Mark McQueen, who heads Wellington Financial, has been collecting data and writing about the “deteriorating state” of the venture capital industry in Canada. In his latest blog post, he uses the word “crisis” to describe this industry and calls for a Canadian-wide summit where active investors and stakeholders would look aggressively for solutions.
In an earlier post, Mark suggested 5 measures that would dynamize the industry, which boils down ultimately to less taxes, and less bureaucracy, which sounds fair coming from an investor.
Calling for a summit and regrouping key organizations is a great idea; although I am not convinced this is just a money problem. It reminds me of Gulf states, which are drowning in money but have zero innovation compared to their nearby neighbor Israel which holds one of the most vibrant tech industry, even though they don’t have much natural resources. This might sounds as an heresy to a VC, but I think money is just a small (albeit necessary) part of the equation in the process.
Here in Montreal, one of the most dynamic industry is video games, with companies like Ubisoft, EA, Eidos, A2M and many other studios, small and big, pushing innovative and successful titles every month. They have now renowned international video game conferences, the Sommet Internation du Jeu Numérique, networks like Alliance NumeriQC, video game schools, and we have even events like video game music concerts going on in Montreal.
My take is that it was due initially to 3D software makers like discreet and softimage. Their success proved in a way that it was possible to actually start something here. Afterwards, we had tax credits, which allowed companies to actually hire many developers and still get a decent production budget. These tax credits are now at 37.5% and still play a big role in attracting new studios and teams in Montreal (see Eidos’s case). Third, there is always a reason quoted when executives choose Montreal over other development centres like Shangai or eastern Europe cities specialized in outsourcing, and that’s the creativity and talent found in Montreal.
As far as it goes, I think we actually need more “role models” similar to Discreet and SoftImage. But this is the kind of thing that you only wish for. It might happen in the next few years … or not; and we actually have to make with what’s avalaible right now.
As for the summit suggested by Mark, I suggest this: it would be a good idea to offer entrepreneurship courses in high schools and in universities. Advertising Montreal or other canadian cities as an attractive technology platform in other countries is also something that can only be done and should be done by governements (say, instead of giving $750k to investors)
Comments
MRM February 06, 2008
I agree – encouraging entrepreneurship is essential. The University of Waterloo already has a faculty of entrepreneurship, their professors own their own IP, they have lots of Angel money in town, RIM is a beacon, and it still isn’t working. Only a couple VC-backed deals closed in the Kitchener Waterloo region during the past year.
It may not be all about money, and commercializing research is part of it, but money is what is needed to create new companies.
Montreal is a great hotbed for foreign-owned video game development shops — but I’m not sure that’s a repeatable template.
Need to get you to the Summit!
MRM
Sylvain Carle February 06, 2008
I had three individual that confirmed me they where raising another (follow-up or new) fund in Montreal, not small things, several, several Mil$… trustworthy people, with great track record in raising and investing money… and my guess is that at leat twice if not thrice more funds are being confirmed in the next few weeks/months (and check also the recent ange québec announcement)…
It’s not because you don’t hear these things in blogs they are not happening!
… Doing my part to do the “not so detailed but you might think I am not talking thru my hat” info relay in blogs, like I know anything ;-)
Montreal Tech Watch February 07, 2008
Crisis in Canada’s venture industry and government lobbying http://tinyurl.com/yu2tdw
Heri February 07, 2008
MRM, i am reading your blog , you should do something at the upcoming canadian innovation summit @ toronto
Sylvain Carle February 07, 2008
So yeah, when they are “real deals” I can then scoop it out quickly here or on A Frog in the Valley… but not yet!
John Stokes February 07, 2008
Mark MacLeod February 08, 2008