Pre-Seed Venture Capital in Canada
Table of Contents
Introduction
It would be a lie to state that there is a lack of capital in Canada. There is plenty of capital in Canada. There are many rich people in Toronto, just look at the One Bloor West. The problem is the lack of guidance and a lack of risk capital regarding investment in early-stage startups, where ideas here have more merit than the ideas found in the USA (e.g. PearAI).
After going to a few Ripple Ventures events, I realized there are plenty of startups in Canada, in their own niches, and there’s plenty of people trying to build the next billion dollar company. There is no shortage of companies and talent. However, there is a shortage of hiring at these startups. These startups are usually one man or two man shows, or very bootstrap oriented, thus not having many paid employees, and definitely not highly paid skilled employees. Hiring can increase through capital which can either be saved or raised. Therefore, “Build Canada” should really be focusing on how to inject more capital into worthwhile lean idea/MVP startups so that they grow and hire people, thus increasing real wages.
In my opinion, the benefit to founders for raising pre-seed capital is very simple. Raise money → pay employee(s) to work on idea or work fulltime yourself → retain enough equity to significantly increase wealth via equity-compensation rather than cash compensation.
Another benefit of venture capital is that founders get an immediate network and people will have a reason to hear your startup out, which can easily result to new customers due to the social network and butterfly effect.
Y Combinator Benchmark
The “goto” VC based out of the USA whenever someone does tech startups (anywhere in the world). The US industry standard is Y Combinator’s SAFE. Although Canadian companies can apply to it, the focus of this article is retaining Canadian presence and market priority. I want to see more startups retaining presence in Canada so that Canadian real wages rise.
YC invests $500,000 in every company on standard terms. Our $500K investment is made on 2 separate safes:
We invest $125,000 on a post-money safe in return for 7% of your company (the “$125k safe”)
We invest $375,000 on an uncapped safe with a Most Favored Nation (“MFN”) provision (the “MFN safe”)
Pre-Seed Venture Capital Firms
I’ve sorted the list of VCs by the amount of capital they are willing to inject. The higher the injection, the more competitive the VCs below them will be. If location unspecified, assume Toronto.
We accelerate pre-seed and seed stage brands, investing $750K to $2M.
and
We incubate new businesses from scratch with our start-up team, investing $500K to $2M.
We target initial commitments of $500K - $2.5M for between 8%-15% ownership of a company. Our reserve model is fluid and adjusted regularly.
- $250k - $2M CAD
- size: $100k – $2M CAD ; $1.6M pre-seed deal noted
- Enterprise SaaS, AI/ML, Marketplaces, FinTech, CyberSecurity, EdTech, etc.
You are looking for cheque sizes of $250K to $1M.
- Montreal, Toronto, Calgary, Vancouver
- Although not Canadian based, they allow companies to stay in Canada
- $250k - $1M USD
Over the last couple of years, we shifted to a systems-level approach to investing, focusing on ventures that, while correlated with profit, are aligned with planetary and societal flourishing. Beyond capital, we offer tailored support and networks for founders’ personal and professional growth, helping them build businesses that create lasting, positive impact.
- $120k CAD (FounderFuel) ; broader pre-seed $1M or less
Promising pre-seed and seed investments in scalable software companies in every region of Canada.
- $100k - $1M CAD (up to $2M total)
- Crown corporation
- $500k–$750k USD
| Type | USD | Timeline |
|---|---|---|
| A | 50,000 | 1.69 years |
| B | 100,000 | 3.39 years |
| C | 250,000 | 8.49 years |
| D | 750,000 | 25.5 years |
This is from my notes. Essentially, if you were to work full time, given minimum salary of 40k post-tax, these are the timelines you should have before raising your next round of funding (assuming you live in Toronto and not the suburbs like I do with a massive car expensive LOL).
The alternative, which I will call the greedy founder approach, is to raise money, keep your job (as in you have negative opportunity costs), and hire above market government subsidized interns you tech lead for. Based on my calculations, all 4 seed amounts allow for hiring 3 interns per year for 4 months each. Based on the one idea I have, I would pursue the least equity dilution possible. I am sure that within 4 months, an MVP will be made (plus working on the weekend), and so the next 2 interns would be marketing/business development interns who will help get the product in the hands of customers. Business development (sales), is not simple. You’d think people with business degrees would know how to do it, but nope. It’s really just comes down to drive and inherent advantages some people have.
- $100k+ at incorporation; up to $500k first year
- Vancouver
- Up to $250,000 CAD
- financing-size $1k (pilot) leading to $200k; overall $10k-$200k
- Vancouver
- Up to C$100k (SAFE)
- Up to 100k CAD
- $50,000 CAD (SAFE)
- Montreal, QC
It says seed, but I mean healthcare disruption kind of requires having an “in.” You either get what I mean or you don’t. For example, an in would be knowing how something in the status quo works and can be improved.
An easy one is that in Saskatchewan, doctors are forced to use US-based software for patient tracking. A great solution would be a solution that was full-proof encrypted meaning that only members of a group can decrypt the data. That would be a good start and would get widespread adoption as soon as someone high up is convinced to use the software solution.
Invested in Cohere so there’s that. This is probably the VC to target if you’re in the AI space.
We invest in ideas that go beyond conventional wisdom and solve major pain points within large markets with potential for rapid growth.
- Waterloo
- Unknown capital injection
Requires full-time dedication to launch a company, usually requires co-founders. It’s there for some people, probably not what tech-founders want though.
Seed (Scaling a Product)
I don’t really care about this at the moment, so will not be updating it till there is a necessity.
This VC is focused on sustainability improvement ventures. They really like innovation that lowers carbon footprints of industries.
Personal aside: There were some Waterloo graduates who created AlgoBio a new type of fire retardant material. They would really benefit from this sort of VC.
Quebec based firm that also focuses on sustainability.