What do you really want in a VC?

March 9, 2009


At this week’s CIBC Presents Entrepreneurship 101 lecture, attendees were treated to the sight of three senior Venture Capitalists (Peter Tolnai of Orchard Capital, Chris Arsenault of iNovia Capital and Michael Midmer of Rosetta Capital) being given MaRtian truth serum and baring their souls as to what they really look for in an investment opportunity.

It’s time to turn the tables and give you, the entrepreneurs in the audience some virtual truth serum and to ask you: what do you really look for in an investor? Is it just the money? Brains? Good looks? Tell us what you really think.

Downloads and Resources

Weren’t able to attend the class? Need some notes or want to look something up? Click below for all of the goodies from the lecture.

How to Get Money From a VC from MaRS Discovery District on Vimeo.

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  • http://www.entreco.org Marc Dangeard

    I would have to say that what you want from VCs is that they stay away if you can do without them. Bringing VCs on board creates a lot of tensions that can be very harmful to your company:

    - equity deals require to agree on a valuation, but most of the time for startups with no or little revenues, this valuation is just a wild guess, and tends to be just what the VC is willing to pay for. Since they have the money and the time, they have the upside in the negotiation. They will leave you with enough to keep you motivated and to allow further rounds with their friends, but they will take as much as possible beyond this.
    - equity creates the need for an exit, so that once you have received the investment, you are on a timeline, and the goal is to get a big as possible before the deadline so that they can get their money out with a good profit. This impacts the strategy, and forces you to focus on the projects with the biggest potential for return, which also tend to be the riskiest. For the VC, it is a number game, and they know that statistically they will get returns from their portfolio, but for you it is really decreasing your chances to make it. I have seen VCs deciding to drop paying customers because they were not inline with the main goal with the biggest potential – a really risky business decision. But if you don’t make it by their next milestone, they will just cut their loss and drop you for the next guy, while you will be left with nothing.

    Having said this, some businesses fit within the requirements of VCs, and some entrepreneurs are happy to play that game, because while you are doing this, you are getting paid. It makes entrepreneurship a little more comfortable even though it is a lot less rewarding financially in the end.

    Which route fits you best?

  • Pingback: We’ll See What VC « The Cross-Border Biotech Blog

Tony Redpath @ MaRS

As the VP of Partner Programs at MaRS, Tony ensures that our external and internal programs work together. Tony also advises entrepreneurs and high growth companies, particularly in environmental, advanced materials and manufacturing markets, with a special emphasis on mentoring and development of entrepreneurs.

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