Saturday, August 01, 2009

Canada's high tech strategy...anyone? Up for grabs.

In today's Globe and Mail, an article on Canada's high tech strategy. Who's advising? Who's contributing? Why is Stephen Harper absent? And, where's the trickle down effect of funding for high tech firms who are in the trenches, investing in Canada's innovation equity today... and contributing to employment.

Try as we might to keep all equity in Canada, high tech firms are forced to go south of the border to access capital for great ideas, innovation and seed capital for start ups. Why? In my mind there are two key contributing factors that keep Canada stagnant in its efforts to jumpstart its international profile back to where Canada used to stand on the Canadian stage as a leader and high tech innovator.

First, the funding model is geared towards rewarding companies who are cash flow positive. Yet it is the ones in the red who are in dire need of the capital to get their companies to the place where they can viably compete and have the chance to succeed. It is at this very first stage that small businesses need the capital but, banks don't have the risk tolerance and there is no small capital structure for venture capital co's who won't get out of bed for less than $10 million and 80% of your company. But what if you only need $1 M? Or less? While there have been recent efforts by some VC's to change this model like Marc Anderseen's recently launched VC fund and introduce funding as little as $50 K to get co's off the ground, they are still more talk then currently actionable funding options and few and far between.

Second, Canada's overall apathy and lack of opportunism and competitive spirit when it comes to embracing new ideas and leadership. Conservative, risk averse protectionism is what stifles Canada's ability to grow and claim these success stories as their own.

For someone who spends a lot of time south of the border and in other countries, it is a clear, disappointing truth that while many great things come from Canada, it is no thanks to our political or financial systems for supporting this success.

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