McCarthy Tétrault LLP was delighted to recently host a sold-out crowd at our feature event as part of Vancouver Startup Week, a week-long celebration of Vancouver’s unique entrepreneurial spirit and innovative technology community.
“Prepare for Launch”, an interactive panel moderated by McCarthy Tétrault’s Genevieve Pinto, featured guests Eric Bukovinsky, Principal, Yaletown Venture Partners; Ryan Spong, Co-Founder & CEO, Foodee; and Spencer Thompson, Founder & CEO, Sokanu, among others.
The discussion spanned a range of topics of interest to early-stage companies, from access to capital to protecting business ideas to strategic growth planning. Among the key themes and insights that emerged were the following:
- Relationships are critical. Bukovinsky, as an experienced venture capitalist, and Spong and Thompson, as startup founders, all stressed the importance of startups building strategic relationships from the outset. Startups are often focussed on product development first and foremost in the early stages and may want to perfect their offering before approaching outside advisors and investors, but in the experience of our panellists, it is longer-term relationships that are more likely to generate results. For example, many venture capital firms will have known their portfolio companies for a year or more, getting to know them and observing their progress, before deciding to invest. It’s extremely important for startups to begin to build their networks early and to reach out to potential investors to start building the relationship foundation that will facilitate the investment discussion down the line.
- Money is time. The panellists expressed the view that raising capital as a startup really isn’t about company valuation or raising the highest amount possible: it’s all about time and opportunity. Large initial financing rounds can make it difficult to raise subsequent rounds, particularly if target metrics weren’t achieved. Smaller rounds, more modest milestones and leaner operations may be a wiser choice for early-stage financing. On the other hand, if a company has a sound understanding of how much money it needs to achieve its goals, it should carefully consider the connection between time and money. As our panel noted, financing is fundamentally about accelerating the pace at which a company can reach its goals. If adequate financing is the difference between capitalizing on a timely opportunity with first-mover advantage and letting the competition take the lead, it can make or break a business.
- Advice is only as good as the advisor. Startups won’t have trouble getting advice—in fact, everyone from friends and family to fellow entrepreneurs to potential investors will invariably offer suggestions and words of wisdom. As our panel cautioned, though, startup founders sometimes need to trust their instincts, and they should not be afraid to filter advice that doesn’t ring true to their vision. A recurrent theme was the need for founders to surround themselves with high-quality people that they can trust, and to be wary of taking advice from—or disclosing business ideas to—untrustworthy or unscrupulous individuals and companies. Non-disclosure agreements and other legal protections are essential, but so are discretion and prudence.
- Location isn’t everything. The panel expressed diverse viewpoints on the importance of operating from a tech hotspot such as Silicon Valley or Seattle, as opposed to building businesses in one’s existing community. Vancouver received considerable accolades for its supportive and dynamic technology community and access to a range of public and private financial support, but the panellists all agreed that the Silicon Valley has a strong pull due to its larger pool of capital and more mature technology investment culture. Wherever a startup is based, the panel encouraged startups to explore funding sources on both sides of the border and to establish a presence in the Silicon Valley, which can be accomplished as simply as by opening the lines of communication with Valley-based investors and partners early and maintaining frequent contact, including regular face-to-face meetings. In the Silicon Valley, as at home, relationships of some duration are a prerequisite to investment.
Following our engaging panel discussion, we held complimentary one-on-one legal sessions for startups with McCarthy Tétrault specialists. In Part II of this post, we’ll highlight some of the key legal questions we heard from startups and our advice and top tips for early-stage companies.
If Vancouver Startup Week was any indication, the city’s startups are in high gear, and we look forward to seeing many new success stories emerge from this flourishing community.