seeking fertile tech pastures

Taken from http://business.financialpost.com/2013/07/21/why-canadas-tech-entrepreners-prefer-american-backers/

Our comment: This is the most accurate article on the startup scene in Canada in 2013. As entrepreneurs this accurately summarizes our experience and that of our fellow entrepreneurs in Ottawa.

Key problem: Canadian financial backers are VERY reluctant to make introductions and open up their contacts to entrepreneurs. Meanwhile, in San Francisco and the Silicon Valley, everyone has a habit of introducing everyone to everyone who has even the slightest interest in each other. In three days one of the authors of this blog, Maria Al-Masani made more contacts in the Valley (such as Twitter and Yahoo executives, etc) than in ten years in Ottawa. And, they were very helpful in making further introductions and contacts. Meanwhile, the few people in Ottawa who do introduce people run nothing short of a full blown due diligence before sending out an email.

Why is this a problem? It means an entrepreneur must already have an extensive network of contacts with money, paying clients before they can even start a business. By the time they developed them for an employer, their financial needs have been taken care of for many years, so they don’t have serious problems. Necessity is the mother of invention: you need problems for entrepreneurs to find solutions. Entrepreneurs with fewer problems as a group are less innovative than those that experience them, but lack the contacts and capital to get the next Google out of their head, and into a running business.

The two gentlemen that started Google themselves didn’t have a rich network of contacts without having been actively introduced (their father wasn’t Donald Trump). Same is true for Twitter, DropBox, AirBnb and most Silicon Valley businesses. While young entrepreneurs have the skills, ideas, access to seed capital via government programs to bring ideas to life, they have to move to the United States to find business people to proactively introduce them to their network of contacts  so that their business can grow.

Canadian businesses’ reluctance to open up their contacts is why Canadian entrepreneurs are leaving Canada by droves to the Silicon Valley. 350,000 Canadians live in Silicon Valley.

National Post Article:

Why Canada’s tech entrepreneurs prefer American backers

Quentin Casey | 13/07/21 | Last Updated: 13/07/24 11:17 AM ET
More from Quentin Casey

National Post

Entrepreneurs say U.S. venture capitalists, unlike many of their Canadian counterparts, are connected, cash heavy and won’t just sit back waiting for the next board meeting.

Carol Leaman recently raised $3.3-million for her Waterloo-based startup, Axonify. The funding round involved two U.S. investors: Harmony Partners, a venture capital firm, and education giant Kaplan.

Ms. Leaman, who sold another company, PostRank, to Google in 2011, had the choice of adding a Canadian investor to the round, but declined.

It was a decision based on experience. “U.S. investors are much more aggressive in actively helping you accelerate your growth — not just sitting back and waiting for a quarterly board meeting,” she said in a recent interview. “My U.S. VCs are actively working for me and thinking about me every day.”

Canadian venture capitalists are improving, Ms. Leaman said. But she added her U.S. investors continue to push further, frequently introducing her to potential contacts and customers.

“They are constantly thinking about their portfolio companies and how they can tangibly help. I did not have that with Canadian VCs,” she said. “If you can go to the U.S. and get money, my recommendation is do it.”

Her experience raises a key question for Canadian entrepreneurs: Is U.S. venture capital more likely to help your company succeed?

A recent funding report from Toronto-based MaRS, an innovation centre, certainly leaves that impression. The report, titled Borderless Investments, highlights the success rate of Canadian companies backed by U.S. venture capitalists.

In 2012, 23 venture-backed Canadian tech companies were acquired. Nearly 60% of them had received U.S. venture capital. “This reinforces the need for Canadian companies to look to the U.S. for late-stage financing,” report author Neha Khera said.

For Code Cubitt, seeking U.S. funding makes sense for one simple reason: “The reality is that there are 20-times more venture capital dollars spent there than here. On a per capita basis, there’s more than twice as much,” he said.

Mr. Cubitt spent more than 10 years in Silicon Valley working for investment firms such as Ciena Ventures and Motorola Ventures. Now, he is managing director of Mistral Venture Partners, a $35-million venture fund based in Ottawa. Mistral Venture, the first fund to set up shop in Ottawa in 10 years, has generated front-page news. Yet it’s tiny compared with the slew of multi-million- and multi-billion-dollar funds in the United States.

“There’s just so much more money there,” Mr. Cubitt said. ”Why not take advantage of it?”

Chris Arsenault, managing partner of Montreal-based iNovia Capital, argues that U.S. cash is not a prerequisite for success. He points to Radian6, the New Brunswick social media monitoring company purchased by Salesforce.com for $326-million. “You need to have connected investors, wherever those investors are,” he said.

