If You're Raising Capital in Canada, You Should Read This

Selena Romero
November 3, 2021
6 minute read
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We’re willing to bet that your parents said “money doesn’t grow on trees” at least once during your childhood. Unfortunately, the saying holds true throughout adulthood—especially when it comes to raising capital for a business.

It’s a hard pill to swallow at times. You’re building a great company—why wouldn’t someone want to invest and help build it?

The reality is that raising capital can be hard. Sure, you might see headlines of a company’s multi-million-dollar fundraising round. But what you don’t see are the countless hours, meetings and pitch decks that went into making it happen. You also don’t see news of the majority of companies that never see multi-million-dollar deals.

That’s not to say that funding your business is impossible. There are numerous options to finance your growing business; each with advantages and disadvantages. Overall, they all serve the same purpose: to help entrepreneurs bring innovative ideas to life.

But how do you know what option is best for your business? This post will go over the options for raising capital in Canada with links to useful resources to help you get the ball rolling.

When it comes time to find someone to believe in and finance a company, many founders simply look in the mirror. Though, this is technically not “raising capital.”

Being self-funded or “bootstrapped” sees a founder rely on his- or herself to get the company off the ground and in growing mode. This can mean putting savings together while you let an idea brew or, oftentimes, holding onto a more stable job while chasing your entrepreneurial dreams every other hour of the day.

By relying on your own cash flow, you hold onto 100% of your company, which is an attractive idea. However, it also means that you have to continuously generate enough cash to keep your business afloat, which can be very hard.

There are cases of companies remaining bootstrapped throughout their entirety, but they’re rare. Most notably, MailChimp founders Ben Chesnut and Dan Kurzius never took a dime from outside investors and managed to see a $12 billion exit.

That said, bootstrapping can be a great way to build a startup up to the point where it can look to raise capital from external sources. But, where can you get capital from?

Friends and Family

Turning to friends and family to finance your business can be tricky. It seems easy enough: ask those closest to you to trust your idea and back your dreams. However, money is a sensitive subject. Not everyone has the cash to spare and you often hear to never mix family (and friends in this case) with business.

If you do have friends and family who have expendable cash and believe in your idea, we recommend keeping these things in mind:

1. Identify if the money you receive is a gift, a loan, or in exchange for equity

2. Along with #1, have a contract set in place that lays out the terms and details of the agreement

3. Seek advice from legal experts to make sure said agreement is legitimate

4. Have all parties sign it

5. If things become difficult at any point, consider not accepting the money. It can be hard to mix friends or family and money. There’s no shame in saying “no.”


Grants can help you finance a certain project or serve a specific purpose to help take your business to the next level. Typically offered by the government, they each have specific criteria and a unique application process—and there’s no guarantee you’ll be approved.

While it seems like a daunting task to find and apply to relevant grants, they’re a great way to help move your business along. Particularly, when they’re non-repayable. You know what they say, “If you don’t ask, you don’t receive.” So, grants are always worth looking into.

Just make sure that your company matches the grant’s criteria, otherwise, it’ll be a waste of your time!

This tool can help you see if any grants match your business needs.


Debt-financing, aka a loan with the expectation that you pay it back with interest, is a traditional way to finance your business. Banks and credit unions are the main way to source debt-financing, but there have been alternatives in recent years, like Clearco.

You can check with your current bank to see what types of business loans they offer, but don’t be afraid to shop around and see if a different financial institution can better serve your business needs. Things to look for include low-interest rates and easy repayment terms—and always ask questions if you’re unsure about something.

Venture Capital

Raising capital via venture capital(VC) seems sexy. You present your company and its mission and hope a venture capital firm buys into your idea. The ultimate validation. Unfortunately, a very small portion of companies receives VC funding—the odds of being funded by popular U.S. firm Andreessen Horowitz is 0.7%.

That’s not to say it’s impossible. After all, numerous companies secure VC funding every year! If you’re at the stage of seeking VC funding, be prepared to schedule many meetings and have a solid pitch deck; raising money can easily take up a large chunk of your schedule. Also, have a set plan of how much money you’re looking to raise and how much equity you’re willing to give up in exchange.

