Posts Tagged ‘ Entrepreneurs

Show me the Money! $50,000 “prize” for one Startup present at the International Startup Festival

We are thrilled to announce that at this year’s International Startup Festival 2012 (www.startupfestival.com), one deserving Startup will leave with an investment of at least $50,000! And the award won’t be limited to one of the Startups selected to pitch on a main stage; any Startup present and badged for the event will be eligible to win.

A group of angels and VC investors, including the Festival’s Founders Phil Telio and Alistair Croll, Anna Goodson, Rory Olson, and Danny Knafo, quickly jumped at this opportunity and banded together as equal partners to create the prize.

The prize will be an investment in a Startup, in the form of an entrepreneur-friendly convertible debenture (reasonable interest rate with no cap on valuation). Terms and conditions with details will be posted on our website soon.

Montreal’s Chris Arsenault, managing partner at iNovia Capital, will curate the process, including forming a selection panel made up of representatives of the fund, along with an equal number of independent but startup-savvy judges. We will be sure to create ample opportunities for any badged startup to get in front of one or more of these judges. But ultimately, the event will imitate real life and startups that want the $50K (or more) will bear the responsibility of seeking out these decision makers.

The fund is not closed, so any Angel or institutional investor interested in participating in the fund, should contact us at [email protected]


There you have it. The International Startup Festival 2012 will deliver insightful speakers, a wide profile of users and influencers to network with, pitching opportunities of all kinds – all wrapped in a true Montreal summer, Festival atmosphere. And now topped off with a chance to walk away with a $50,000 investment. Register here www.startupfestival.com

For more details please contact Philippe Telio: [email protected]



Startup Visa Canada: Who’s In, Supporting Organizations, Media Coverage, and How You Can Help

“We believe startups to be the driving force behind job creation and prosperity,” says [CVCA's] executive director Richard Rémillard. “We need to be more attractive to foreign entrepreneurs.”

Thanks for supporting the Startup Visa Canada Initiative. It’s been about 5 months since we launched. During that time, the team has been busy reaching out to government officials, influencers and organizations across Canada to gather data and garner support for an alternative visa for entrepreneurs.

Here’s a quick update on our progress:

Chris Arsenault, iNovia Capital joins the Founding Team

We are pleased to welcome Chris Arsenault, Managing Partner at iNovia Capital to the Startup Visa Canada team.  Chris has been an early stage investor and entrepreneur for over 17 years and is an active board member with the Canadian Venture Capital Association (CVCA).  Chris has been a strong supporter of the initiative and recently wrote a post in the CVCA magazine entitled Attracting Foreign Entrepreneurs to Canada. Based in Montreal, it’s great to have Chris on board to represent and support Startup Visa Canada on the East Coast.

Who’s In?

Over 270 people including you have signed our online petition and 67 notable entrepreneurs, investors and influencers have come forward to publicly endorse the initiative including:

Supporting Organizations

Many thanks to the organizations, who have also endorsed the initiative including the CVCA, StartupNorth, Real Ventures, iNovia Capital, Bootup, the Canadian Innovation Exchange. Podium Ventures and Startup Edmonton. If your organization would like to endorse us as well, please send maura [at] bootup [dot] ca a message.

Media

“It takes eight years for the Canadian immigration system to evaluate a young tech entrepreneur applying to immigrate from Paris. Applying from Hong Kong takes a little more than seven years, from New Delhi more than six and from Beijing nearly four.  In the world of technology startups, waiting times measured in Olympiads will convince applicants to apply for a visa elsewhere.”  -  Joe Friesen, The Globe & Mail

Startup Visa Canada has also received some great coverage in CVCA Magazine, BC Business, Techvibes, StartupNorth and Hacker News. You can find links to more stories in the Press section on the Startup Visa website.

How You Can Help

  1. Tell your friends to endorse the Initiative, if they have not already done so.
  2. Tweet and blog about the initiative @startupvisaca
  3. Send your local MP’s a message with a link to the site and express your support for Startup Visa Canada
  4. Follow us on Twitter @startupvisaca and like us on Facebook
Thanks again!

