What makes a business worth investing in? It turns out that business founders and prospective investors might have very different ideas of that entirely.
On March 13, ventureLAB, York Regions Innovation Centre hosted its first in a series of its new style outreach workshops, dubbed thinkLAB, to educate technology entrepreneurs, potential investors and their advisors in the region.
The many challenges faced by Canadian entrepreneurs were summed up by Michael Betts, a ventureLAB Executive in Residence.
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Early stage investing is the most risky investing activity of all. Betts cited statistics that only four per cent of deals seeking angel capital from accredited investors in Canada are successfully transacted. Investors are rightfully cautious. He pointed out that the American scene has investors there putting up three times the money per transaction that we see here in Canada. Cultural and pension funding reasons for this difference aside, Betts painted a daunting picture for Canadian entrepreneurs. He said it calls for skill to navigate the investment system here effectively.
Betts, who is the President at Castlegar Management LTD. of Toronto, explained that “entrepreneurs and investors often have differing views” on what makes an “invest-able business” (i.e. one that investors are willing to bet on) and different priorities on deciding when the time is right for outside investors to engage with an entrepreneur’s company.
“Securing investment and getting your business off the ground is not for the faint of heart, it’s incredibly hard work. However, the upside of taking this uphill, uneven path is that when you do find success with customers and investors it can absolutely be one of the most rewarding experiences you can ever have,” he says.
“The journey to investment is not a treasure map on which you find it… but rather that investment is something you have to earn,” said Paul Rivett, ventureLAB’s Client Service Manager. He introduced a signature ventureLAB program that helps entrepreneurs learn how to do that. “BUILD is especially for first time entrepreneurs, to help them successfully progress through the five key stages of their business”.
In other words, as Mike Betts said, a way to learn how to make their businesses “invest-able.”