[adamgravitis]

"In short: this author is endorsing a funding model focused on low initial investment and faster profitability."

-> so basically, Canadian "venture" capital. They don't even want to talk to you unless profitability is there or within a few months. So, basically, it distills to a barely riskier than usual bank loan, except you pay the loan with equity.

[Hongwei]

A cause or symptom (I'm not sure about causality here) is that the Business Development Bank of Canada (BDC) directly funds most private Canadian VCs. VCs now have public money as part of their LP base, with some strings attached. Most of these strings (eg. don't waste taxpayer money doing anything unethical or overly negligent) will nudge VCs to be more conservative. Plus, the VCs are guaranteed 20%+ of their 2% carry from BDC taking up that much of every fund and don't need to swing for the fences to make a good income.

[nicholascamera]

I live in Montreal and intend to do a consumer oriented software startup. I would like to better understand what I would be getting into starting up here, vs. applying to YC. Can you suggest resources for understanding Canadian startup landscape, funding etc.?

Perceived Pros:

- Many STEM grads

- Gaming and AI industry, 2+ top AI schools

- Relatively little competition for engineering talent compared to SV

- Many engineers who are barred entry to US based on country of origin

- Easier work visas (to be confirmed)

- Free healthcare and other social services, and less violence

Perceived Cons:

- Cultural lack of ambition, entrepreneurial dreaming.

- Excessive reliance on government subsidy (the government is the customer)

- Risk averse VC

- Shallow bench of experienced operators to mentor, invest, and manage

- Brain drain to SV of best talent

- Higher taxes

[jariel]

Remember in the SV costs are astronomical, so there's a kind of buy-in threshold necessary which won't make sense for most companies.

Shopify is a perfect company for Canada - they are not making 'tech for other techies' and don't require all the best devs in the world. It took a while to get going, so costs needed to be lower. They can make some income early on, thus 'proving the model'.

There is a reason that the nations top social network started at Harvard, which has an elite status among young people. There's a reason that Snap was started by an attractive young man from Cali, from a the top school in Cali. Glossier, a 'makeup company' is actually, truly a 'social network', and there's a reason it was founded by an ex-model/reality TV star with deep connections in LA/NYC.

On the technical side, there's a reason that certain companies really need to be in the Valley as well.

So if your business needs to be in the Valley, it might make sense to do that, but if it's a 2cnd-tier kind of thing, not something the FAANGS would ever look at, and doesn't require the best technical talent in the world, than you can do it other places.

Montreal a tier 2 cities, Ottawa/Vancouver, not really tier 2, Toronto is probably a solid tier 2. FYI that is actually not bad considering tons of American cities are not tier 2 either. Chicago, Toronto's 'twin' really might not even be Tier 2, there is a weird lack of entrepreneurial activity there for its relative size and power.

Montreal has cheap prices, decent AI grads, stable economy, supportive government, weak VC but the top could of firms are fine places to go for smaller up to round A, and if your business fits well into Quebec's strategy, following rounds can be supported by Desjardins and nationalist players.

Also, Porn.

[a13n]

Purely anecdotal, but having lived in Canada for 5+ years now, I'd definitely say Canadians tend to be more averse to risk.

[loceng]

Arguably there are less Canadian VCs available locally as well, and therefore they can get away with offering worse conditions.

[troughway]

>Canadian "venture" capital.

I love this. I wish it were a thing, "The Canadian Model".

[vkou]

The Canadian model for business isn't all that great.

It doesn't do a great job of serving the country's social needs, and it also doesn't do a great job of producing competitive businesses.

There's a fair number of public funds that get funneled into unproductive firms through things like innovation grants, and there's a lot of protectionism for incompetent incumbents. All of this seems to enrich a small class of elites, at the expense of the public purse. Most Canadians just shrug their shoulders at all this, and move on with life.

[nickff]

Ballard Power being a classic example of this, though there are many.

[airstrike]

Can you share more on how this applies to Ballard Power? It's a name that just came up on my radar this weekend and I was planning on doing research on them, so thought I'd ask in case you have something specific to share

[nickff]

Ballard's been getting government grants and subsidies for over 20 years, and produced very little in terms of saleable product on the other end. They make fuel cells and related products, but their business model seems to be mostly taking government and investor money, and using it to produce units which they 'sell' at below-cost to companies trying to look green by 'testing' alternative fuels.

[randaouser]

One of the worse offenders is North which is previously thalmic labs; Not a single product has reached the market with any revenue to show but remains a poster child for a successful organization.

[imtringued]

That sounds like the conventional VC model of pumping money into obviously bad companies. The only difference is that this is government funded.

[bcrl]

Canadian banks are incredibly risk averse, and programs like CSBFP have so many strings attached that make it almost useless for certain sectors. Trying to fund infrastructure (rural FTTH) has been an exercise in futility with most Canadian banks. 75-85% loan to value ratio on fibre builds makes no sense considering the assets have 30+ years of life after being paid off in 3-4 years. But hey, we love real estate!

[munk-a]

As a Vancouver-side Canadian I must say that the support for tech up here is pretty poor in a large part due to the labour laws being gutted by EA. Providing information on OT policies and OT compensation is one of the first rounds of questions you can expect to receive during hiring.

On the other hand - Canadian business expenses are still quite high, but quite a bit lower than US business expenses. Healthcare and cost of living are huge factors in labour costs.

[WalterBright]

> public funds that get funneled into unproductive firms

If they were productive firms, they wouldn't need government money. This is why free markets work better, because free markets allocate resources to the most productive uses.

[markdown]

> productive uses.

You misspelled profitable.

[WalterBright]

The role of government in a free market is to make profitable and productive congruent.