The Startup Visa Canada Team

Canada is commercializing… but not scaling

Curated Content: First posted by Arshia Tabrizi on Wed, January 26, 2011 for TechVibes

So for the longest time the problem in Canada was phrased as follows:  we are great at R&D but we can’t commercialize or build products that can generate revenue from that R&D.

Much money and effort was spent on figuring out ways to help move R&D from our universities and hospitals into the marketplace. To that effect, in Toronto, we saw the establishment of MaRS (of which coincidentally I’m a fan and supporter), and later MaRS Innovation, and the reorganization of much of the tech transfer offices across the GTA.

We also saw the establishment of brave new early stage venture funds, like Extreme Venture Partners and Rogers Ventures, who are not scared of jumping in “early” and taking a risk on early stage companies.

Over the past year, we observed some nice exits, such as Sysomos (bought my MarketWire), CognoVision (bought by Intel), and Bump Top (bought by Google).

This is great everyone said… we will be the next Silicon Valley (see Toronto Life cover article in November 2010, and letter to editor from yours truly in response in December issue).

Hold on now. We have shown we can spin out technologies from universities (coincidentally all the above companies were spun out of the same lab in the computer science department at UofT)… and our ecosystem has matured… and so have our entrepreneurs… but we are not scaling our businesses.

While entrepreneurs and fund managers are making good multiples on their exits (and many are friends, so I’m delighted for them!), we need to scale our companies if we ever plan on building the next RIM or Nortel on home soil. Otherwise, we will have become experts at commercializing R&D but not at building businesses.

That will require 2 ingredients: later stage venture capital and a focus on building scalable businesses (i.e. acquiring customers and selling products and services to generate revenue).

We can only then start to build a critical mass of innovation and truly contribute to Canada’s economic development and the establishment of a thriving knowledge industry.

Knockout Entrepreneurs! When a Limited Partner and Venture Capitalist take it to the ring – for a good cause

Next Montreal Last evening, nextMontreal featured a post about an unusual upcoming boxing match that will see an LP and a GP of a Venture Capital Fund go at it, in the ring!

These Knockout Entrepreneurs! are Jacques Bernier of Teralys Capital and François-Charles Sirois of Telesystem. Sounds crazy to hear that two major players in the Canadian Entrepreneurial and investment community are going at it, with gloves? Well at least, it’s for a good cause.  It’s an “Invitation-Only Event” and all proceeds from the event will support both St-Justine and the Centre of Excellence for Cellular Therapy of Hôpital Mainsonneuve-Rosemont.

It should be a memorable match.

Here is an excerpt of the blog post by Chris Arsenault on the nextMontreal web site October 28th, 2010.

Canadian GP & LP put-on the Gloves for a great cause on Nov. 18th

Do you remember the last time you got into a heated argument that culminated with your adversary laying down the proverbial gauntlet by issuing those infamous three words – “I dare you!”? Then, without even a shadow of a doubt and before you can even comprehend the seriousness of the situation, you responded with a testosterone-tinged “Sure, I’ll do it – name the time and place!” More often than not, the consequences of such actions end up being more than you wished for.

Now, to be honest, I’ve given more than my share of cocky replies over the last 20 years in the business. That being said, I can also say none of my “quick replies” ever landed me in a prize-fighting ring versus a trained boxer who also happens to be Canada’s largest VC and PE fund investor!

Yes, ladies and gentleman; Jacques Bernier, Managing Partner at Teralys Capital, has dared the VC community to face him in the ring. He is wants to go at it, one-on-one and show what it what he’s made up of.

Personally, stepping into a ring is already something I consider a little crazy. Furthermore, to go out and face one of my future potential investors in a boxing ring is almost suicidal. It’s definitely a lose-lose proposition…Or is it?

François-Charles Sirois, a dynamic young entrepreneur (and also President of Telesystem – one of Canada’s most active entrepreneurial investor through its numerous funds), heard the calling in October 2009. When Jacques threw out his “I dare you” in a friendly meeting, François-Charles rapidly evaluated the odds of winning or losing, the time he needed to train, the muscle-mass he needed to gain to face Jacques, identified Jacques’ main weaknesses, calculated the difference in age and speed, and rapidly (because all of this happened within a micro-second) answered back: “Sure, I’ll fight you. Give me a year to prepare. Oh, and by the way, I care tremendously for a specific foundation that gives support for kids and want to give 100% of my winnings to the Fondation Sainte-Justine.” “My winnings” – talk about a bold statement! Jacques quickly replied: “Perfect – but to be clear, my winnings will go to the Centre of Excellence for Cellular Therapy of Hôpital Mainsonneuve-Rosemont, which is a cause close to my heart”.

