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 Steven P. Duckering from TDG Capital Partners, L.P.

Here’s my seventh interview with Steven Duckering who is the Director at TDG Capital Partners L.P..  TDG Capital Partners, L.P. is a private alternative investment & advisory firm. They are located in Edmonton, Alberta.

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

I am interested in a company most generally when they have generated sustainable revenue. Getting to revenue is critical, as it proves there is some level of demand for your product/service. I also think that generating revenue should happen as soon as possible, and through multiple revenue streams.

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

I believe everyone has an “idea”, and we don’t invest in ideas; we invest in businesses. You need a great team working on a great business. The business (the actual product or service) needs to sell, and the management team is responsible for making this happen. I think if you evaluate companies that have failed (under any market cap), you will see that it was either the business (for lack of demand or otherwise) or management (unable to successfully operate) that failed. Looking at those who have sustained long term success, the management complements the business and it works very well together. You need definitely need both.

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

A winning team in business is comparable to a winning team in professional sports. They are all highly talented, there for a purpose, and are focused on winning. Personally, I am a fan of small teams (3-5 people) who are working together to achieve something great. It is about bringing in “great” people, not just for the sake of “more” people.

Although looking at the past success or failure of a CEO or founder is easy, past success doesn’t guarantee future success, and past failure certainly does not mean more failure. You need to look at the team in their current state and how well they understand the business they are in and how they go from square one to square five.

For myself, it doesn’t matter age or experience. I like teams who are the best at what they do and know how to beat competitors.

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

Right off the start, I am going to change the word “idea” to “business”.

My favourite analogy for this is that, as an investor, you can’t always go to the plate and swing for a home run. It is all about your batting average and avoiding strikeouts. Sometimes, a double gets the job done (assuming an appropriate amount of downside risk to justify a double).

The best businesses have a unique product/service that gives them an advantage, and they add value to as many people as possible. Every investor looks for different things, I am sure some only want the next Facebook, but I don’t think that batting average will be too high.

For me personally, a winning business is one that I understand, has great people involved, and has the best interest in mind for the shareholders. I understand the huge incentive to cash out and be acquired, but I also find it very attractive when a business can generate cash consistently and build something great over time.

Does a startup have only one shot?

Remember, in business, “no” doesn’t mean “no”; it means try again. Pandora was taken to over 300 investors that turned them away and we can see their success today from persistence. I would not be discouraged after rejection, I would use it as an opportunity to be better and return (even to the same investor) with a different pitch.

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

Due diligence can generally take 30-90 days, but extend as long as 6 months. It depends on what information is readily available, and how the communication and cooperation flow is. We start with an analysis process where we understand, value and find an acceptable price to pay. This can take anywhere from a week to over a year.

The better prepared/organized a company is, the easier the process will be.

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, why not?

Canada is a great place to do business for both investors and entrepreneurs, although I will not paint an entire country with a generalized stereotype. There are always going to be great businesses and poor businesses in every country we do business in. We are a very micro analytically, in a sense where we look at hundreds, thousands, of companies individually and do not apply any biases on them from their location.

I believe it is important not to compare different geographical places to others, whether it’s Canada to Silicon Valley or New York to Boston ect… Today, the world is integrated and I don’t view it as a segmented market place.

There are a lot of helpful resources that assist, promote and support startups in Canada. I have never found any issues of finding any business, of nearly any size, in Canada.

About Steven Duckering

Steven is interested in all things business and investment. His focus is on private equity and capital markets, but he enjoys learning about different industries, all aspects of a companies value chain, and enhancing value. He has spent considerable time learning, applying, and adjusting various forms of financial analysis to value a potential investment asset (cash-flow, asset base, growth, unlocked value, restructuring etc…with private corporate entities, public equities and real estate). Steven is able to understand businesses in a wide range of industries and stages, in-depth to an extent that allows for long-term value creation.

Social Outposts: 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.

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