What VCs look into Canadian tech startups - A technology primer for startup founders
Been a part of more than 200 VC meetings in Canadian startup scene, I’ve reverse engineered what VCs look in terms of technology while assessing your startup.
Hint: It really isn’t about in house vs outsourced tech
When a VC looks into a startup, let’s say a disruptive startup like Uber or Airbnb, they are really trying to assess how fast can they grow, how much can they scale. Scalability isn’t about just about business, but it is also about technology as well.
If this is the first time you are hearing about technology scalability, don’t worry, I’ll walk you through it.
Technology scalability is about:
- How fast can you add new features to your technology stack?
- How many users can you handle?
- How much burnout would it require your technology stack to handle?
- Do you have a team or an agency that can reliably manage this tech stack for you?
- How well managed is your codebase for scalability? Is it a mess?
In short, you tech stack isn’t just about what’s hot in the technology space, but it is also about how reliable is what you are building, how quickly can you adapt to changes and at what scale can this technology serve?
Below, I will walk you through each of these in a bit more detail.
#1 How fast can you add new features to your technology stack?
There are ways to write code for your app. If done poorly, could be the first reason you can’t add more features with ease. There are patterns of writing any software that we usually follow. When you are building an app for your startup, make sure that your development team follows a software design pattern. A lot of Canadian VCs I know look for them as the starting point to judge whether you are really prepared to disrupt or not.
#2 How many users can you handle?
So, let’s say you built an app with a proper software design pattern in place that makes it easy to add features. But right from the cloud provider you select, right from the number of servers and their available and the database you select - you define how many users your software would be able to handle. Ideally, VCs would want to be able to look into various software components your app has, and be able to see how many requests can they handle.
Now, when you define these components that your app has and how many requests can they handle, that’s not it. You also have to make sure that these app components are fail safe for your mission critical features.
#3 How much burnout would it require your technology stack to handle?
Scalability comes at a cost. And most VCs are pretty divided over what needs to be done with the costs associated with scaling technology.
Whatsapp started as a company that picked up expensive pre-packaged solutions to get to scalability. Whereas Telegram on the other hand was more oriented towards an engineering culture, and built scalability on their own. Both Telegram and Whatsapp are incredibly successful, but both follow different scalability philosophies. They both got funded.
As a rule of thumb, I would advise you to pick-up a scalable technology piece that doesn’t induces a threatening burnout rate.
#4 Do you have a team or an agency that can reliably manage this tech stack for you?
Let’s say you got yourself an app built, you launched it and you are already getting some engagement that you seem that’s all a VC would want. But that’s not it. What they also expect you as a startup founder is to also be able to be resourceful enough to either have an in-house dev team, or a reliable Canadian app development agency that can help you quickly launch new features, pivot, etc
#5 How well managed is your codebase for scalability? Is it a mess?
Most startup founders underestimate this, but if you are building a startup for an exit, you need to build it with a codebase that is written for scalability. If it is a mess, you would not only lose valuation, but also reduce the chances of a successful exit. VCs understand this very well and would expect someone pitching them to take this very seriously as well.
Over to you
This is a very concise view of how VC’s technically judge a startup’s quality. If you have any questions, feel free to drop a comment or reach out to me at email@example.com