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Toronto start-up companies are increasingly using a new innovative approach to launch a business according to The Mark Online Forum. As a result of the recent financial crises start-up companies have been facing a shortage of capital. Rather than discourage emerging Toronto business, this investment capital shortage has led to what has been dubbed "lean startups," companies that focus on getting a product to customers as the first priority and "only after this link between product and market has been established are additional resources devoted to trying to grow the business, including a larger investment in marketing and sales."

"Companies that make it this far are more likely to be successful, while those that fail to find a market for their product at least don't waste as much money on it."

"In many cases, the lack of capital is forcing startups to build highly innovative business models that are predicated on engaging customers earlier," says Duncan Hill, General Partner of Mantella Venture Partners. "This is a great thing for young companies and will serve them well in the long term." Derek Smyth, a Partner at Edgestone Capital, a leading Toronto VC firm agrees. "It's a lot cheaper to fail and that's obviously a good thing."

The lean startup approach means that companies are looking for smaller seed investments. This puts them outside the domain of traditional Toronto venture capital that typically invests larger amounts of money once the company has a proven product or an established stream of revenue."

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original source The Mark