Debt Is Your Friend

Rick Segal’s Vancouver VC Roundtable session took place yesterday afternoon – unfortunately I wasn’t able to attend but Dan Gibbons of Carrie & Danielle was there and summed it up concisely on his blog.

The short version: don’t dig yourself a hole with poorly structured friends and family rounds; convertible debentures are your friend; don’t try and raise VC money for a lifestyle business; really know your numbers (trust me, almost no-one takes the time to understand how their business actually works; it’s a huge differentiator); and make sure you check your ego at the door and really have the stomach and drive to exceed your VC’s expectations. All self-evident once you’ve emerged from the process of pitching VCs without knowing this stuff, and all things it’s infinitely better to know before you get started.

Gibbon’s full commentary post is definitely worth a read. He interestingly points out that debt is your friend and the first angel investor in many start-ups is often a friendly (and unaware) Canadian bank that has pitched in with a high credit card limit or some leeway on a line of credit. In today’s Web 2.0 world, those thousands of dollars can be enough for you to prove your concept and prepare you for your first meeting with a VC like Rick Segal.