Definitely, François-Charles is walking into this adventure with but one objective in mind – to win! While Jacques already knows he has won!

Please checkout the nextMontreal web site for the full article (clik here)

Views on Building a Culture of Entrepreneurial Venture Capital

repost by Chris Arsenault, Managing Partner at iNovia Capital

Earlier this month I was invited by Rob Hyndman to post some of my views on the topic of: The Future of Venture Capital in Canada, as part of a series of posts at The Mark – Canada’s daily online forum for news, commentary, and debate. I ended up posting a short view of the “VC Ecosystem”, outlining only but a few key elements critical to having a stronger and most importantly a viable tech industry supported by venture capital in order to compete on a world wide basis. David Crow, added some valuable comments relating to “Creating a Venture Culture” so as did ex-VC and entrepreneur Rick Segal, tech CFO Mark MacLeod and others, participated in the discussion and shared their views on the topic. If you haven’t read the posts, I strongly suggest you give it a read.

I fundamentally believe in the early stage venture capital model that supports promising high growth tech startup entrepreneurs. And through my efforts and those of my colleagues and partners at iNovia Capital, MSBi Valorization, the CVCA, the C100 and numerous other initiatives, we are trying to make the model work by approaching venture capital the same way you one would build any other tech business: with the right people/team at the right time (entrepreneurs vs. operators); by building a strong network of knowledgeable partners with complementary skills sets and long term relationships; and by understanding what startups and entrepreneurs need from their early stage VC’s and deliver results/returns to our Limited Partners while properly managing expectations. Building an Ecosystem takes time, commitment and passion.

Building an Entrepreneurial Ecosystem requires the right culture and mindset! For the last 12 years I’ve dedicated my entrepreneurial life towards helping to build successful tech business via my role as an active early stage investor. Over this same period of time I’ve witness important changes across the Canadian VC landscape which continues to evolve and now seems to be driven by a more entrepreneurial culture, one that includes Venture Capital savvy Entrepreneurs that understands the role of VC funding more than ever before. Hopefully the pieces will continue to fall in place and we will see the next generation of successful Canadian tech entrepreneurs that will change the way we work and live be funded by Canadian VC’s.

Earlier in March I was given the opportunity/challenge to discuss Entrepreneurial Venture Capital by giving a, “fast, 15 seconds per slide, 5 minute 20 slide presentation” at Ignite Montreal. My presentation was specifically on the topic of trying to communicate how to “Make Venture Capital Work”.  I really like the Ignite presentation model, but it’s indeed a challenging concept, too bad I ended up doing the basic mistake of trying to say too much in too little time… thus not saying as much as I could if I would of said less!

So, many entrepreneurs these days are talking about “How the Venture Capital Model is Broken”, which is the wrong way to address the lack of capital Canadian entrepreneurs face! The VC Model isn’t broken because it never really worked in the first place, period!

With the exception of the 1980’ and the few last years of the Internet bubble, the model has never been successful for the masses, but has been only for a handful. And, when it comes down to Canadian numbers, we have to account for an additional level of difficulty: the fact that Canada doesn’t have the “weight” of numbers in its favor. Not only does Canada have a less mature IT and Biotech industry when compared to the US, it also has a small and nascent private equity and venture capital industry, and still only has a handful of privately managed venture capital funds today.

The stories about the highly successful technology entrepreneurs as well as those about the rockstar venture capitalists (note: over 80% of all venture capital returns are generated by less than 25% of the venture capital funds out there) created the impression that the only thing needed to build a high valued successful startups was an entrepreneur with an idea and an investor with cash! This meant that venture capitalists could blame poor returns on unsuccessful entrepreneurs while those entrepreneurs could blame their failures on the lack of capital or restrictions tied to the capital they did raise.

