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Founders in Canada usually hear the same funding advice in the same order. Raise equity from angels and VCs first, apply for government funding second, and treat sales revenue as the last resort.
If you're building a software company today, I'd flip that order, because it's easier than ever to build an MVP and start selling.
The bigger point is that there's no single right way to raise. What you need to do depends on what you're building, and a lot of the standard advice falls apart once you look at it that way.
U.S. Investors Back Founders Who Could Raise in Canada Anyway
The case for going south is that U.S. investors take more risk, write cheques faster, and pay higher valuations. For most founders, the real advantage is volume. There are more investors to pitch, so the more meetings you take, the better your odds of a yes.
U.S. investors also mostly back highly legible founders, the ones who could raise in Canada anyway.
Raising in the U.S. only makes sense when you already know how to raise, you've done it successfully before, or you have a branded background, like a Waterloo degree, a stint working with Geoffrey Hinton, a Thiel Fellowship, or a previous exit. Going south also makes sense when you need a specialist investor who understands a niche, like a new nuclear technology.
As we covered Tuesday, many VCs are writing fewer cheques into non-consensus deals. If you're in that legible group, you won't feel much change. Everyone else should expect the U.S. to be less open than it was.
Government Funding Costs You Time
Government funding gets pitched as free money that saves you from dilution. What it costs is time, between applications, approvals, reporting, and waiting on reimbursements.
In my view, that admin overhead pulls founders away from finding product-market fit. It slows you down, and speed is a startup’s biggest advantage.
Standard Decks Were Built for SaaS
Founders are also told to follow a standard pitch deck—Cover the team, the problem, how you'll solve it, competition, how much you need, and where you'll be in 15 months. And investors will understand your story in just ten slides.
That worked in the SaaS era because most companies had the same timelines and business models, and investors knew what progress should look like. You were part of the VC factory. The companies getting funded today are all different types, so your pitch should be built around what you are.
Here's a general breakdown by company type. It won't fit every company perfectly, but it's a better starting point than one template.
Software Founders Need Real Customers
Investors want proof that you can build, that there's customer demand, and that you can compete with the frontier labs. Launch the product, get customers, keep iterating, and be ready to explain your wedge and how your business compounds.
Hardware Founders Need to Explain Timing
Hardware needs money before revenue is predictable, to cover prototyping, tooling, manufacturing, inventory, and certification. That makes timing a central part of your pitch. You also need to show why you won't be commoditized, since many physical AI products can be copied and lose their value.
Deep Tech Founders Need a Validation Plan
Start with the problem you're solving and whether it's valuable enough to justify the work. Then lay out the time and money it'll take to validate the technology, what you'll need to commercialize it, and why your team is the right one to build it.
Five Questions to Answer Before You Raise
What are we building, and what does the next investor need to see?
Where does our next big cost sit, in engineering, tooling, inventory, regulatory work, or sales?
How much does speed matter for us?
What comes with this money, from reporting and repayment to restrictions and investor control?
Who actually understands our kind of risk?
There's no universal answer to funding in Canada. Build a funding plan for the company you're actually building, and let that decide where your capital comes from.
What's one piece of funding advice you got early on that didn't fit your company? Hit reply and tell me.
~ Alex
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Hear Raghav at Together Toronto on Monday, Oct 5. He's joined by Philer's Ankita Sharma, Tyce's Lylia Djait-Paulien, and Supermoon Capital's Mike Masterson.
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