Canada and Vancouver’s Startup Climate–I think something is missing.
February 8, 2008 by Tris Hussey
Filed under Business News
Show me the money!
Having been a part of several startups, and more than half Canadian, for years now. The one thing that drives me nuts is how great ideas here in the Great White North (or great mossy green South coast) just don’t get the support needed to get them off the ground, while it seems that folks down South, well they just get decent money as they need it. Like let’s take Seattle, close by, lots of talent, they have a culture that seems to just breed cool ideas:
As a result, Seattle is home to a growing community of technology innovators who are willing to take risks and money is pouring in. During the last 12 years, venture capital investment in Seattle has more than tripled, to about $1 billion annually and last year Washington tied with Texas as the third-largest destination for VC money nationwide, behind California and Massachusetts.
Question: Will this same ‘offshoot’ phenomenom fuel tech start-ups in Vancouver? If so, what companies should we look to to spawn these ‘babies’? Source: Who are the Baby Bills of Vancouver?
The question of will vs. can is important here. We can. We have awesome, awesome people out here, but the will, well … yeah we need folks with money willing to take risks. I know that some do. Heck b5 is supported by Brightspark and JLA Ventures. I know that Canadian startups get funding, the question is–do we given enough funding to enough people. Remember Will Pate’s post from January on startups? We certainly have people here who can make great things happen, but you need to be able to feed yourself and pay people in the process.
If the Canadian government is really serious about Canada’s future, we need to help the startup climate, well, start up.
It’s not just money, is it?
But is an influx of money the answer? Actually, no. It’s not that simple. I’m not so naive to think just giving out money is the solution. We need to help build a climate where risk is okay. Where failure isn’t failing but finding just another way not to do something. That takes a lot more work.
Who’s up for the challenge?
It’s a bit of a myth that it’s much easier to raise money for a start up in the US. Guy Kawasaki has in the past quoted some interesting stats on the percentage of US start-up businesses that get venture funding. I think it’s something like one in every 4,000.
I think us entrepreneurs have to take some of the blame for the Canadian situation. So often I’ve heard people saying “if I could afford to quit my job I’d start x, y, or z”. In the US the mentality is more like quit one’s job, rack up credit card debt, beg, borrow and steal the rest. That is to say, believe in the idea so much that you’re willing to risk every bit of financial security to make it happen.
The other myth that gets perpetuated in Canada in that US VCs invest at the idea stage. In most cases this simply isn’t true; VCs like to see traction before they jump in, which means it’s friends, family and formal or informal networks of angels who bridge the gap. The US companies getting venture funding have typically been through a brutal bootstrapping phase.
Also, the stories we hear about Seattle, or the Valley for that matter, are almost always the highlights, the companies that did get funded, the angels who bought in, etc. We don’t hear about the thousands of other start-ups toiling in obscurity. And nor do we hear about the years the funded companies spent honing their product before it actually got funded.