Canadian VC’s on Tech Start-ups and the Changing Climate for VC Funding in Canada
Deloitte, one of Canada’s leading professional service firms, which conducts an annual Global Venture Capital Survey, published some disconcerting numbers last fall when they released the results of the 2010 edition. The survey measures the opinions of VC’s from around the world, and asks each one about their country’s investment climate and future outlook. The survey identified perhaps the biggest challenge facing the start-up industry in Canada: fewer investors with less capital.
After speaking with people like Martin-Luc Archambault at Wajam, a successful entrepreneur/angel investor, I was getting a sense that there was another side to Canada’s start-up investment story than we being told in the survey results and in the news: a much more positive story. But I needed more validation.
Chris Arsenault, Managing Partner at iNovia Capital, and Board of Directors Observer at Well.ca, helped break down the negative overtones of Canada’s start-up climate for someone like me… a writer with very little VC investment know-how.
In the VC survey, two thirds (66%) of Canadian respondents expect the number of venture firms in Canada to decrease between now and 2015, while a great majority of VC’s in China, India and Brazil anticipate adding more venture firms in their country during the same time frame. And half of the Canadian survey respondents saw a decline in the size of investment funding from venture capital over the next five years. In fact, 11% predicted a decline of more than 30%, the second worst outlook of any country surveyed.
“The Canadian VC industry is changing,” Chris explains. “The composition of the teams that form the general partners of Canadian funds being raised today are somewhat more entrepreneurial than in the past, and more driven by their own experiences as operators than by financial backgrounds.”
He says its true that Canada is seeing less new VC funds being formed. Yet, Canada is also seeing VC funds come together with way more industry expertise in the teams and these new fund managers also have more capital under management than in the past. “So less VC’s, but more expertise, reach, and capital that goes at work into promising Canadian tech companies.”
The advantage Canada has, as Chris sees it, is that we are still a small community, highly educated, and driven by innovation in a country that has been built by entrepreneurs. He believes we need to pool our resources to support Canadian entrepreneurs and build global companies, starting right here in our backyards. Just the sort of thing Sprouter, Maple Leaf Digital Lounge, Wajam, Well, Pushlife, Mobisandbox and Tokii are working together to do.
These last few weeks, I’ve spoken with experienced VCs and fresh thinking CEOs on my way to discovering more about the start-up climate in Canada. The many driven, creative and experienced people committed to helping start-ups find funding here in Canada all seem share the spirit that things are changing for the better.
This is a big year for Tokii, and we’re glad that we’re not going it alone. We want to thank all of our friends and partners in Canada and around the world who are helping turn this little Canadian start-up into a global phenomenon. Tokii is all about relationships, and we have already made some great ones.
About the Guest Blogger
Anton Tolstoy is a member of the BC College of Teachers and enjoys passing on his knowledge of Social Studies and Humanities. He knows how to dig deep behind the front page to discover the facts, and is passionate about intellectual freedom and the power of words to make real change in people’s lives. Anton is a guest blogger for Oakville based Tokii, and his other posts can be found at blog.tokii.com. The posts here are reprinted with permission.