How to finance a Canadian tech startup, from pre-seed to series D

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Innovation Nation: There are three crucial stages to the funding process

Canada has a rich history of innovation, but in the next few decades, powerful technological forces will transform the global economy. Large multinational companies have jumped out to a headstart in the race to succeed, and Canada runs the risk of falling behind. At stake is nothing less than our prosperity and economic well-being. The Financial Post set out explore what is needed for businesses to flourish and grow. You can find all of our coverage here.

The details are then flushed out and completed when they’re able to obtain a $20-million cheque — something so rare in Canada that management teams generally have to acquaint themselves with U.S.-based hedge funds. With a working prototype in hand, a founder will look to begin the seed stage of financing, where Reckziegel suggests they’ll aim to raise $1.5 million in an attempt to develop a customer base.

The other option at this stage involves targeting a venture-capital firm. In the past two years, venture-capital firms and other institutional investors provided an average of $1.6 million in 216 tech deals during the seed stage, according to data obtained from CVCA InfoBase. Here, startups are looking for between $5 million to $10 million in Series A and B investment rounds, according to Reckziegel, and they’ll use the money to prove their product will work on a wider scale, launch new products and fill out their management teams.

Most firms tend to have their own areas of expertise and their own investment cycles, so companies have to cater their investment applications with these factors in mind, Haynes said.

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