| I was at a Toronto event in November that revolved around this exact topic. http://www.aspectgraphics.com/ACCTO/A_TO_invite.html Basically, it was a room full of startup folks, a couple of people with money talking and a few lawyers. It was more informative than it sounds. In short, the question being asked was "what's wrong with Canadian Startup Capital?" After the lectures and a lot of conversation about the topic with other Toronto based startup folks in addition to a few VC people, I boiled the problem down to these points: 1)
We don't value our own work. To hit a product out of the park, we sort of assume (like the rest of North America) that we need to be in the valley. I don't think that this is unique of Canada though - I've talked to a lot of U.S. based startups outside of California that feel the same way. 2)
Canadian investors have different investments. We like resources, land, oil, that sort of stuff. Investing in tech somehow seems un-natural to a lot of the folks with the Brewsters Millions type of money. 3)
A lot of Canadian tech startups are founded in revenue. Shopify is a good example - they're making money. They need some money so they took funding, but they didn't start the company needing funding to survive. Talking to a large number of Canadian startups over the last few years, I think that the previous point is the biggest problem with the Canadian VC industry. We simply don't ask for the money early and often enough to constantly remind people outside of the tech industry how much money it usually costs to get to revenue. A lot of the products grown in Canada are not erroneous in the least - the strong majority of them have customers and revenue in proportion to the costs they incur. 4)
Last, many Canadian tech companies aren't solving big enough problems. Similar to the point above, we're focused on revenue. VC is a game best played when the players are ALL swinging for the fences. A lot of the problems that our current products solve are focused on those that have a limited number of customers so that we can quickly build and sell them a solution. VC's want to fund solutions that will impact very large groups of people, if not all 6.8 billion of us. In the end, it's only a matter of time really. We'll have a few more Shopifies under our belt and then Film Industry won't be the only folks coming up North for a good deal :) |