“You go where the key relationships are.”

David Quail’s newest venture, Zenlike.me, is straddling the Canada-U.S. border, reaping the benefits of both countries. The Canadian entrepreneur has lived in Silicon Valley for three years. There is “no better place in the world” for accessing capital and marketing and business development expertise, he said. “The downside is it’s a pretty terrible place to recruit and build a technology team.”

The average Silicon Valley software developer earns as much as $180,000 a year and are quick to jump to another company, or start their own. Mr. Quail based his engineering team in Edmonton, where developers earn half of what Silicon Valley counterparts do. “And they’re more loyal,” he said.

However, Mr. Quail plans to remain in the Valley, because so much money “flows” between investors and startups. “And it tends to flow within your close circle,” he said.

“It’s the old adage: business is largely who you know. It’s incestuous… but you have to play in that game.”

Green Business Models

Green companies are thriving when the economy is in recession. This is the proposition of Professor Mika Westerlund of Carleton University’s Technology Innovation Management program.

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To get to a sustainable business one needs to combine social and environmental entrepreneurship with personal passion, while not neglecting the profits.  A triple bottom line equals a sustainable business!

Sustainability brands are easy to build but also are  easy to hurt if one is not serious about being green. It starts with mindset – after that you will see opportunities and openings in the market.

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Data centres are a good example of sustainability producing measurable benefits by reducing power consumption. Same goes for Virgin Atlantic fuel efficiency, coca cola water saving and UPS reduction of left turns.

These are a great example of incremental sustainability, where the business model is not affected. However, as Piet Aarts said, technology innovation should be complemented with commercial innovation.

What will be an innovation game changer in green space? If its incremental and efficiency improving it is easy to copy. However, new companies have a significant advantage starting green.

To enable green value creation one needs to enable culture change in the organization. New business models are needed to enable systemic green change. Startups have the advantage, because they can create their own culture.

There are many challenges growing a sustainable eco-friendly company, like premium price green products, only wealthy can afford, or perceived lack of urgency. Again, culture change is easier for startups rather than large dinosaur companies.

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When it comes to intellectual property, a carpet company named Interface gave their trade secrets away, yet they still had the edge. IP protection is not widely used in green innovation. The best IP protection is the slow rate at which the corporate culture changes, since large firms need more time to adapt  to changes in strategy.

How can you be open transparent and green and still be profitable? According to Professor Westerlund, the focus should be on open innovation model with minimum IP protection! If licensing is used then it should be flexible and affordable.

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There is increasingly stronger focus on sustainability in business models and business ecosystems, as well as open innovation. This is changing the nature of both innovation and business as we know it, creating the brand new economic and social models for the 21st century.

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Green coworking in Ottawa

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This is a small park not far from downtown Ottawa, Canada. Very quiet area.

Since 3G data plans are widely accessible, one can simply turn a phone into a hotspot and connect the laptop to it and voila! you can do your work anywhere!

Some side effects of working outside may involve occasional random acts of tree hugging!

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However, there may be some occasional visitors coming to check up on you.

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And the rest is simply beautiful! What a great positive environment for creative work!

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Hub Ottawa does Annual meeting right!

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This is how you do meetings right!
At Hub Ottawa

Vinod, the head of the Hub, invited the membership, used engineers without borders impact report. Design was made as green as possible. Membership is a mix of 44% local, 26% national and 36% Global. It is the first Hub in the network to audit failure report. The financials were public, open to all. Vinod asked not to tweet but we could view and discuss numbers and accounting systems open. It was inspiring: no hierarchy, transparent and horizontal when it comes to numbers. Members from 22 to 65. Members of different sectors from startups to final stage to idea stage. Copious amounts of wine, beer and coffee are available. It is the most fun and excitement we have seen at a financial report in Ottawa ever. San Francisco Hub and other Hubs are thriving and even invest in other ventures as a group. The report will be on the website.

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The space itself is amazing: sustainable and flat. All boardrooms have glass.

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They even have legos!

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Canadian conservative corporate dinosaur

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He has an MBA from Harvard. Rawr! And he thinks a startup is a cultural fit. Rawr!

This is an actual image from a Canadian startup incubator (no joke)

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#canadianincubator pt 2

This was found after the bureaucrats removed the dinosaurs from the walls. Nuff said…

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#canadianincubator

This is how brave guerrilla entrepreneurs react to the bathroom tissue bureaucracy at the Canadian startup incubator Invest Ottawa.