Andrew Lugsdin of BDC Venture Capital was front and centre at the 25th Angel Forum today at the SFU downtown campus in Vancouver, starting the day with a fact-packed session on “What VCs look For.”
Lugsdin started the session by pointing that there’s never one thing VCs search for when looking to back a company. But there are several criteria that will help fledgling companies to differentiate themselves.
An ideal candidate, Lugsdin said, is a private technology-based company with strong management, a strong competitive advantage, and placement in a large market with high growth potential. It goes without saying that the company should have a sound business model and reasonable valuation, but they should also have a comprehensive business plan. Companies should know how they’ll go to market, how they’ll maintain their position, and all of those factors have to be fleshed out and validated before approaching a VC. Protected intellectual property is another good element, whether its a patent or other defensible matter that preserves your competitive advantage.
Financing isn’t a short-term relationship, Lugsdin said, and so trust and integrity over a long relationship are very important.
And finally, a company should have a credible route to a liquidity event. VCs should know, or at least have a very good idea, as to when their investment is going to pay off.