Startup funding is the central issue for many entrepreneurs. To help everyone navigate the process better, Startup Montréal recently organized Coulisses du financement in partnership with National Bank, an event that involved several ecosystem stakeholders (VCs, experienced entrepreneurs, etc.), sharing their best tips on the different funding sources available. We present 5 of their tips in this article.
5 tips from our entrepreneurs to choose the right funding sources and benefit from the current context
1- Do a thoughtful, in-depth search for investors
Our four entrepreneurs agree that starting the preparation process for a venture capital funding round requires a good search for investment funds, depending on the company’s growth stage, the economic sector in which it operates, and its compatibility with the desired investment thesis. Also, not all investors invest the same way. For example, some want to become proximity partners with the entrepreneurs they wish to support.
Also, entrepreneurs need an exhaustive list of potential investors, because the key is to have a certain volume. Finally, out of 75, 100 or 200 investors encountered, only 2% to 5% will tell you “yes” if you have done a good job. Never forget to take time to produce a good list to ensure compatibility between the investors and your project and vision. In the final analysis, this is the most important factor.
2 – Don’t underestimate preparation of the presentation
You must have a clear growth plan and know how to anticipate the investors’ questions. You must also be aware of your plan’s weaknesses. You also need a good presentation, which must be upgraded and adapted constantly to account for the comments received and each investor’s specificity.
3 – Take advantage of the funding application process
The pandemic facilitated the meeting process with investors by virtualizing the vast majority of steps and simplifying access to a larger pool of potential investors, regardless of their geographic location.
It is a great advantage to eliminate travel-related time and cost constraints in making presentations to investors. It is now possible to meet ten investors in a day instead of two, simply due to the time saved by using virtual mode. This change in the funding process is also beneficial to mental health. It can be hard on morale to meet hundreds of people who say no one after another. When it is possible to do these meetings in the comfort of your living room and take breaks, this certainly helps the medicine go down.
4 – Look at the funding round process as a marathon, not a sprint!
Our panelists ended their meeting by sharing a very useful tip. “You must not see funding as an end, but as a means to achieve an end.
“Once the funding is obtained, it’s time to execute the game plan promised to the investors. There is follow-up to be done, from hiring personnel to supporting growth, etc. This is the beginning of something and you will already have to anticipate new funding rounds. It’s better to train yourself to maintain a sustained rhythm than to see this as a sprint to be constantly repeated.
5 – Be supported before, during and after funding
Never hesitate to solicit people who have gone through these same steps. This helps you be better prepared, deliver the goods and continue to move forward. That’s why you must always take the time to choose the people you want around you.
We invite all entrepreneurs to make frequent visits to Startup Montréal’s projects, events and opportunities. You will certainly find interesting resources to help you progress in your business project.