Finding the perfect match and building long-lasting relationships were common themes discussed today at the Canadian Innovation Exchange (CIX) conference in Toronto. Throughout the day, venture capitalists and angel investors outlined the key attributes that they look for in a technology start-up partner. Start-ups and investors were able to set-up quick meetings in advance in order to chat today in a round of "meeting exchanges" that looked a lot like speed dating to onlookers. Only time will tell if any new partnerships were formed as a result of this event.
A number of speakers in the break-out sessions mentioned that looking for the right investment in a start-up is just like dating. What really sells them on an investment is simply a great entrepreneur who has that "X factor" that is so commonly described on reality TV show talent competitions. Duncan Hill, General Partner at Mantella Venture Partners explained that "you just know it when you see it." The panellists in a session entitled Understanding the Canadian Seed and Angel Funding Landscape hinted that the relationship between investor and entrepreneur has to be a “great marriage."
Here are some of the key qualities that venture capitalists and angel investors look for in an ideal start-up investment:
Overcoming barriers to entry
Investors want to see that you know your market well and can identify how you will stay ahead of the competition. Throughout the day, 25 top Canadian innovative companies had six minutes to pitch their products to a panel of technology industry and venture capital heavy-weights. The presenters were drilled with rapid-fire questions about how they stand out from their competition and provide value to their customers. Some managed to wow the panellists, like Manitoba's 360 Replays – a technology that allows broadcasters and sports fans to watch live 3D instant replays in 360 degrees. Others were told to improve their pitch for next time.
Investors hinted that even if you know your market well, they want to see that you're willing to pivot when necessary and take their advice when it's time to change your strategy.
It is critical that the entrepreneur and investor are aligned on the long-term strategy and are willing to grow and evolve together. Investors also want to align with someone who is willing to take the risk and just go for it. It was implied that if you are waiting for someone to invest in your idea before you quit your job then you're not going to get anywhere. Investors also want to make sure that the entrepreneur is on board with the ideal exit plan. Start-ups need to be patient and willing to wait for the best offer.
At the end of the day, three companies were awarded with distinction as part of the CIX 2010 “Canada’s Hottest Innovative Companies” program. There was one winner in each category:
- Clean Technology Category - GreenMantra Recycling Technologies (Toronto, ON)
- Digital Media Category – gShift Labs (Barrie, ON)
- Information & Communication Technology Category – BlueCat Networks (Toronto, ON)