I will leave it all to y’all to come up with suggestions as to his motivation, but former Venture Capitalist Mark Skapinker had some choice words for Canadian entrepreneurs, as well as the venture capital community, in a interview earlier today. I think Mr. Skapinker may have earned himself what Frank Magazine used to refer to as “Great Canadian” status with this Wall Street Journal interview:
By Timothy Hay
The venture capital industry is on the rocks in Canada.
One VC firm has grown so dismayed while looking for entrepreneurs to back – and finding that the cream of the crop has departed for Boston or Silicon Valley – that it has started up, funded and launched three of its own Web companies.
“The venture capital model is broken in Canada, and this makes more sense than running a fund,” said Mark Skapinker, a partner at Toronto-based VC firm BrightSpark. “We can’t rely on anyone else, so why don’t we just delve into that marketplace ourselves?”
BrightSpark raised a $55 million fund in 2005, Skapinker said, and used it to fund 10 emerging companies. But it was next to impossible to grow the fund any larger, and the field of start-up companies looked increasingly narrow. The firm decided against raising a new fund.
“There are no significant repeat entrepreneurs here,” he said. “And there used to be an infrastructure of VC firms here. We used to get referrals, and that’s not happening now. We need co-investors, and there are very few players.”
A recent report by the Canadian Venture Capital Association painted a similarly bleak picture, with decreased government commitments to venture investing and a wave of consolidations among venture firms. Deal pace and venture fund-raising has slowed dramatically, according to the report (the link opens up a PDF document).
According to Skapinker, just two years ago there were as many as 15 active venture firms in Canada, and that now the number can be easily counted on one hand. Two of Canada’s biggest firms, VenturesWest and Celtic House, have been stalled in their fund-raising, and slowed down their activity considerably.
BrightSpark still functions as a VC firm, managing its funds and working with its portfolio companies, Skapinker said. But the situation has grown so dire in Canada that the firm has started building software and launching new companies.
The firm’s partners are former founders and executives from Delrina Technology Inc., a software company that grew to employ hundreds of people, and which was sold to Symantec Corp. in 1996 for $450 million.
“We decided to go back to basics,” Skapinker said. Within the last six months, the firm launched three Web-based businesses, all of which share a common architecture. The sites are room-sharing service istopover.com, software development program agilebuddy.com and collectors’ marketplace collectionbuddy.com.
All three were backed with up to $200,000 from Brightspark partners and angels, and all should be cash-flow break-even within a year of being launched, Skapinker said.
Asked why a VC firm would launch its own businesses – as opposed to investing in start-ups that seem similar – Skapinsky said that, as an early-stage investor, if BrightSpark backs a Silicon Valley company, it most likely means all VCs in Silicon Valley already passed on it. “You have to be in driving distance,” he said.
While it might seem counterintuitive for a VC firm to dream up, develop, fund and launch its own companies, for the entrepreneurial veterans at Brightspark it’s merely a case of doing what comes naturally. “It’s a wonderful feeling,” Skapinsky said.
As for the photograph of the torn and tattered Canadian Flag that accompanies the story, I note that if it had been an American Flag, a crime would have been committed in the process of creating the graphic.
If you want to point out names of great Canadian Innovation Economy repeat entrepreneurs who haven’t left for Boston or Silicon Valley, feel free to fill up the comment box below. So many come quickly to mind, including Garner Bornstein, Francesco Bellini, Phil Deck, Greg Kiessling, Stuart Lombard, Skuli Morgensen, Angus Reid, etc., etc.
(hat tip – CN)