The math is the same for a Canadian venture capital fund as it is for a US venture capital fund. Investors in venture capital funds usually expect a high IRR (internal rate of return) – Top tier venture capital expected returns in the +30% IRR, a rate that is far above banking rates due to the high level of risk involved. A Venture Capital fund will usually has a ten year life and will require a certain level of management fees over that period. Therefore, in order to understand the type of capital that needs to be returned to the investors of the Fund (the Limited Partners) one needs to plan on generating three times (3x) return of capital to be successful and part of the Top tier firms that are able to continuously raise additional capital and funds.

In a nutshell, that means that a $100M size fund must return approximately $300M in order to generate the expected level of returns of a Top tier fund! So, knowing that for an early stage venture capital fund, one can expect it owning on average 20% of any given company in a portfolio of around 15 companies (for a $100M size fund), this would translates into $1.5 billion of aggregate portfolio enterprise value at exit, or $150M in cumulative EBITDA based on a 10x EBITDA exit valuation, needed to generate those type of returns. That’s pretty demanding! Managing expectations also sets the bar as regards the type of actions that will be put forward to achieve those expectations. Maybe it’s time we set an aggressive but achievable bar that would benefit the whole industry, no?
Reality is that entrepreneurs operate in a living “Ecosystem” that feeds itself by growing and building new connection. No party can do it alone! The community feeds itself off its own growth. High growth technology companies need venture capital to succeed and the venture capitalists need to back successful entrepreneurs to generate strong returns. Not only do we need to have better return expectations for venture capital funds, we also need better collaboration within the community to build networks strong enough to support promising technology companies and deliver high shareholder value.

The more successful entrepreneurs are, the more successful venture capital funds will be, leading in turn to more funding for entrepreneurs.
We have to learn how to expect more and know how to get more. Yes, funds and large institutional investors like pension funds and insurance companies should expect better returns from their venture capital investments. The last 10 years of Canadian venture capital returns represent -0.2%, yet expectations were in the unrealistic + 30% range, while solid manageable returns should be more in the 15% level. Large institutional investors can help themselves achieve such realistic returns by selecting fund managers with entrepreneurial backgrounds and experience with building successful companies. Managers who think and act like the entrepreneurs they back are better suited to select the ones who understand how build a successful start-up and have the most chances of succeeding.

Likewise, entrepreneurs should expect more from themselves, their teams and their investors. Entrepreneurs need to understand what is expected from the capital they raise and they can do this by selecting the right potential investors and doing due-diligence on them, by understanding the ecosystem they are operating in and making sure they surround themselves with people who are stronger than themselves, and generate stronger returns by setting themselves up for success.

High but achievable expectations create and define leaders!

Entrepreneurs are natural leaders, because they are able to execute on ideas, they transform opportunities into tangibles such as jobs, products and profits. So by having more entrepreneurs funding other entrepreneurs, we have more chances of building a sustainable ecosystem. It takes time to build a viable company, and by understanding the type of returns that are expected from the different source of funding, entrepreneurs and fund managers alike will be able to create a model that works.

The venture capital model is broken only to those who don’t understand it
those who aren’t willing or interested in investing the energy to adapt it to their reality. Like other industries, the venture capital industry will continue to evolve over time.

I’m looking forward to seeing the level of returns over the next five to 10 years as the Canadian venture capital industry begins this evolution – where entrepreneurs are funding entrepreneurs

Now, some questions for you:
- What do limited partners think of the emerging number of entrepreneurial driven Venture capital Funds?
- What do entrepreneurs think of the new breed of entrepreneurial VC’s?
- Is the Canadian market mature enough to trigger the level of collaboration required to build a strong ecosystem around Canadian technology companies?
- What is expected by the entrepreneur of the early stage VC’s (other than the obvious $)?
- How will you be part of the “make it Happen” generation?

For those interested in participating, take a look at the following few links to recent articles and you’ll get a feel for the energy and around the subject:
The Mark: The Future of Venture Capital in Canada
La Presse: Jacques Bernier, de Tralys: le goût du risque
Tech vibes: Venture Capital Funding Outlook In Canada
Financial Post: Venture capital finally gets a break
TechCrunch: Strength In Numbers: Canadian Entrepreneurs Flock To The C100
CVCA: Canadian Venture Capital Investments in 2009 – Lowest recorded in 13 Years
StartupNorth: What is being a startup really about?
Bootup Labs: Startup Visa Canada

Start-Up Brain Drain: The Next Threat To Canadian Venture Capital?

