The 7 Questions Interview Series: Angels and Venture Capitalists

The 7 Question Interview Series is an investigative content series where I seek out key leaders in a specific industry and/or subject matter expertise area and ask them 7 key questions that “enquiring minds want to know”. There is a twist however to these questions. I provide the interviewee with a hypothesis for each question to help frame and set context for their answer. This specific series of interviews is ideal for startup founders.

Series Objective

The objective of this series is to establish direct connections with VCs and Angel Investors across the globe and ask them the same set of 7 questions regarding investing in technology startups. I’d also like to know what their appetite is for investing in Canadian startups and why they do or don’t.

Interview with Sandi Gilbert, Founder of SeedUps Canada and COO of  ECN

Here is my 13th interview, with Sandi Gilbert, Founder and CEO of SeedUps Canada and COO of ECN (Exempt Capital Network, Inc.)

When would it be appropriate for a startup to seek investment from you?

The typical SeedUps Canada business has a proven business model and has raised a small amount of capital from friends, family and others close to them. They have a solid management team, outside advisors and are seeking their first real “seed” capital in the range of $250K – $2 million. This capital will help them move their product or service to market – generally growth capital.

What’s more important: the idea, the team or both?

The team. Having said that, they idea needs to have some legs with some quantifiable assumptions for its ability to generate revenue or sustainability. I’m honestly not that hung up on the technology – if the business model works, the technology will adapt over time. Technology for technology’s sake is just that. It has to be put into practice.  Will it attract users? Do people or businesses see the value in using it? And, ultimately, can it generate some revenue.

What are you looking for in a startup team? What does a winning team look like?

The team should be well rounded – not just the guys that thought up the idea over a beer.  Adding team members (or advisors) that have had some experience in the space and can introduce the product to the market can be integral in speed to market. It’s good to have marketing, finance and process people on board.

What are you looking for in an idea? What does a winning idea look like?

I’m looking for an idea that business or consumers feel will improve their lives in some way. Often times it is simply improving a current process or task through technology – like Open Table makes it easier to book a reservation. You could always make a reservation at your favorite restaurant – Open Table just took it to the next level. From an investor’s view – it has to be able to generate revenue so it can share in profits or be powerful enough to attract the attention of competitors that may want to take them out, or a complementary company that wants to add them to their own product or service offering

Does a startup really have only one shot?

I think that the VC world likes to propagate this concept. I absolutely disagree. If your pitch didn’t fly – try to determine if you weren’t a fit for the investor – or if you simply didn’t get your message across effectively. Practice in front of people that don’t know your business and see if you can get them to understand what you are doing. Dust off your jeans and go for it!

Can you describe your due diligence and investment process? What’s important for a startup to know about it?

We conduct formal due diligence on companies raising capital on SeedUps, including background checks, corporate governance and references. We require 3 year proformas (with quantifiable assumptions), business plans and market validation.  Additionally – there are unique qualities that make a raise from the Crowd possible. Companies that have strong social followings, trending products or services and media attention can be more successful in a Crowdfunded raise than complex offerings that can’t be easily explained in an online environment.

The SeedUps platform is regulated by securities regulators in Canada, so we ensure that companies profiled on SeedUps don’t “over promise” the investment potential. Each company profiled on SeedUps must present an Offering Memorandum that certifies that the information provided does not contain any misrepresentations. Our entrepreneurs may think they are going to change the world, but we make sure they back it up!

In your view, is Canada a fertile ground for tech startups? If so why and in what ways is Canada unique and competitive in this regard? Are you investing in Canadian startups? If so, why? If not, how come?

It’s tough to raise startup or venture capital in Canada. I’m not sure why, but Canadian investors don’t have a strong appetite for risk capital and many companies, both large and small, are forced to look south of the border for the capital they need. We’re hoping to change that by bringing private capital investment opportunities to more investors through our online platforms. Entrepreneurs can now seek out investment from young investors, already comfortable with online transactions, who have never before been exposed to private equity deals. A great amount of potential capital could be unlocked by including the “ordinary” investor in raising capital for startups. If we are right, the next 18 months may tell a very different story for Canadian startups!

About Sandi Gilbert

Sandi is the Founder of SeedUps Canada, a CrowdFinance platform that supports direct equity investments from ordinary investors into privately held small to emerging companies seeking between $500,000 and $2 million in capital. In April of 2014, the platform facilitated North America’s “First Ordinary Investor” to make an online investment in a private company.

She is also the COO of ECN Capital, a Global private equity investment platform that brings together qualified investors, investment firms and corporate issuers to facilitate private offerings ranging from $5 – $150 million. Today, she is working diligently to develop technology infrastructures that enhance the private equity investment marketplace by making it easier for investors to find good investments and good companies to find the investment they need.

Sandi is a board member of NACO Canada and a co-founder of the ECFA.

Social Outposts: LinkedIn | Twitter

Chris HerbertChris Herbert is the founder of Mi6. Mi6 is a B2B (Business to Business) marketing and business development agency dedicated to helping companies build their brands and develop commercial relationships. He is the founder of ProductCamp Toronto and the Hi-tech community Silicon Halton. He tweets under the handle @B2Bspecialist.

Leave a Reply

Your email address will not be published.


*