“What VCs Look For” at the 25th Angel Forum

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.