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Lesson 1: Venture capital
Chapter 1: Fund your startup
Nathan Monk, a senior strategist for the MaRS Information and Communications Technology (ICT) sector, introduces our segment on angel investing.
Angel investors are generally most interested in companies at the validation stage and will invest on their own or in a syndicate (that’s a group of investors). Angel-only investment rounds typically provide $250,000 to $1 million in financing. We connected with Janet Bannister from Real Ventures to see how to pitch to angels.
Chapter 2: Angel investing
Part 1: Janet Bannister, General Partner at Real Ventures, gives insights on what to consider in relation to angel investment.
Typically at a very early stage, angels or friends and family will invest in a business and then as the business gets a little bit more mature, and maybe is at seed-stage, often they will get investments from venture capital.
So that's sort of typically how it works, but as an entrepreneur, you need to understand the pros and cons of taking money from the different sources. And so it really comes down to who that investor is, and angels as well as friends and family. So in some cases, that person can add a ton of value because they have really relevant experience. In other cases, they can add no value, and then, in the worst case, they actually detract value. So you need to understand where on the spectrum that is. You also need to understand as an entrepreneur, hey, if you are taking money from your mother-in-law or from your best friend or from your sister, what does that mean in terms of the implications if the business doesn't do really well?
So a lot of things to consider on that.
With venture capitalists, again, it really varies by firm in terms of, but their expectations, as I said, generally speaking, they're looking for a very high return, a 10x return, versus an angel or an individual might be super-happy to double their money in two or three years, versus a venture capitalist is typically more in it for a long run and looking to get a high multiple on their money.
Part 2: Nathan Monk recommends key reading and introduces our segment on venture capital.
We highly recommend reading Venture Deals by Brad Feld. In that book, you’ll gain a solid foundation on how venture capital deals come together, and the essential elements of the term sheet.
Connecting with other entrepreneurs in your startup community who have raised money from angels or institutional investors will give you plenty of insight and the do’s and don'ts of engaging with outside investors.
Now let's hear from Janet Bannister on fundraising strategies from venture capitalists.
