Talking Business: How Not To Be A Deer In Headlights

Emmet McGonagle

Jun 17, 2022

Teruel Carrasco - president of Valhalla Private Capital, co-founder of Radar Endeavour Group Inc and CEO of Lending Assist - has discussed the standard investment journey of a startup, from its inception to achieving product market fit status in the latest installment of Valhalla’s ‘Talking Business’ series.

With expertise in business development and within startups and established companies alike, Teruel claims that some companies “skip through so many steps” on a mission to go public.

While this approach is “aspirational” - “good on you”, Teruel remarked - there is an established development strategy for startups which has been curated to reach product market fit as economically as possible.

Friends & Family

Typically the “first step” of founders, Teruel claims that angel investors look favourably on this round as it shows that “friends and family are willing to bet on you”.

Pre-Seed

Generally carried out via an angel (individual investor), angel group, or a micro fund, Teruel remarked that a pre-seed round’s definition “is embedded in the name”.

“It's seeding the startup,” Teruel said, “it's getting the startup to develop and accelerate their product.”

At this point, a startup usually has a minimum viable product, minimum sales and “in some cases, they're pre revenue”.

As a result of this, these startups tend to be in search of what Teruel refers to as “rocket ships fuel capital” of $250,000-$500,000 (less than $1m) so that they can get their product to market, better known as early stage investing.

Series A

After a startup has created traction in the market and has their first handful of customers, they typically go to a Series A and speak to a venture capitalist.

However, the amount of money startups look for at this stage is defined by industry. For example, an app which provides software as a service would typically start looking at anywhere between $2-5m dollars in ARR (annual revenue) with amazing traction.

On the topic, Teruel comments: “If within the last two years you've gone from zero to $1m, you're at $2m and you're headed to $10m, venture capital companies love to have you at that juncture and have conversations with you.”

Product Market Fit

Product market fit has been discussed at length by Teruel in a previous blog post, with reference to the hockey stick model and the prospect of a liquidity event.

“When I describe this process to a founder I get ‘deer in headlights’ looks.” Teruel explained.

“Nobody's ever laid it out that way to these startups, but they need to look out for these key guideposts of growth as they grow their enterprise,” Teruel concluded.

Do you have a question about angel investing? Get in touch with Valhalla Private Capital via our contact page.

< Older Post Newer Post >

Canadian Unemployment Grows in ‘Labour-Constrained Economy’

By Emmet McGonagle • 01 Dec, 2023

Canada’s unemployment rate has trended higher once again this month, according to the latest iteration of Statistics Canada’s November labour force survey.

Workers Call for Pay Transparency

By Emmet McGonagle • 29 Nov, 2023

More than half of workers believe that disclosing worker compensation details on job postings will lead to better equality in pay, according to the latest iteration of LinkedIn’s Workforce Confidence Index . The index - which is based on a survey of 3,302 members in Canada between June and September 2023 - found that 52% of people asked felt that people sharing their pay information (including salary and bonus) would improve workplace equality, compared to 48% in 2022. This number varies between different generations, with younger Canadians more likely to express support for pay transparency (73%), followed by 69% of Millennials, 46% of Gen X and 44% of Baby Boomers. However, 37% of those surveyed remarked that they felt anxious about sharing their pay information - a 2% rise from the year prior. Likewise, just under half (49%) said they felt well compensated for the work they do while 74% expressed that the pay gap between CEOs and employees had become too wide. The people of LinkedIn have come out in their dozens to give their two cents on the topic, with Adrienne Tom , executive resume writer for executives, saying: “ I'm all for salary transparency, so long as the number is clear and legit. Some postings list salary ranges so wide that the actual salary number isn't entirely clear, leaving job seekers confused.” “If you have a manager who is not advocating for the pay gap, you are working for the wrong manager,” remarked career strategist Sweta Regmi , while noting that women in Ontario earn an average of $0.87 for every dollar earned by men. On the topic, she added: “Salary ranges with job postings can help close the gender pay gap while allowing companies to find qualified candidates more quickly.” Do you have a question about angel investing? Get in touch with Valhalla Private Capital via our contact page .