The Mayor of Waterloo recently called all Canadians out, asking for our loyalty to RIM - asking us to recommit to a company which once proudly stood as a beacon of Canadian ingenuity. I’m sorry Ms Mayor. If you happen to throw a RIM parade or other extravaganza, ask for my presence as a request of my loyalty. I will abide. But asking me to commit to a company that hinders my creativity and sends me two steps back from the innovation frontier, well that’s just obscene.
So yes, I’m going to go ahead and stamp Blackberry out of the mobile race. Thankfully, the world is larger than just North America and thus filled with plenty of races. RIM will just face a diminishing presence here at home. And Ms Mayor, please don’t shrug my attitude as a disloyal one; I would be simply mad to wait yet another year for an illusive phone when so many will tickle my fancy by year’s end. My loyalty lies instead in the fact that if at the end I’m proven wrong, I will be glad for it. That, Ms Mayor, is all I can offer.
This dark cloud, however, does have a silver lining because it has again sparked the conversation of entrepreneurship in Canada. Canadians have technology prowess; we know that. Silicon Valley knows that. They have over 300K of our people, and I say that with pride. We lose many smart people to the allure of Silicon Valley, but so does every other metropolis in US. We have to live with that. It’s when we lose entrepreneurs to other regions of US that becomes a concern because Toronto, Vancouver & Montreal can stand shoulder-to-shoulder with the likes of New York, Boston, or Chicago.
A resounding issue raised by Canadian entrepreneurs is the lack of seed capital. Fingers point across the board, but it really is a chicken-and-egg issue. Early VCs must play a numbers game, required to invest in 40 or so companies hoping for one to hit. And if there simply isn’t sufficient startups in the field, VCs have to play frugal and hold out for larger, later-stage investments. This is the state in Canada; this is why our home-grown startups are quick to go South.
Since my return from the Valley, however, I have only seen positive signs. More incubators are sprouting in major cities, Meetups are flourishing, educational institutions are igniting the passion, and entrepreneurship is a real ambition in young eyes. True ambition. An egg of ambition ready to hatch. It now lays on the hands of early-stage VCs to accept this new state of mind and adopt a more conventional investment style.
Easier said than done. First, old habits die hard; bring in new young blood. Second, seed financing is an all or nothing game. Funds have to invest in a hundred companies and more, realizing that any returns will be delayed by three to four years, if it comes at all. Natural selection. Like a bird who learns to fly by jumping off a tree - all hope lost - to collect enough air resistance that catches its wings and creates that first flight! Or not.
US has proven that the conventional style works. While Canadian early stage funds had experienced negative returns on the 10-yr average, their US counterparts earned a boastful 35%. Early stage VCs in Canada have to assume a similar numbers approach and increase the amount of investments by ten-fold, acting fast but with prudence. Prudence is the Canadian advantage. We lack the fierce competition among VCs that has led to much exuberance in the Valley; and while they act too fast, we must beware to not act too slow.
I have seen a couple early stage Canadian firms adopt this conventional investment style this past year. Early leaders. Several other firms have raised sizable funds recently, and it remains to be seen which strategy they will employ. Only time can tell. But on this centennial anniversary of the War of 1812, its quite befitting for Canada to lay focus on channeling its entrepreneurial spirit - to creating an environment conducive to creativity and innovation so we can reach the world anew, and not just through the eyes of RIM.