You hear that a lot, but from a Waterloo perspective it's hard to make the case that Canadian VCs have set the bar too high.
Sure, we could always use more funding options, and customers are unquestionably a huge milestone -- one that makes it easier for any start-up to attract funding.
But there's hundreds of millions of dollars sitting out there ready to be invested by VCs eager to find fundable deals.
Just in Waterloo alone, Tech Capital Partners manages nearly $100 million in capital and has over $40 million waiting to find a good home. Very few of its portfolio companies -- no more than two, I think -- had customers or revenue when the deals were made. Most communities don't have an equivalent of Tech Capital, so the Waterloo experience probably isn't typical.
But it's not just Waterloo. GrowthWorks has an entire fund -- albeit a small one -- devoted to companies that are typically pre-revenue. BDC and EdgeStone both have Waterloo-based companies in their portfolios that were funded before customers existed.
In fact, I can't think of a single start-up company in Waterloo Region over the last few years that should have been VC-funded but wasn't able to find a Canadian VC to take the deal. The only start-up companies I can recall that needed to go outside the country to get funding are ones that I wouldn't have touched with a bargepole while wearing rubber gloves. There may be an exception I'm forgetting, but I doubt there's more than one.
I wouldn't want to make it sound like it's easy to get VC money. Of course it's not. Few companies will clear that bar -- and that's equally true in the VC-rich U.S.
I said a couple of weeks ago that if people want to complain about the scarcity of VC money, they should be able to identify companies they think should be funded but haven't been able to get a deal. Maybe in Toronto and Ottawa there are lengthy lists of such companies (if there are, maybe they should just move here). But I'm skeptical about that. And in Waterloo, I'd be hard pressed to come up with one.
Now, angel-level funding, on the other hand ... is a topic that will have to wait for another time.