The Canadian government has committed $400 million to boost the venture capital market in Canada. In Canada, some say the venture capital industry is broken. In particular, when it comes to small companies, the start-ups that need a boost and therefore help with Canada’s economic growth report the VC industry in the last decade in Canada has not been good. Pension funds are largely reported as staying out of the game.
There are reports of too much financial engineering. In the United States, especially Silicon Valley and Boston, John Ruffolo,CEO of OMERS says,”We need to increase Canadian mentors to increase VC funds. Venture Capital funds benefit from entrepreneurial experience and brain power.”
Paul Lem, CEO of Spartan Bioscience, says, “In the United States, in particular, Silicon Valley the VC’s are specialists that have referrals and solutions. Whereas in Canada there are generalists.” Matt Golden, Managing Director, Golden Ventures Partners gives solutions on how not to make mistakes in VC industry. “The need for smaller more focused models with mentorship may be what is missing in Canada.” In Silicon Valley and New York, there is an increase of micro funds of $10 to $50 million.
Do Canadians dream big enough? Is there a disappearance of the tech sector in Canada? Some experts seem to think when Canadian companies are successful they then sell out because of lack of access to capital. Canadian entrepreneurs seem very hungry. Do we have the Valley culture and mentorship found in Boston?
Paul Lem, CEO of Spartan Bioscience says there is pressure on Canadian entrepreneurs to move to the US because the odds are against them if they stay in Canada. Stories of Canadian companies going to the Valley and raising $5 million are heard time and time again with much lower odds of raising this amount of money in Canada.
But in Canada, experts state it’s less expensive to get engineers needed and Canadian companies are open to co-investment. It is hard to compare Canada to Silicon Valley as Silicon Valley has had 50 great years of investing and Canada has had a long dry spell according to experts. In Canada, we have C-100 – Silicon Valley Canadian tech and mentoring company and many accelerating programs. There is Extreme Ventures, and a few United States VC’s looking to invest in Canada and great signs from the government at a critical time.