VCs Share Their Thoughts For Growth Stage Entrepreneurs During CoLab Day 2021

For our CoLab Day session on fundraising, we had speakers from venture capital and private equity discuss how the industry has changed and how founders can benefit from the current climate.

The Current State of Venture Capital

The panel began the session with a discussion on the current state of the fundraising market and how it’s changed in the past 18 months. 

The consensus was that the time it takes to make decisions has massively compressed. 

Today’s market is more founder-friendly and companies that feel confident enough to go out to market should take advantage of this, as it’s not known how long this will last. Once interest rates start to rise, they will affect the robustness of private markets. 

More funds are crossing over now — later-stage investors are coming down-market and early-stage investors are moving up to make the most of their pool of capital. But there are also sophisticated public market investors moving into private markets for the first time and bringing with them the same level of diligence and analysis from the private markets to public markets. 

Founders have even more power now and should be running their raise like a structured process. It’s to their advantage to control the process and they have much more leeway to control assets now, unlike many years ago. 

In the past, striking a deal without meeting a company would have been crazy! However, that’s become more and more common now. Both sides are more comfortable with limited contact pre-deal or meeting at the very end. 

Founders and Culture

Having the CEO in every meeting with a company answering all the questions can be a red flag. Investors prefer to have conversations with as many members of the team as possible and get an authentic sense of the culture that way. 

A culture that’s built by the broader team and not just in the image of the founder’s leadership can help you stand out. If your team has a great story that speaks to the culture that wasn’t led by the CEO, you should highlight those contributions from your team. 

Regional Differences in Venture Capital

All of the VCs present thought Canada has long been an untapped, underappreciated market and many of their Canadian investments have been great ones. 

One participant said that in their experience, early-round Canadian VCs had been more focused on accounting metrics – has that changed? 

The panel shared that the focus on higher diligence, accounting metrics etc., is likely more the case for early-stage funds. At the growth stage, funds are pretty similar in terms of the process and requirements. 

Back Up Your TAM Projections

Total Addressable Market (TAM) should be in the mid- to high-hundred billions and you should be able to clearly show the math to back up your TAM projections. However, don’t underestimate really effective vertical businesses who have a powerful solution that consumers will be willing to pay for. A vertical business with a smaller TAM can often be a better bet than a horizontal business with a huge TAM owing to a stronger product-market-fit and smaller lift for the go-to-market team.

If you’re a vertical business and think you can build into adjacent verticals over time, highlight this to investors in your path. Telling that story is awesome. 

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We hope you enjoyed this recap of the Growth Stage Fundraising Ask Me Anything (AMA) session from CoLab Day 2021.

Special thanks to this session’s moderator, Georgian Investor Evan Kerr and to all our panelists Margaret (Margo) Wu, Lead Investor, Georgian, Hugues Lalancette, Principal, Inovia Capital, TJ Dembinski, Partner, Drive, and Stephen Jones, Vice President, JMI