South of the border, the party is raging. You can almost hear Prince’s “1999″ playing the background as startups find themselves being courted by investors and snapped up for eye-popping amounts.
The case in point is Facebook’s $1-billion purchase of Instagram, which is staggering any way you want to slice it.
To me, it feels frothy and eerily similar to the dot-com boom of 1999/2000. Meanwhile, Jason Freedman, founder of 42Floors, wrote a post yesterday about how investors at a Y Combinator demo day were “frenzied almost, excited to invest in entrepreneurs”.
While there seems to be reasons for concern about a market becoming increasingly over-heated, you also have wonder whether it matters. If the party is happening and everyone is having a great time, does it make sense to be a party-pooper? Maybe it is just better to jump into the fray and enjoy the ride.
It is a strange world. While the startup scene in the U.S. is flourishing, the Canadian startup ecosystem is far from robust. There still isn’t enough capital, many institutional investors are still not participating, and many startups find getting financing difficult, if not impossible, to attract.
This is despite the fact the startup ecosystem is as vibrant and strong as it’s ever been, and that dozens of start-ups were acquired acquired last year. In other words, there is a lot to be excited about but Canada is hosting a small tea party, there’s a wild rave taking place in the U.S.
When you compare the two “parties”, the key question is whether Canadian startups are missing the boat? Is our conservatism and aversion to risk damaging the development of the startup sector and hurting Canada’s ability to drive innovation and economic growth?
When the federal government has to commit $50o-million to support venture capital activities, it is an admission something is not right.
One of the key questions is whether Canada’s startup scene is not robust enough, or whether it is getting out of control in the U.S. Are we right, and they’re wrong, or are we missing a good party?
What do you think?
More: Anyone interested in the Canadian startup landscape should read Jevon MacDonald’s post on StartupNorth.