Here is a quote from an article by Brent Holliday, a Venture Capitalist, published in the January issue of BC Business.
How does this sound? I want to start a business. It will not make a dollar of revenue for 24 months. It won’t be profitable for four years, at least. It has no assets whatsoever. In fact, the only asset it will have four years from now is a highly subjective thing called intellectual property. Here’s the good news: once I am up and running and my innovative product has caught on in the market, other larger competitors will buy me out with a stupidly huge valuation. Oh, one more thing. We will definitely need to raise more money after your money runs out.
Are you in?
I encourage you to read the article because he has lots of interesting commentary on the process of starting up and financing a small technology company. The main thing that I take from his comments is that, in comparison to many technology startups, ConnectionPoint (FundRazr’s parent company) is in very good shape both from our approach to this startup phase and from the basic characteristics of our target market and our solution. We are building the business such that we should have our first dollar of revenue by July this year, as opposed to the 24 months out he quotes in his article. We also should be profitable with the next 18 months, not the four years that is typical for many other startups.
We also have an advantage that startups in previous years did not have of generous support from the Ministry of Small Business, Technology and Economic Development in the form of EBC Tax Credits. These tax credits provide an immediate 30% rebate of an investor’s qualified investment in our company for residents of BC. What a way to reduce the risk of an investment in a startup!
We are lucky to live in a province with such supportive venture capital investment policies…