Alec had a good post yesterday on the state of VC funding in Ontario, calling it “a mess”, based in part on a post by Ian Graham: “Is Startup Funding Broken in Ontario?“.
One of the points raised in both posts is the legal cost of doing small rounds of funding. We certainly felt that pinch last summer. Our small angel round cost around $70k in legal work. And check out how much paper was involved!
Canada has always been under-served in the VC department. Most entrepreneus end up going south to find money, which is often followed by moving the whole company with them. But all is not grim. Two major successes in the last year: Montreal-based Mobivox raised $11m and Vancouver-based EQO raised $8m.
Yeesh, what a stack of paper.
As our corporate counsel puts it … “I think that lawyers are responsible for the destruction of the rainforest in at least 3 different countries.”
Shai, thank you for the mention.
I have been giving a bit more thought to the funding paradox and believe that both early stage businesses and investors are correct. Most early stage businesses, at least the ones I am familiar with, are looking for pre-seed and seed funding. Most investors are looking to fund Series A or later. So essentially what you have is the two groups (start-ups and investors) talking on different channels, kind of like DWDM on different wave lengths. Just a thought.