Re-post by Suzanne Dingwall William of Venture Law

When US VCs grow introspective, it’s almost never good for Canada. Which is why we should all be concerned about the self-reflection now taking place south of the border.

In recent months, US VCs have cottoned on to the importance of immigrant entrepreneurs to an innovation economy. This used to be Canada’s exclusive domain; thanks to historical inclination and demographics, we’ve long known we need foreign innovators in order to grow our economy.

Now, US venture capital is catching up. Their zeal is fueled by a recently released study by the NVCA, which notes that (a) immigrants have started more than 25% of U.S. public companies that were formerly venture backed, and (b) more than 50% of the employment generated by U.S. public venture-backed companies has come from immigrant-founded companies like Intel, eBay, Yahoo!, and Sun.

The New York Times has also taken note, citing Harvard Law professor Vivek Wadhwa’s claim that 52.4% of today’s Silicon Valley startups have at least one foreign founder. US VCs are figuring that, to expand domestic deal flow, they need to expand the immigrant entrepreneur base.

As a result, US VCs are now actively lobbying the Obama administration to increase the number of specialty worker visas (referred to longingly by Canadians with dreams of a Silicon Valley life as H1B Visa).

This is not the best of news for Canada, unless you are a young entrepreneur who believes his business would get more and better financial backing if only he could relocate to California. The limited number of H1B Visas in the US has driven high tech growth in Canada, in some respects; in several cases, American businesses who cannot attract or sponsor adequate numbers of high tech professionals have near shored that work to Canada.

In a larger sense, there is an active competition heating up for innovators from outside of North America, one which Canada can ill afford to lose. Canada has some immigration programs for entrepreneurs which are laudable, but not spectacularly effective. There is a need to think and plan for how to capture this desirable talent pool, before new market entrants steal our thunder.

Will Toronto Be The Next Capital of Angel Investing?

Re-posted from Suzanne Dingwall Williams blog at Venture Law Lines

According to the “Global Entrepreneurship Monitor”, Canada only ranks 9th in the world in angel investment. I have no idea who or what the Global Entrepreneurship Monitor is (I am scraping the data from our own National Angel Organization’s website) but I have to believe this ranking is based on incomplete and dated information. There are a number of indicators which would suggest that, in the last two years, Canada in general and Toronto in particular has been racing to the top of the pack.

Now, I’m basing my suggestion in part on the sheer volume of angel deals that have churned through our office over the last two years. I figure, if our firm has only a percentage of the addressable market of angel deals in Ontario, then using fancy math, this would extrapolate to practically exponential growth in this area.

There are a number of key drivers of the growth in angel investment in Ontario, that would support this theory, including the following:

- the giant sucking void of seed and pre-seed capital, matched only by the sucking void in public market returns. For many angels, this makes the opportunity cost of placing money in private companies acceptably low.

- new government pools of capital (the Accelerator Fund, IRAP, the Emerging Technologies Fund, to name a few) that are designed to help fill the funding gap. These help mitigate against the risk that there may not be additional growth money available for angel investees.

- the emergence of an angel community, led by the National Angel Association and various angel investor groups who, through broad based public marketing, have marketed angel investment as an asset class unto itself. This has created a kind of validity about the investments that directs new angels to action.

The result is an emerging set of Ontario angels with unique characteristics:

- The angels writing big checks are not, generally speaking, active participants in the local angel community. They find their deal flow through their own focus and interests, rather than community events. The most active Ontario angels are high net worth individuals with successful track records in high tech or traditional industries who have the resources to provide follow-on funding themselves if required. This can protect an investee that is doing well against any shortage of venture capital.

- Ontario angel investments are often purpose driven. They invest because they want to be a tangible part of solving a particular problem – in detecting or treating disease, for example, or in removing a stumbling block that has stymied their own industries for years. (This leads me to wonder whether the Diabetes or Kidney foundations, to name a few, find themselves losing funds from past donors who favour more personal interventiion through investing.)

