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)