 5 mil, then at 70k signups and 500 signups/day…it’s an easy 1 mil..:)

    From any direction, twitter was an #-of-eyeballs investment.

  27. Now, I did read an article where it said that you met Dave McClure in Montreal first and then you exchanged a couple of emails and then you went pitching to him (i.e. 500 Startups).

    Nonetheless it is good to hear that.

  28. David, you know I’d never tell you to STFU. ;-)

    I do believe there will be challenges and obstacles no matter where you are. It’s how you respond to them that matters. (Hint: Complaining doesn’t help.)

  29. Super article and thanks for sharing this David; it’s even harder to raise capital on the East coast…that being said, it is not impossible and perhaps the business models here are given more scrutiny and that’s not a bad thing. I suspect those on Canada’s east coast (e.g. Radian6) likely succeed more often than fail. Would be an interesting comparison to run.

  30. I think “it’s even harder to raise capital on the East coast” is a huge fallacy and I am planning on writing about that soon. Definitely not a correct statement imo. 

  31. I listed it first, it’s the difference between looking it up and using my bourbon soaked brain.

    I think if you want big boy valuation then you have to deliver big boy numbers. And remember that the Twitter investment doesn’t disclose the pre- and post- valuations. The $5MM might have gone in at a variety of valuations. 

    So 70k users + 500 signups/day should help you get to raise. It doesn’t say anything about the valuation. 

  32. Imo Canada is a paradise for start-ups, try to look at Poland, there are about 8 ba networks registered in polish agency for entrepreneurship development, registering they have to fill form, with questions like ‘deals done’. There were about 30 deals in polish business angel funding since 2000…

Comments are closed.


  • DemoCampHamilton3 Recap: Crow Call | Software Hamilton August 24, 2011

    […] two zeros” to our entrepreneurial expectations. He challenged us to not to make excuses about things being easier in Silicon Valley, but to go there and do it if we thought so. David also talked about the strength of community not […]

  • UK early-stage venture capital market « Earl's Business August 24, 2011

    […] Show me the money ( […]