- What Canadian entrepreneurs need to know before pitching to investors
- Raising capital or bootstrapping the decision that could make or break your start-up
- There is only one way to meet a venture capitalist
- Valuing your tech start-up is harder than you think
- Friends rarely make the best business partners
- A smart entrepreneur’s guide to choosing the right VC
- Choosing an investor is like choosing a spouse (but with less romance)
- Not much difference between angel investors and VCs anymore
- What to do if your startup is suffering founderitis
- How risk and failure drive entrepreneurial success
- Beware of the revolving-door venture capitalist
- Getting an investor to move from “not now” to “yes”
- Talk to your venture capitalist before you crash and burn
- Entrepreneurs need to know when to call it quits
Want to secure venture capital? Learn the five key principles startups need to understand before pitching to investors
For interview requests, click here
Each year, hundreds of entrepreneurs and investors gather at the Fairmont Banff Springs Hotel in Alberta. Over two days, IT, life sciences, and cleantech companies pitch to an audience of venture capitalists and angel investors, hoping to secure funding for their ventures.
Panels feature top venture capitalists, seasoned entrepreneurs, and innovation experts discussing emerging investment trends, sector-specific challenges, and best practices for scaling startups. Keynote speakers include high-profile investors and successful founders who share insights from their journeys. The event also includes networking sessions designed to connect entrepreneurs with potential investors and mentors, fostering valuable industry relationships. The setting is polished and professional, but beneath the decorum, competition for investor attention is fierce.
One entrepreneur was once overheard harshly criticizing the VCs who had passed on his deal, revealing just how little he understood about venture capital. This serves as a reminder that securing funding isn’t just about having a great idea—it’s about understanding the investment landscape, knowing what VCs expect, and positioning yourself accordingly.
 Insider tips for startups looking to get VC funding. |
| Recommended |
| Clear communication is key to rebuilding trust in the workplace
|
| Snackable content is the secret sauce to stopping the scroll
|
| What a losing sports team taught me about business leadership
|
Here are five key principles for navigating today’s venture capital ecosystem.
Be okay with no
Insiders call it the “elegant turndown.” A VC has mastered this art when they can decline a deal while still leaving the entrepreneur feeling optimistic. Investors rarely want to go through the lengthy process of explaining why they’re passing. Instead, they offer polite but vague reasons like:
- “Our allocation for your sector is complete.”
- “Call me when you reach $X in sales.”
- “Come back when you have a lead investor.”
The real reason is often left unsaid—because explaining it would likely lead to an argument and waste time. When you hear one of these lines, don’t try to debate it. Just move on.
Understand their focus and limits
Most VCs specialize in a specific sector or stage of growth. Don’t waste your time pitching if you don’t fit their criteria—usually listed on their website. And don’t assume you can persuade them to step outside their model.
VCs invest money entrusted to them by institutions and pension funds, and these backers impose strict guidelines on where their capital can go. If a VC funds IT startups, your medical device company isn’t going to change their mind.
Know their fund cycle
The age of a VC’s fund is critical. Check their news releases—when did they launch their fund? If it’s over six years old, that fund will likely no longer do new deals.
Venture funds typically operate on a 10-year cycle. VCs aim for exits within four to seven years post-investment. If a fund is over six years old, they’re focused on managing existing investments, not taking on new ones. At best, they may offer follow-on funding to companies already in their portfolio.
Understand their workload
A VC three to five years into their fund spends more time managing existing investments than hunting for new ones. However, they still need to review potential deals, just in a more compressed timeframe.
This means meetings are shorter, responses are quicker, and explanations for why they’re passing become even more vague. At this stage, the “elegant turndown” becomes second nature.
Know their return requirements
Venture capital is a high-risk game. A VC fund may invest in 20 companies, but they’ve reviewed at least 2,000 deals to get there. Even among the chosen 20, most won’t succeed.
A typical fund breakdown:
- 4 out of 20 are complete losses.
- 12 limp along—neither failing nor thriving.
- Only four succeed—and they need to be massive home runs for the fund to deliver strong returns.
VCs get paid a salary, but their real prize is called carried interest—typically 20 per cent of the fund’s gains after all investments exit. But before they see a dime, they must first return capital to their institutional backers, often doubling the original investment. Many VCs never achieve this, which is why their due diligence is relentless and their deal terms can seem ruthless.
The bottom line
Venture capital isn’t inherently good or bad, but you need to understand it to use it effectively. By staying informed about market trends, exploring alternative funding options, and building strategic relationships, founders can better position themselves for long-term success.
Warren Bergen is the author of Swagger & Sweat, A Start-up Capital Boot Camp.
Explore more on Business finance
Troy Media is dedicated to empowering Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in fostering an informed and engaged public by delivering reliable content that strengthens community connections, enriches national conversations, and helps Canadians better understand one another.
