Drawing on deep experience in entrepreneurship and investing, community leaders Neil Murdoch and Mike Stork shared their knowledge on how to establish a successful startup to University of Waterloo students at a Founder Fireside Chat event, hosted by Velocity in collaboration with the University's Office of Advancement.

In the chat moderated by Adrien Côté, executive director of Velocity, an engaged group of student attendees captured the opportunity to learn from Murdoch and Stork, who between them have decades of experience investing in and advising startups.

An active investor, Murdoch has served on the boards of many private and public companies, including his current portfolio of private businesses. Stork devotes much of his time to non-profit organizations and has been active in the business community for more than 30 years and is an avid angel investor, spending much of his energy investing in Waterloo Region startups and ecosystem.

Here are key takeaways:

It’s a tougher market now but opportunities for investments and startups endure

Murdoch said that currently, venture capital firms are being more selective and are expecting higher rates of return, but investors are still seeking opportunities.

“Now Series A investors are looking for solid revenue and startups’ path to profitability and the technology and business model needs to be validated,” Murdoch said. “We can expect that it will take another three to five years for the market to return to normalcy but right now seed money is available for the right idea — early-stage investment is out there.”

Murdoch added that overnight success stories can still take a long time, in some cases it can take up to a decade to build a company.

When seeking investment, it’s key to have customers, even prospective customers, and not approach investors until you can prove that.

“Many founders come into meetings with pitch decks citing a massive addressable market — don’t do that,” said Murdoch. “You have to have something realistic and give investors concrete information when pitching.”

Establish the right strategy and get the right people

Many factors contribute to the success of startups, with attracting and retaining high-caliber talent and advisors being top priorities for investors.

“Recruit great people, even if they are working or advising part-time,” Stork said. “I look out for the quality of the people the founder has surrounded themselves with, and need to see that high level of commitment so I know they can deal with it when roadblocks are thrown their way.”

Stork said it’s imperative that founders can roll with the punches and know that customer discovery can lead to a shift in priorities

“Find a strategy and prove to your prospective investor that you can think about shifts and adjustments,” Stork said. “You can expect that there will be issues and it takes months to capture the attention of customers — be flexible and be ready for the changes that will come your way.”

Murdoch emphasized that good entrepreneurs hire good staff.

“If you have confidence in yourself, you will attract the right people,” he said. “I look at the who the founders have recruited and how passionate they are about the business model and the company’s vision.”

Students ask questions

Students participated in a question and answer session following the chat

The importance of passion and perseverance to founder success

Stork underlined that founders should be prepared to handle tough questions from investors and that seeking investments early is never too soon.

“But you have to have conversations — with potential customers and investors — and they’ll tell you when they are interested,” he said. “Go out and meet people and start speaking with the right partners.”

Murdoch said founders shouldn’t rely on assumptions about their business and customers because market and technology shifts can happen quickly and could have a significant affect on startups.

“It is going to take twice as long and twice as much money to get to your goal — don’t underestimate what it takes to get things done,” he said. “Understand your industry norms but expect delays and the money that will cost you.”

Admittedly, it’s scary to be a startup founder and support from networks, university communities and incubators can imbue confidence to push forward.

“There's a difference between passion and perseverance versus stubbornness,” Murdoch said. “A founders’ passion has to be knowledgeable passion, speaking from depth and an applied understanding of the industry in which they work, and founders need to distill that knowledge passionately.”