Summing up Ontario’s VC industry in 5 minutes flat
31 January 2010
How do you sum up the Province of Ontario’s venture capital situation in the space of 300 seconds?
Around noon on Monday, representatives of the Canadian Venture Capital & Private Equity Association will be appearing before the Ontario Legislature’s Finance Committee as part of the committee’s pre-budget hearings. Given the number of different groups that have useful things to say, each deposing party gets five minutes, with another 10 for questions from the MPPs.
As a multi-party entity, a Legislative Committee has the potential to get good ideas on the table, and there is always a chance that the government of the day is looking for new ways of dealing with challenges that might fit within the upcoming Budget.
Although I’m joining Richard Remillard on behalf of the CVCA, and have yakked about ideas for years (see representative post “Solving the Start-up & VC malaise” Jan 19-08), I’m most interested in what you would talk about in the space of five minutes.
- The fact that between 2004 and 2009, Venture investing in Ontario has dropped 77.1%, from $642 million per annum to $142 million?
- The fact that the number different Ontario companies financed by VCs (new and follow-on) has dropped 77.4% between 2004 and 2009 — from 124 in ’04 to 28 last year?
- The fact that the government’s 2005 decision to kill the Ontario Retail Venture Capital Industry means that a group of funds that participated in 56% of 2004 VC transactions were able to join just 18% of 2009 VC investments? (see prior representative post “The great LSIF myth” July 2-08)
- The fact that the dollar value of Ontario VC deals that benefitted from the participation of Ontario’s Retail Venture Capital industry has dropped from $366 million in 2005 to $28 million in 2009?
- The ongoing challenge of commercializing on-campus research into technology startups?
- The investment pace of the Ontario government’s previously-announced policies that were meant to stimulate the VC industry and Innovation Economy? (see representative prior post “UAE’s Sheikh Khalifa Fund vs. Ontario’s OVCF” Jan 10-10)
- The fact that some government departments have become technology lenders and direct investors, even to TSX-listed public companies, bypassing the very Venture Capital industry they have sworn to assist elsewhere in the government? (see prior post “Why is Ontario getting into interest free corporate lending?” May 11-09)
- The fact that government press announcements regarding new spending by the Ontario Research Fund regarding the nature of the universe or improved treatments for alcohol addiction appeared to be designed to bolster “job creation” for the construction industry?
- Leveling the playing field between Ontario mining, oil & gas and innovation startups by allowing the New Economy access to the same flow thru share tax programs that have made Canada a leader in the mining and oil & gas industries? (see prior posts “Why no flow-thru shares for Canada’s Innovation economy? ” and “BNN TV “SqueezePlay” interview” Nov 12-09)
What would you mention in your five minutes?
MRM
(disclosure – although I’m on the CVCA Board, this blog, like all posts, reflects a personal opinion should you feel that I’ve reflected one here)
5 Responses to “Summing up Ontario’s VC industry in 5 minutes flat”
January 31st, 2010 at 7:46 pm
Great list, and you know the issues from the inside out.
As an entrepreneur feeling this pain, 3 things:
1) We need more VC funds that can invest in early stage companies/rounds, i.e. at the $500K-1.5M level. That segment is dry now.
2) Bill 116, Bill 116, Bill 116. It’s a roadblock. Can we get rid of it?
3) The government must know when it’s in the way, and not try to be involved in everything.
February 1st, 2010 at 11:51 am
Questions:
#1) Specifically, beyond a stated diversification and expected return benefit, what benefits are Ontarians getting from the 20% allocation to US funds through the OVCF? Is there a MOU that the US funds are expected to sign that outlines these benefits? Does said MOU include an undertaking to invest in Ontario?
#2) Have any non-Ontario commitments been made out of the OVCF? If yes, why have they not been disclosed on the OVCF website?
February 1st, 2010 at 8:25 pm
Stop building expensive office towers and instead start supporting community initiatives.
Reduce barriers to foreign direct investment.
Entrepreneur visas should be much easier to come by.
Introduce something equivalent to the Bayh-Dole act to standardize the commercialization of inventions generated on university campuses with government funding.
February 3rd, 2010 at 12:34 pm
Great Article !!!! I think government need to play major role in order to raise VC Funds.
February 4th, 2010 at 11:59 am
Think longer term instead of playing politics in job creation.
Many unemployed Canadians can become entreprenuers leveraging their workplace experience. They need support to make it a reality.
Absolutely need to be able to work with VCs and not rely on Angel investors.