It’s not easy to run a startup. The intense highs of success are moderated by uncertainty, and the majority of founders have little financial support in the event of their company’s collapse.
For an increasing number of Canadians, however, self-employment is worth the insecurity—and nowhere is that truer than British Columbia. Last year, a Shopify survey revealed that more than 39 percent of BC residents have gone into business for themselves, marking the region as Canada’s most entrepreneurial province.
At the centre of that innovation, Vancouver tops the list of the country’s best startup ecosystems. Named last year as the 15th most prominent hub worldwide, the community generates $9 billion of revenue annually for the city.
It’s little wonder, then, why events at 2018’s Vancouver Startup Week have been thriving.
The annual affair invites companies to host happenings all over the lower mainland—and anything goes. One business might offer an intimate fireside chat at their office, while another could rent out a public space for a product demo and series of panel discussions. The series is a feat of organization, with more than 100 official events taking place at over 50 locations.
Eclectic and vibrant, Vancouver Startup Week has two primary goals: to celebrate the local tech community, and to offer workable advice to up-and-coming businesses.
This year geared towards guiding companies from ideation to profit, various panels provided advice about the best way to achieve success. When considered together, two in particular—“The $1000 Side Hustle” and “Canada vs. U.S. Investment”—offered a blueprint for entrepreneurs to pursue their dream.
The $1000 side hustle
Many idealistic businesspeople know they want to be self-employed. Few are ready to take the leap. For panelist Paul Singh, founder of Disruption Corporation and a seed-stage investor, the biggest obstacle to launching a side business is getting hung up on the way that the process is portrayed in popular culture.
“Over 98 percent of businesses in the BC economy are small businesses—[those that have] 50 employees or less.”
By romanticizing Steve Jobs or Elon Musk, he said, the media implies that the best way for a would-be founder to transition to self-employment is to kick a stapler across the room, tell their boss that they quit, and start their business from scratch the next day. In reality, most successful companies have been built up over a long period of time off the side of a desk—primarily to minimize risk.
“Jill Earthy, who is a big player in the startup support ecosystem in Vancouver, has used the term ‘risk astute’, rather than ‘risk-averse,’” agreed Humaira Hamid, co-creator of Rock My Business Plan—a program at Futurpreneur Canada that allows individuals to translate their ideas into viable products. “You take calculated risks where you know there might be a great payoff. I’ve been working specifically over the last two years with about 100 side-hustle entrepreneurs from across Western Canada. And it was very much, ‘I have a mortgage, or kids, or a student loan, or aging parents, or whatever it is that I am responsible for’. You can’t just throw everything to the wind and build from there.”
Instead, the speakers suggested, creating a side business requires locking down a great idea, and carefully planning and testing it.
“There’s a book you should read,” Singh said. “It’s called So Good They Can’t Ignore You by a guy named Cal Newport. I won’t ruin the book for you, but in it, he argues that [finding a niche involves examining] what you’re good at, then what you happen to like, then what a lot of other people want. He argues that it has to be in that order. A lot of people try and come at it the other way. They say, ‘What do I love?’ And there’s plenty of research that shows why that won’t work. Or they come at it saying, ‘Gosh, what do a lot of people want?’ But he argues that you have to start from the skill side. What are you good at? What are you willing to invest 10,000 hours in to learn?”
Everybody who has ever been employed, the panelists suggested, have a skill that somebody is willing to pay for. The hardest thing is determining what it is—and having the guts to chase it.
“Over 98 percent of businesses in the BC economy are small businesses—[those that have] 50 employees or less,” said Hamid. “That includes solo entrepreneurs, the gig economy, and side hustles. There’s zero excuse not to get started. If you’re going to move on your idea—if you’ve decided that this is what you want to bear out—find a community that works for you. Get the minimum idea onto a piece of paper, and start talking about it.”
— Vancouver Startup Week (@vanstartupweek) September 26, 2018
Securing U.S. investment
For many, the next roadblock in a company’s journey comes at the moment that it needs to grow beyond a few employees. On the West Coast, there’s a familiar narrative.
A BC business creates an innovative product and starts to gain some traction in the market, but needs investment to take the next step. When the organization turns its attention to fundraising, it finds it near impossible to find seed or Series A capital. American investors, it discovers—with their fabled bulging pocket-books—often overlook the province in favour of Ontarian or U.S. companies, and businesses find it hard to track down local financiers.
For Mat Kaliski, principal at Rubicon Venture Capital—an American-based late-seed and Series A fund— the solution lies in self-promotion.
“A lot of the capital is in Toronto because they do a good job of talking about all of their successes. They have BetaKit. In Vancouver, the people tend to be more humble.”
“I think there is a big difference between East and West—the way in which BC versus Toronto and Montreal, that supercluster, works,” he said. “A lot of the capital is in Toronto because they do a good job of talking about all of their successes. They have BetaKit, they have a ton of blogs that promote the ecosystems. In Vancouver, the people tend to be more humble and don’t brag as much. They need to start bragging more about the things that they’re doing here to get more visibility, and get more people back here. Toronto has done a good job of getting a lot of buzz. A lot of hot air also, but a lot of buzz.”
In Singh’s view, it’s the excitement around a scene that brings investors flocking to the city—and face-to-face meetings are what inspire financiers to open their wallets. Wanting to reduce their risk, funds prefer to have long-lasting ties with a location and a company, and creating durable connections now will pay off for the region a number of years down the line.
“The average length of an investor relationship is seven years,” he says. “It’s a long play. So if you’re going to play that game, where you go and try and get a cheque in a day, the only way that works is if you have significant traction. In the absence of that you have to build a relationship.”
“You can’t just drop in—you’re never going to be a parachuter,” Kaliski agreed. “You can’t come [to Silicon Valley] for a week or two, with no introductions, and expect to get a deal. You might get some meetings with analysts and principals, but it just doesn’t work that way. One of the issues that frustrates me about the industry is the very close network. Where if you don’t come from Stanford or Harvard, or aren’t a white male, you need to put a lot of development into those relationships over time.”
There is, however, a positive side to investors’ reticence to visit BC. Forcing side-hustlers to develop a bigger market share and hone a product to perfection before funders come for a visit, Vancouver companies have the chance to avoid some of the pitfalls that await those with a fledgling vision.
“Long story short, I don’t think the big firms are coming [to Vancouver], but I don’t think that’s a bad thing,” said Singh. “In fact, I think that is healthier for everybody […] Most companies survived on the planet for thousands of years without any outside capital.”
“If you raise too early, before you know what your product is, and how it competes in the market, that’s when you get into trouble,” Kaliski agreed. “You raise too much, and end up hiring too many people to sell and market a product that isn’t quite there yet, and that’s when you end up getting into bridge conversations where they say, ‘Well you promised this, but you’ve fucked up and you can’t get there, so you either have to raise the money for existing investors, or new investors.’ It’s possible to avoid that.”