Supporting Founders with More Than Just Capital

May 14, 2019

Simple strategies for building successful start-ups that create returns for investors

A lot of people ask us what’s more important for successful start-up growth: money or strategic advice. Our answer has always been ‘both’.

But recently our partners at The Evidence Network (TEN), a unique research firm that measures the impact of innovation organizations, validated that answer with quantifiable data.

When they surveyed NPC’s 500+ clients they found that companies who received both money and advice achieved the greatest results. This aligns with TEN’s research into many other innovation organizations across Canada and around the world; companies that receive both advice and money do better than companies that receive just one of those things.

We think that makes sense on a number of levels.

“At NPC, if we invest in a company, we’re more likely to have spent a lot of time getting to know them and providing strategic counsel. So if a company gets investment from us, by default it also gets advice,” says David Gauthier.

But that’s not always possible with individual investors or angel groups who don’t have experience in a given sector. That’s where specialists are necessary like mentors, accelerators and organizations like NPC with strong subject matter expertise in the technologies and business models that may be in play.

“We see this in the natural products arena where biology is often at the root of the product or service but it’s also an issue in many other innovation-focused sectors like IT or biotech,” says Gauthier.

Gauthier adds that this is one of the reasons angels and not-for-profit investment funds like NPC make such great partners.

“Angels are essential in the innovation capital spectrum–they fill the gap between government funding and VCs. They’re willing to take on earlier opportunities, but they can’t know everything. They need a group of experts around them to augment their knowledge and develop that investment.”

There’s another reason this ‘money plus advice’ theory works. Companies that attract money are often described as coachable–willing and able to receive and implement advice.

“Strong technical or business expertise is great to have in an entrepreneur but if they aren’t willing to hear other points of view from those who have ‘been there and done that’ it can be a red flag for investors,” says Gauthier.

But there’s one other element that’s critical to founder success: connections.

“Helping the entrepreneur build a network of strategic partners, clients, suppliers, technical and business service providers is the perfect complement to capital and strategic advice,” says Gauthier. “Connected companies are better able to fast-track ideas and stay ahead of trends or issues. Investors and others that can help them make those connections can dramatically increase their velocity.”

David Gauthier will moderate the session, Supporting Founders with More Than Just Capital, on June 5 at the World Angel Investment Summit in Calgary, Alberta.