Wellington Financial contributes VC chart to Maclean’s Magazine’s “75 charts every Canadian should watch in 2017”

Mark McQueen

This is a MSM feature every one of our readers will find interesting. Jason Kirby from Maclean’s Magazine has brought together 75 very interesting charts into one remarkable package. The only requirement he had of us was that our chart had to “be relevant to the Canadian economy in some way.”

Given our focus on the Innovation Economy, but with feet in both Canada and the USA, I wanted to look at the disproportionate amount of venture capital that American entrepreneurs draw per capita as compared to those from Canada.  This is what we provided to Maclean’s, and the chart fits well with the other contributors, including Fidelity Investments, HSBC, Prof. Jack Mintz, TD Bank Economics…:

If the Canadian economy is going to succeed, our country requires more early-stage risk capital. As the chart shows, Canadian entrepreneurs attract a woeful amount of venture capital as compared to their American counterparts. Despite the 2013 launch of Stephen Harper’s Venture Capital Action Plan, the per capita ratio of U.S. investment has raced ahead of our own. I’m hopeful that might start to turn around in 2017.

vc-investment-per-capita

I looked at the relative levels of VC investment in both USD and home currency, dating to 2006.  Back then, Americans raised US$93.37 per capita as compared to US$45.76 (C$51.89) in Canada, using the average exchange rate for that year.  Nice years later, in 2015, the US figure had jumped to $186.23 per capita, as compared to Canada’s US$49.42 (C$63.19) per capital (using the average exchange rate for 2015).

What’s worse is that although the CAGR of our respective populations are about the same over the period (0.9% vs. 1.0%), the American VC/capita investment grew at an 8% compounded annual growth rate between 2006 and 2015, as compared to 0.9% for Canada in USD.  It wasn’t much higher in Canada’s home currency, with a CAGR of 2.2%; if the “new” part of your economy is growing at or below the rate of the “old” part, you’re destined to stay put.

Congratulations to Maclean’s for a very successful project.  I can see why the 2016 version was one of the most popular posts of this past year.

MRM


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