I heard Paul Lem refer to VC funding as rocket fuel. I really like the connotation and think that it is most appropriate. The analogy is something like this; if you are a start-up in a very high growth market (revenue of $100M in five years) then rocket fuel will help to get you to lift off faster. Just be careful which direction your space craft is pointing before igniting. Many rockets exploded on the launch pad during the bubble days. There is a bit of rocket fuel out there if you know where to look, have a solid team, some traction and a believable business plan. I know only a few start-ups who need rocket fuel, although many others that think they do.

If you are like most start-ups I have come across then what you probably need is gasoline (revenue of $20M in 5 years). There is a gasoline shortage right now and no prospects on the horizon of anyone opening a gas station or a tanker truck showing up. In my opinion the government should be helping to open up start-up gas stations all over the country to help early stage (seed and pre-seed) entrepreneurs and start-ups and yes, government does have a role to play. The reason I say the government should get involved in some way is to incent private investors to invest in businesses in the very earliest stages of formation. Right now no one is doing it because it is to high risk. Find a way to remove some of the risk for investors and perhaps we will see some investment. There is one program I heard about that sounds very interesting, however, I am trying to track down more details, a post to follow soon.

Looking forward to the first start-up Petro-Canada.

Ian Graham

Filed under: Commercialization, Entrepreneurship, Innovation, Start-up by Ian
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