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The right funding fit for you, might not be the same as it is for other startups

Fundraising isn’t one-size-fits-all

Fundraising innovation week
Kevin Kliman, April Hicke, Cameron Burke, and Judyanna Yu (left to right). — Photo by Jennifer Friesen, Digital Journal
Kevin Kliman, April Hicke, Cameron Burke, and Judyanna Yu (left to right). — Photo by Jennifer Friesen, Digital Journal

“I have not raised a single dollar of fundraising,” said April Hicke, kicking off a panel on fundraising at Calgary Innovation Week, hosted at Platform Calgary Innovation Centre.

“I’m going to come here and challenge you all to look at other ways to approach finances with a startup or with a business,” continued the co-founder of Toast. 

Her fellow panelist, Cameron Burke, partner at Fort Capital Partners, responded: “I have the opposite experience of April. I raised a lot of money for my own businesses, and a lot of mistakes were made along the way.”

Kevin Kliman, CEO and co-founder of Humi, and Judyanna Yu, managing partner at One Six 8 Ventures, round out the panel and together the group explored a spectrum of approaches to financing startups, as well as the nuances of scaling businesses in Canada versus the United States.

Innovation Week Funding panel
Photo by Jennifer Friesen, Digital Journal

Early-stage investment insight from experienced founders

It probably comes as no surprise that Hicke is a staunch advocate for bootstrapping. 

As a co-founder and the Chief Growth Officer of her company, she shared how her commitment to maintaining control and focusing on sustainability shaped Toast’s fundraising journey. 

“For the first two years, our only goal was to create a financially sustainable business,” she explained. Building a company with multiple revenue streams and focusing on efficiency helped avoid equity dilution and maintain a clear mission-driven approach. 

She added, “If we had more money, we’d be able to grow so much faster. But being able to grow sustainably and stay purpose-driven has worked for us.”

Hicke also reminded the audience that there’s a significant time investment when chasing fundraising opportunities. 

“Fundraising obviously takes a ton of your time,” she said. “So pitching and going out and meeting investors … I think it kind of takes away from your business. And I’ve heard that a lot from my friends who are founders, and that kind of dissuaded us from doing that.”

At the beginning of Burke’s startup fundraising journey, he said he was swayed by what he thought he was “supposed” to do rather than what was right for him as a founder and for his business goals. 

“I thought the way other people do it is the way I should be doing it,” he explained. 

Burke also warned about the potential pitfalls of overfunding. 

“First time, [I was] raising too much money, and spent too much money — I kind of lost control of the direction of my own business,” he said. 

He recommended founders be careful and strategic about the path they take, by weighing how much capital they need and the amount of dilution they feel they can allow.

Emphasizing the importance of understanding the terms of funding and maintaining alignment between founders and investors, he said to not rush into a funding relationship without doing your due diligence.  

Innovation Week Funding panel
Judyanna Yu says preparation is key for venture capital. Photo by Jennifer Friesen, Digital Journal

If you go the venture capital route, here’s how to do it

“There are different types of venture capital funds. Some invest in early-stage — pre-seed. Some invest in seed-stage and later-on. I think, especially in Canada, there are a lot of later stage funds,” said Yu. 

Drawing on her experience as a venture capitalist and CFO, she underscored the value of preparation and clarity before seeking funding. 

“For a company to be ready for VC you do have to be quite mature,” Yu explained.

“Be ready enough for VC, where you do have a clear plan of how you’re going to expand [and] how much.”

She also noted that not all funding solutions will be of value to all companies and that there are creative ways to raise funds. “Every industry is different. Every company is different.”

For instance, if you’re in the tech and healthcare space, Yu said licensing your tech to larger companies, hospital returns, or even different countries could be an alternative option. 

“A company that I was with, a vaccine company, had a technology that was developed over two years. It was licensed to a public company in Hong Kong for $100 million up front. So it was a $500 valuation deal, and that’s great, because that’s not diluted. You don’t give any shares, but you’re basically … allowing another company to use your technology to develop it in their country.”

Yu’s key takeaways to founders: be creative and explore the potential of all the funding opportunities that are available to you. Also, make sure you have a realistic and complete plan when pitching VCs.

Innovation Week
The panel, called “Bridging the Fundraising Information Gap: A conversation between founders and an investor,” ran on November 20, 2024. — Photo by Jennifer Friesen, Digital Journal

The Canadian advantage: Staying north of the border

As their discussion came to a close, the panelists answered a question from the audience on how to strategically decide whether to scale a startup in Canada or the United States. 

Both Kliman and Yu emphasized the benefits of building in Canada.

“There are a whole lot of advantages of being a resident here and paying Canadian taxes,” Kliman said. 

From access to non-dilutive funding like the Scientific Research and Experimental Development (SR&ED) program to competitive talent costs, the Canadian ecosystem provides unique leverage in comparison to the US. 

He also pointed out that US venture capital firms are increasingly investing in Canadian corporations without requiring a shift to US incorporation.

Yu echoed these sentiments, adding that operating costs, particularly salaries and rent, are significantly lower in Canada. 

And you still have the benefit of geographic proximity, she pointed out. 

“It’s great to be in Canada because we have access to the US fairly easily — you can drive to the US, you can attend conferences within a day, and you’re competing with companies around the world,” she said.

“Everyone [global] wants to access the bigger market in the US. It’s very hard for them to fly and attend conferences and seminars and all that, and it’s quite easy for us to reach out to US investors. So I think there’s benefits of lower costs here, having access to the US and having the benefits of the supportive environment ecosystem that we have here.”

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Abigail is a writer, editor, journalist and content strategist based in Toronto and El Salvador.

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