Seeking Too Little Capital Inhibits Growth

By Charles Plant, Impact Centre | University of Toronto

In several prior reports, we looked at the impact that smaller VC deal sizes has on the slower growth of Canadian companies and on the availability of late stage capital. For this report, we wanted to look at whether smaller deal sizes may be as a result of any action that entrepreneurs themselves are taking.

To do this we looked in detail at 35 companies seeking financing. What we found was that their forecasts expected, on average, a 160% compound annual growth rate in revenue. While aggressive, this in itself is not an issue. Their other expectations though are problematic in that they expect to achieve these results with very little capital while recording profits of 34% of revenue.

Clearly these expectations are phantasmagorical as their requests for capital would, under any scenario, be insufficient to propel growth at these rates. What we concluded was that as a result of seeking too little capital, entrepreneurs may be inhibiting their own growth and thus contributing to our challenge at scaling companies.

You can read the full report here.

Or an executive summary here.

Please feel free to circulate the report and if you have any questions, don’t hesitate to ping me. And by the way, you can see all of our past research at


Charles Plant

Impact Centre | University of Toronto