- Angels who are purpose driven tend to provide more rigourous oversight of a company’s execution of its business plan. (This is not the same as providing operational support – more on that in another post.) They also tend to be more effective evangelists of the business.

- Ontario angels are remarkably patriotic. They believe in contributing to Canada’s place as a technology leader.

- While Ontario angels are patriotic, they are not insular. Many have invested outside of the region, andhave leveraged the resulting networks for the benefit of local investees.

This is the kind of skill set that most start-up regions can only dream of. It also suggests we are developing Ontario angels that will be long term participants in seed investing. Stay tuned

The state of the Canadian VC industry

Report from Startup CFO Mark MacLeod


The Wall Street Journal recently reported that VCs are heading for the door. “Not since the dot-com bust has the industry experienced as much turnover as it is now”. Partners from some of the biggest funds have retired or otherwise moved on. The same is true at all levels of these funds.

Healy Jones, a friend and former Associate at Atlas Ventures gave his very personal account of why he recently left the VC industry here. Its definitely worth reading. What should we make of all this turnover? Is this just part of the normal cycle of expansion or contraction that all industries go through? Or is there a bigger story here?

While the WSJ article talks only of contraction, there is still growth taking place in the industry. PEHub recently reported about five new and relatively small early stage funds.

VC in Canada

Here in Canada, we’re getting set for what I hope is a period of big growth, due in larger part to the Quebec government’s $ 700M commitment to investing in innovation and entrepreneurship. Jacque Bernier‘s Teralys Capital fund of funds is getting set to have a big impact! Alberta’s largest fund manager has also recently announced a $1B commitment to private equity investing.

So, who’s got it right?

As I look at these varying stories – tier 1 US VC funds like Atlas, Bessemer and Vantagepoint downsizing, while the Canadian space gets set to expand, you have to ask who’s got it right? Is Canada crazy or inspired to be expanding? Are the US funds that are downsizing smart or unlucky that they can’t get more capital now?

Traditional investing theory says: buy low and sell high. While public markets (led by the tech-heavy NASDAQ) have recovered somewhat from the beating they took after the U.S. credit crisis, startup valuations are still down. So, from the point of view of pricing, now is a great time to be investing.

In the absence of another big market shock, then the primary buyers of startups and their products and services should see a broad-based recovery. And with all this new capital coming in, the Canadian industry can afford to take a long term view. So, I’d have to conclude that the decision to invest in the industry is inspired, and timely. With one but…

A new approach

If these new VC funds execute on the same model of the past, then we should expect poor returns. in its 2009 report on emerging Canadian Software companies, PwC reports that “the median Canadian VC has shown a cumulative-since-inception return of 0%”. This is for a 10 year period that includes the end of the last bubble. Two years from now, those returns will be negative. More of the same just won’t get the job done.

The new commitments to VC and PE in Canada are coming from public / governmental sources. That’s all good, but for the long term health of the industry, private pension players need to be drawn back into the mix.

I am hearing a lot of encouraging talk about new models and approaches to VC investing – especially at the seed and early stage level. We have a small market here in Canada. We have to do things differently. People cite the Israeli-model as a great way to build a successful startup ecosystem.

Bottom line for me: I am truly excited for the future. I am looking forward to seeing these new funds come online and for some fresh thinking (from all players) about how best to build great, valuable companies. So, from where I stand, the state of the Canadian VC industry is looking good.

Update:
I guess the Canadian VC industry just got even better: The Canadian government has announced $ 350M in new commitments to venture capital: $ 260M for BDC and $ 90M to invest in new, private funds. You can read about it here.

More OCE Funding Opportunities: The Embedded Executive Program

Re-posted from Suzanne Dingwall Williams blog at Venture Law Lines

Over the last few months I have found my feelings for Ontario’s Centres of Excellence to be changing from ones of friendship to something more. Dare I name it? Can it be…love?

When the expanded mandate (including funding for business acceleration, market readiness etc.)for OCE was first announced, many of us treated it as a non-event. But since last December, when it rolled out its first Accelerator Fund investments the OCE has been going full bore. The OCE may well be the single most active early stage investor in Canada at the moment.

