By David Crow
Reposted from StartupNorth post.
I’m reading Michael Cusumano’s Dealing with the Venture Capital Crisis in the October 2009 issue of Communications of the ACM, and I’m struck by the idea that our geographical proximity to the US, advanced economy, good universities and strong intellectual property rights might be the spawning ground for new ventures, sources of wealth, social welfare and employment. The article proposed four markets that meet these requirements including:
Estimated 2009 Population: 7.4 million
2008 Venture: 483 investments totaling US$2.08B, $780M from local VCs (Cdn$2.54B/Cdn$904.84M) (IVA)
Estimated 2009 Population: 5.3 million
2008 Venture: 406 investments totaling 360M euros (Cdn$620.55M) (FVCA)
Estimated 2009 Population: 4.9 million
2008 Venture: 160 investments totaling 243M euros (Cdn$418.87M) (IVCA)
- New Zealand
Estimated 2009 Population: 4.3 million
2008 Venture: 52 investments totaling NZ$66.1M (Cdn$46.81M) (NZVCA)
Well these are great numbers, how does this compare to Canada?
Estimated 2009 Population: 33.8 million
2008 Venture: 371 investments totaling Cdn$1.3B (CVCA)
When compared to the US and Israel, Canada looks like a poor third cousin. What is the appropriate measure here? Investment as a percentage of GDP? Well, we fall somewhere between New Zealand and Ireland. Maybe things aren’t as bad as we’d like to think. We have more venture money than New Zealand. We’re closer to a larger market. Maybe we should start to look at the positive factors and exploit the constraints to build opportunities.
- Advanced economies
- Sophisticated customers
- Good universities
- Strong intellectual property rights
- Favourable tax laws
- Vibrant entrepreneurial cultures
What’s an entrepreneur to do?
In my opinion, there are only two items on this list that are directly impacted and influenced by entrepreneurs – Sophisticated customers and Vibrant entrepreneurial cultures. Sure, the net result of a more positive entrepreneurial environment is an advanced economy that produces good universities. We can lobby politicians for strong intellectual property rights (and consumer freedoms) and favorable tax laws. But there are advocacy groups like the National Angel Capital Organization and the Canadian Venture Capital Association that more directly benefit and are better funded to act on the behalf of entrepreneurial financing. This is not some list that necessarily deserves any additional attention than is currently dedicated to the political process. I’m arguing the entrepreneurs should build companies and leave this to the pundits, advocates, policy wonks and politicians.
Tomorrow, how Canada can become a better place for start-ups, by building sophisticated customers and vibrant entrepreneurial cultures.
David Crow is an emerging technology and start-up advocate/evangelist. At Microsoft Canada, he is responsible for helping Canadian start-ups gain access to software, support and visibility in the Microsoft ecosystem through programs like BizSpark (details at microsoft.com/bizspark). David blogs at http://davidcrow.ca/ and http://startupnorth.ca/ or follow him on Twitter @davidcrow