Personal Finance

Raising Money for a Tech Startup

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  • Oct 13th, 2012 11:01 pm
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Newbie
Jan 21, 2012
11 posts
Toronto

Raising Money for a Tech Startup

Dear RFD’ers

I would like your advice on how to raise money for a startup company particularly in the Tech Industry. Raising money is tough, but I was hoping for a few different avenues to explore. I would even be interested cities that may offer better conditions for a Start up company. I just want to do this the smartest way possible with as many advantages Canada can possibly provide, to give myself a running start.

I’m aiming for:
1. $60,000 – $100,000, more would definately be better.
2. Hopefully still in Southern Ontario

Thank You :)
12 replies
Deal Addict
Jun 8, 2005
3160 posts
639 upvotes
Toronto
60-100k? Beg borrow and steal from your family and friends. Also, banks.

Otherwise, sell equity and take on an angel investor. There are several angel investor clubs in Toronto that you can approach.
Jr. Member
Aug 20, 2009
132 posts
20 upvotes
This thread is better suited for the entrepreneur section. You should look into government programs like SR&ED and IRAP.
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Deal Addict
User avatar
Nov 14, 2006
2569 posts
1818 upvotes
Waterloo
If you think you've got a great business idea and are an early stage tech startup, apply for Hyperdrive, a Canadian startup incubator program:
http://hyperdrive.communitech.ca/

They provide $55k of initial funding (equity and loan) with more funding provided in the future based on your progress in the program.
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Newbie
Jan 21, 2012
11 posts
Toronto
I'll look into that @ cadave.

I didn't see the entrepenuer section... thanks
Deal Fanatic
User avatar
Feb 6, 2004
6902 posts
586 upvotes
GT'eh
You can try contacting the big shots at venture capitalist group Andressen Horowitz and see if they like your idea and can cut a cheque
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Deal Fanatic
Jul 1, 2007
8569 posts
1763 upvotes
Check if your city, or any of the cities your considering moving to, have some sort of regular angel/venture capitalist get-togethers where you get the opportunity to pitch your ideas in front of a crowd of potential (though usually unwilling, lol) investors. Here in Alberta we have something like this called "Deal Generator" http://www.dealgenerator.com/ though I wouldn't recommend AB as a place for a start-up because a) there's not much capital that doesn't get sucked up by the oil industry, b) most of the venture capitalists who attend these things just go for sh*ts and giggles, c) you'll have an extremely hard time hiring, affording and retaining talent.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Banned
User avatar
Feb 15, 2008
26318 posts
3242 upvotes
Calgary
Thalo wrote: c) you'll have an extremely hard time hiring, affording and retaining talent.
With very little money, yes, getting good people to take you seriously will be extremely difficult in Alberta. If you have lots of money (ie: a Silicon Valley-like budget), then everything you need in Alberta is easily at hand. Especially for tech.

The rest of your points are good -- its not the 'tech' labour that's expensive in Alberta, its the cost of everything else. In much of Ontario and even Vancouver, its probably not very hard to get a good receptionist for $15/hour -- but in Calgary you'll have to pay $20.
Member
User avatar
Feb 22, 2009
494 posts
122 upvotes
Kitchener, ON
I strongly urge you to put as much work into your startup with your own hands BEFORE looking for any outside cash to fund it. Way too many startups think that they need $$ before they can make a business. In most cases you can do a lot of the work yourself (family can help too). A good entrepreneur is a minimalist: Every dollar spent is thought out to push it for the most value. Granted we don't know your start up idea but my guess is there are plenty of ways to cut away the fat if you are willing to be honest with yourself. Try also running you business from your apartment/house. Try doing the programming (if its a web start up) yourself. There are so many things people can do on their own to help save on cost that would have helped push their start up further and kept it alive much longer.

Only look to outside funding as a very last resort. When you do so just remember you will lose some control of your baby.

But most importantly, before you make your startup do a lot of research. In most cases, especially in the ultra competitive tech world, the idea has probably already been done (and failed). If you've done the research then do some more researching! In many cases a start up fails because they didnt research the market, etc enough. It will always help!
Deal Addict
Oct 20, 2002
1619 posts
227 upvotes
Mississauga
I'm starting my own tech start up (if you can call it that) on my own. Depends on what you need to do though but mine is online platform to do something I think will fill a need in the market. I've spent almost 6 months thus far working on it (on and off) and hiring help from online working with folks in India, Indonesia and somewhere in eastern europe. Everything is out of my own pocket and I've kept the cost thus far to about 5k. I'm not even thinking of asking for funding or looking for funding until I reach at least Beta if not a soft launch. Easier to sell and market with a working polished (I hope) product I figure.

Enough about me but does your require that much funding to start? How far do you think you can take it on your own? Have you heard of kickstarter.com? That is a place worth checking out. You can also try http://www.cybf.ca/ if you meet the criteria.

Anyhow, I'm interested in what you find out and learn as well.
Deal Fanatic
User avatar
Mar 20, 2009
8862 posts
2693 upvotes
Vancouver
corezz is absolutely right about how to do it.

Government funding programs can be helpful too, but consider them an incremental supplement to support what you were already doing anyway. And keep in mind that for every dollar the government programs give you, they take back 50 cents in bureaucratic paperwork overhead.
Deal Addict
Oct 20, 2002
1619 posts
227 upvotes
Mississauga
corezz wrote: I strongly urge you to put as much work into your startup with your own hands BEFORE looking for any outside cash to fund it. Way too many startups think that they need $$ before they can make a business. In most cases you can do a lot of the work yourself (family can help too). A good entrepreneur is a minimalist: Every dollar spent is thought out to push it for the most value. Granted we don't know your start up idea but my guess is there are plenty of ways to cut away the fat if you are willing to be honest with yourself. Try also running you business from your apartment/house. Try doing the programming (if its a web start up) yourself. There are so many things people can do on their own to help save on cost that would have helped push their start up further and kept it alive much longer.

Only look to outside funding as a very last resort. When you do so just remember you will lose some control of your baby.

But most importantly, before you make your startup do a lot of research. In most cases, especially in the ultra competitive tech world, the idea has probably already been done (and failed). If you've done the research then do some more researching! In many cases a start up fails because they didnt research the market, etc enough. It will always help!
I agree completely. I've done a fair bit of research and thought into mine. How much it cost, how much it could make, other models, etc. The idea is sound, there appears to be a market for it and the need hasn't really been filled, and there's a great first mover advantage.

One of the reasons I did not go look for funding is that I can support myself and I don't want to give up any control unless I absolutely have to which is why I'm looking into kickstarter.com. It's like selling your product or service ahead of time so you can raise some funds and generate some revenue. Don't have to give up any control and it also help gauge your product as to how many people are even interested in it to prepurchase your product / service.
Newbie
Jan 21, 2012
11 posts
Toronto
Thank you for all of the replies, I'm doing all of the planning and flows for the program as well as requirements. I just need the money to hire a good local programmer, as well as some money for advertising. A lot of the other stuff Ill be able to do myself, without much help. I think 60k would be more than enough, but I'd like a little bit of a buffer just in case stuff hits the fan.

Thank you for the advise.

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