Know that VC money typically comes when a business is slightly more established and shows consistent and promising growth. Some founders might receive money at the earliest stages of operations (aka pre-seed funding), but that’s usually when a founder has a track record of success and good connections in place. So, don’t be discouraged if VCs aren’t interested. It might just be a sign to look at other options on this list first.

It’s also important to remember that VC money isn’t the end-all, be-all of startup success (though it can sometimes feel that way). There are numerous cases of companies that received a boatload of VC money but never reached success. There are also many companies that never went the VC route and did reach success.

Like any funding option, if you look to raise capital through venture capital, make sure you find partners that align with your vision and goals, and can help you execute them. See a list of the top 10 most exciting VC firms in Canada here.

Angel Investors

Angel Investors are similar to VCs in the way that they can give your business a large amount of cash in exchange for partial ownership. However, unlike VCs, angel investors usually seek early-stage startups.

They’re high net-worth individuals who have an expendable amount of cash and typically seek companies they truly believe in and want to help get off the ground. Still, you will have to have a solid business plan in place to appeal to an angel investor—and need to get connected with one in the first place.

If you can find and receive funding from an angel investor, you will have a champion for your business (which can help make you an even more appealing investment opportunity if you raise more capital down the road). That said, they may also want to have a say in how you run your business—and they’ll be entitled to do so with partial ownership—so make sure they’re someone whose opinion you value and trust.

There are an estimated 20,000 to 50,000 angel investors in Canada, and these steps from BDC can help you get connected to one.


Crowdfunding is a great way to share your business with the masses and receive financial support from those who believe in your mission most. When it comes to raising capital for your business, there are two popular models: equity crowdfunding and rewards-based crowdfunding.

Equity Crowdfunding

You can raise capital from the general public with equity crowdfunding. Still a relative newcomer in the startup funding world, it opens the doors to everyday investors and allows your company to gain not only capital but a community of supporters for your business.

Unlike VCs and angel investors who give large amounts of money towards your business from a minimal amount of people, equity crowdfunding sources small amounts of money from a lot of people. Like VCs and angel investors, you will still need to set aside a portion of equity, aka ownership, to give to your investors.

In Canada, National Instrument 45-110, was put in place in fall 2021 to help streamline equity crowdfunding rules across the country. Now, founders across the country can raise up to $1.5 million from “the crowd” to put towards advancing their businesses.

In addition to the funding raised through a campaign, equity crowdfunding helps you market your business to the public and gain a community of supporters in the process.

You can reach out to the FrontFundr team if you’re interested in holding an equity crowdfunding campaign.

Rewards-based Crowdfunding

If you’re not willing to give up ownership in your company, but still want to raise money from “the crowd”, rewards-based crowdfunding could be for you!

Instead of giving equity to investors, you can raise money with the promise of giving “rewards” to the people who back your business.

Rewards can range from a physical product that your company makes to a subscription if you offer a service. Whatever you offer, just make sure it’s something that entices someone to give money to your campaign. Best of all, whenever people use or wear your “reward” in public, they’re showcasing your business!


An accelerator is a great way to help accelerate the growth of your business. These exclusive programs provide startups with useful services like mentoring, networking, a working environment, and even funding.

Typically run on a scheduled basis, an accelerator offers you the chance to go all-in on your business, with the bonus of support all around you.

Each accelerator has unique terms regarding what it provides and expects in return, so read up on what program best suits your needs before applying. If you get in, it could be the difference between your business failing and succeeding!

View a list of accelerators in Canada from BetaKit here.

Each business is unique, so each business will have a unique experience with raising capital. You might use one of these methods or you might use multiple! No matter what, we hope this post was able to help you find a way to keep your entrepreneurial dream alive.

Are you raising capital in Canada and think we missed something? Let us know at marketing@frontfundr.com. We want to keep this post up to date with the latest funding options to help more entrepreneurs succeed.

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Selena Romero