Toronto Startup's Need a Paul Graham or Steve Blank
Yesterday, Pete Forde wrote up a piece on raising capital in Toronto and this hit on something that I believe is missing from Toronto’s startup community.
I’ve always found that information about VCs, angels and who the best lawyers are, was easy to find in Toronto. From attending various democamps, I’ve found plenty of experts on raising capital in Toronto. The angels here are very accessible and the StartupNorth team is very knowledgeable.
Raising capital is not the most immediate problem facing Toronto startups
One of the commenters on the post pointed out that you need to prove that your startup can make money before raising capital. I belive this is very true in Toronto and for the most part in the valley as well.
Similar to scaling the technical end, figuring out how to raise capital is a problem “you should be so lucky to have”. Because it means you’ve reached a point where you’ve found a business model and you need the cash to scale it.
The people getting funded on an unproven idea are much rarer than most people think. The only people who don’t have to go over the hurdles of establishing a scalable business model first are people who have had previous success – something that is far more common in the valley than Toronto.
The real problem that Toronto entrepreneurs face is learning how to get to a scalable business model – getting to the point where your business is realistically investable. Because once you reach that point the process of raising capital is much more straightforward.
While you can easily find experts in raising capital at Toronto startup events its harder to find vocal mentors/leaders who have gone out and built successful startups and had a good exit.
The Paypal Mafia Effect
Flickr co-founder Caterina Fake recently said in the NYTimes about building New York’s startup scene:
This is true for Toronto. We need a Paul Graham or Steve Blank – people who have built successful startups – to provide a base to our startup community. Another point raised at the Toronto Dev Lunch was that we need an incubator like YCombinator thats founded not by traditional investors or bureaucrats but by experianced vets.
Why? Because investors and beaucrats know the capital scene in and out and who the right person to talk to is. But they can’t teach you the street smarts needed to build a scalable startup.
With that base we can start pumping founders who are ready to build scalable startups. Once that happens capital will become more accessible in Toronto and more favourable to founders.
Steve Blank recently said in at his great keynote (42:00), the problem right now is not a lack of information. You can go online and find an answer to any startup question you have. What we need is a framework to take in the information and put that information to good use and I think it takes an battle tested entrepreneur to provide that framework whether its through an accelerator, mentorship, or just getting involved.- By Dan McGrady