You’ve got to hand it to them – they’ve filled the current gaps in start-up funding as creatively as possible. The latest addition? According to my clients, OCE has funds for an “Embedded Executive” program. OCE will provide some funds to pay the first 6 months salary of a senior executive that joins the team of Ontario emerging growth companies. This incents start-ups to add bench strength sooner rather than later. Since team strength is an important metric for attracting growth capital, this is a terrific supplement to other OCE programs.

I don’t know much more about the program, but suggest those of you engaged with OCE contact them for further details.

About the author:

Suzie is a partner with Venture Law Associates LLP in Toronto, Canada, a boutique law firm representing entrepreneurs and emerging companies. Admitted to the New York and Ontario bars, Suzie has worked on Wall Street and Bay Street and at Nortel Networks. Suzie’s start up stripes were earned as part of the founding team of Saraide.com, a wireless data startup that was sold to Infospace for $470 million in 2000. A former VC, Suzie now advises private companies at all stages of growth. Suzie is also the founder of Corner Office Beauty, a beauty products and fragrances company.

The Challenge (and Opportunity) for Regional VCs

Re-posted from Suzanne Dingwall Williams blog at Venture Law Lines

An oft-heard comment about Canadian entrepreneurs is that they don’t aim high enough. Lately I’ve been wondering if our local angels and VCs are doing the same thing. In focusing on nurturing the local startup community, are they missing a larger opportunity?

Let me start by agreeing that, no question, local VCs need to prove to their LPs that there really is a critical mass of fundable entrepreneurs in Canada. But this focus needs to be applied with a sense of the broader trends in North American venture capital. The industry is consolidating and reinventing itself south of the border. Canadian VCs need to think where they fit in this new, emerging industry. Will local excellence be enough?

To date, Canadian venture capital has not been able to survive as an industry that services solely Canadian start-ups. That doesn’t mean it won’t change, but that’s the track record, neatly summarized in a handful of consultant reports tucked away in certain VC offices. And past results generally drive LP investment decisions.

Expanding investments to the US would be a logical hedge against slower growth here, but this has been difficult for a number of reasons – either LPs (because of their own institutional requirements) require that investment be limited to Canada, or because it been very difficult to get access to quality American deals. What does a Vancouver/Toronto/Montreal investor bring to a syndicate of Silicon Valley investors? Tough question to answer.

These two challenges are also faced by other regional players in the US. And I have to wonder if the needs of regional VCs in, say, Chicago, Philadelphia, Washington and North Carolina present a unique leadership opportunity for Ontario VCs.

Before you tweet away, consider this: in the next few years, American venture capital likely will evolve into a two-part industry, consisting of: (a) a handful of mega funds that operate globally, and (b) some smaller regional players that service start-ups off the Silicon Valley grid. If you believe that Canadian venture capital must expand to survive, then it’s got to figure out how to play in this new North American industry. I think it can do more than play – it can lead. I believe Canadian VCs may be best positioned of all to become leaders in regional venture capital.

Why? Billions of dollars have been to support and grow the venture capital industry in Ontario over the last decade. Since 1998, Ontario has been one of the largest living start-up labs there is – perhaps the largest one outside of Silicon Valley in terms of dollars spent. Ontario VCs and start-ups are uniquely positioned to become strong regional players.

How? We can provide great quality investments in Ontario to regional VCs looking to expand their portfolios, also don’t have access to Silicon Valley deals. We can in turn act as good syndicate partners for our US regional partners. We can extend runway for investees by helping them expand by setting up development teams in Canada, taking advantage of job-creation-driven government funding.

As a VC, I was fortunate enough to be part of a fund that could lever its LP’s name (BCE) as a potential strategic partner, allowing us to join US investments and sit at the table with some of the biggest U.S. names in the business. The networking and experience gained was invaluable. Without that kind of entrée, however, Canadian venture capital need to be creative in how we build. And the current consolidation creates a nifty opportunity.

Where will Canada’s start-up industry will fit in the North American ecosystem? Is there an opportunity outside of Silicon Valley that we need to cultivate in order for our local VCs to survive? Is it enough to aim locally? Do we want to go to the matinee, or do we want to go to THE SHOW?