Canadian startups with an Empire State of Mind are hitting up the New York VCs for a bite of Big Apple-style funding. While many founders on the West Coast have Silicon Valley on the brain all the time, astute entrepreneurs (and the accelerators that back them) know that big deals and big dreams are still to be had back east.
As VC-backed Vancouver accelerator HIGHLINE’s Global Operations Director, Lauren Robinson, put it, “Canada remains an attractive place to headquarter, but many of our portfolio companies like Andela, Skift, Preo, Wantering to name a few, are scaling by growing their business there. Given our investments in FinTech, Advertising and Media and Retail and Commerce, we want to help them to connect them to potential partners and investors to the #2 startup ecosystem in the world – which is also the leading hub for those industry areas.”
How do Canadian startups get access to one of the world’s biggest funding marketplaces? It helps that the interest is mutual.
“Thanks to a weak dollar, a relatively uncompetitive VC market and generous government subsidies, from our experience we can see that New York VCs see great value in Canadian companies,” Nat Cartwright, COO of Vancouver startup Payso (a HIGHLINE portfolio company), noted that after her startup has begun testing out its smartphone app in the New York market.
Still, Canadian startups tend to be more used to navigating the Valley. Taking on the world’s most famous urban jungle need a different approach. It’s not just a different city than San Francisco – it’s almost like a different country, with its own business culture and way of doing things.
— Mike Woronuk @ SXSW (@MikeisMedia) September 17, 2015
Fortunately, they’re not alone. There’s a Canadian Technology Accelerator (CTA) program in New York City that’s geared up to help Canadian digital media companies accelerate their path to success. The CTA connects with local entrepreneurs to help them raise funds for sponsored fundraising trips, facilitate VC and mentor introductions, and generally champions their cause. BetaKit recently caught up with CTA’s Trade Commissioner, Mike Woronuk, to discuss ways Canadian startups can connect in the Big Apple.
Woronuk said that working on this has given him a deeper insight into how Canadians are currently operating there – and how they can do better. He had some advice for any firm that’s looking to be the next Sinatra of the New York startup scene.
“One of the key differences between our venture ecosystem and New York City is that New York is so much more competitive, focusing on different stages and opportunities, with each VC company competing for deal flow,” Woronuk said, indicating that the larger scale and faster pace of competition affects how VCs view what’s valuable about a startup’s offering. “The Valley is looking for uniqueness in the technology and how that technology is going to disrupt an industry. By contrast, in New York, the tech sector there wants to change the return on investment for an existing marketplace. They want to see how your solution can apply to everyday business right now.”
The New York funders don’t just want theories – they’ll want to see proof that your solution can sell. Woronuk said companies that are more likely to succeed probably need to have a product in place, a go-to-market strategy and a sales process that’s already ironed out. “They need case studies for how it’s driving ROI.”
Many Canadian startups who can show ROI with some best-in-class Canadian players, such as a media company that’s made deals with Telus or Shaw, might think they’re now in prime position to take on the biggest potential customers in the US. But success is relative. Results that seem like home runs in the Canadian marketplace might come off as little league in New York.
“New Yorkers just want to get to the point. There’s just so much opportunity here. Make it worth their time.”
– Mike Woronuk
“They come to us asking for an introduction to Goldman Sachs, MSCNBC Universal, or some other large Fortune 500 company so they can make a deal,” Woronuk said. “That’s common – but in reality, they might not be ready. We might suggest how they could approach those large players, but for now, how about approaching tier two or tier three players. It’s about targeting people you might have a better foot in the door with. Then you can snowball into the bigger contracts.”
Doing business anywhere, relationship-building is key – but Woronuk recommended that when you come to New York for meetings, ditch the small talk and friendly chit-chat and cut to the chase. “They’ll be impressed with the speed to which you can relate how this is going to be relevant to them, right now,” Woronuk said. “If you want to land that contract, you’ll hit them with numbers proving it. That may seem harsh to outsiders, but New Yorkers just want to get to the point. There’s just so much opportunity here, these funders could spend their time talking to any number of business prospects. Make it worth their time.”
While hungry startup CEOs are dashing around the city, they’ll be tempted to attend events where they can meet and greet – and potentially make that connection with a person who opens the right doors. That can happen, but Woronuk says navigating those events is a challenge. “There’s always a lot of different events happening in the city and you might get a meaningful one once a week; since events are happening every day, finding the relevant ones is a challenge.”
Naturally, that’s one area where the CTA is trying to help, starting to connect Canadian entrepreneurs with American funders at events like Finnovate, particularly relevant to the financial tech crowd.
One last piece of advice Woronuk offers is that you shouldn’t expect to come back to your home country with the same mindset. “For a lot of founders who come here, this city has given them a unique insight not just about the size of the pie, but also about the level of investment they really need to achieve success.”
Running on big dreams, with the right guidance, connections and mindset, Canadians can become empire builders in the city that never sleeps.
Image courtesy Melissa Kwan.