I have been writing for some time about the lack of available equity funding for Canadian software companies and how bootstrapping can be the preferred choice for many companies. As the US financing of VC’s drops off even more (see below - and note that this is Q3 - before the mess on Wall Street - imagine Q4) things will only get worse in Canada. Unless you are a very successful serial entrepreneur, have a boat load of patents, or have rich relatives that can lead a round, my advice to most Canadian software CEO’s is - don’t use your valuable time chasing VC. Spend it selling your product.
And now another complication - with a major slowdown in our largest market, selling is harder and more cash-saving creativity is required. I am enclosing an article which has some interesting suggestions in how to stretch your dollar. http://calacanis.com/2008/03/07/how-to-save-money-running-a-startup-17-really-good-tips/
The good news for those that are looking for options, is that the M&A market for smaller (sub $20m companies) remains active. Larger tech companies are still flush with cash and looking for opportunities to grow in-organically as organic growth gets harder to achieve. If you elect to go this route, make sure you give yourself enough time. The process can take 6 to 9 months and you don’t want to run out of runway while you are in the process.
Whoever said the software business was boring??
About the Author
Bruce Lazenby
Regional Director - Canada
Corum Group