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Myth: The Lack of Startup Capital in Canada?

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When I saw this tweet last week by David Crow, my first reaction was he was out in left field given the common assumption there isn’t enough capital to grow and accelerate Canadian startups.

But the more I thought about David’s tweet, the more it struck me there’s a lot of truth in it. As much as it would be great for entrepreneurs to easily get the money they need to nurture and develop their ideas, startups are risky propositions that are just one of many options for investors.

At the same time, it is important to separate enthusiasm, energy and activity within the startup ecosystem from the investment realities. By nature, entrepreneurs are bullish, which leads many of them to see the ability to raise venture capital as a given or right.

But here’s the thing: most startups will fail due to a variety of reasons: a bad idea, the wrong people, an inability to tactically execute, etc. And then there’s the ultra-intense competition from other startups around the world with the same ideas and businesses.

When you take all of this into consideration, it is easy to understand why investors need to be selective about what ponies to bet on. While we gripe about a lack of startup capital, it may be the Canadian startups with the most potential are getting the funded, while the rest are left to bootstrap, borrow, apply for incubators and accelerators, tap into tax credits, etc.startup capital

It is also important to have some perspective. A key part of our complaints about the lack of capital for Canadian startups is we look at the aggressive investment happening south of the border, and then wonder why the same climate doesn’t exist up here. Truth be told, Silicon Valley is another planet with a different set of rules and a complex cabal that marches to the beat of its own drum.

My take is the startup financing landscape is healthy and getting more robust and mature. Sure, it would be better if more startup entrepreneurs were able to access capital, but there is a growing infrastructure starting to emerge to support good ideas.

This is most evident in the growing number of incubators and accelerators that help entrepreneurs develop their ideas and businesses. There are places such as Ryerson’s DMZ nurturing young entrepreneurs, while the Entrepreneur 101 program at MaRS is a great resource for entrepreneurs to learn from people in the trenches.

As someone immersed in the startup community, the startup scene is better, more active and oozing with more potential than ever – and this comes from 15 years within the Canadian technology landscape in a variety of roles.

I think we’re on the right path. Maybe the pace isn’t quite as fast as some people would like but we’re definitely heading the right direction.

Tomorrow, I’ll publish commentary from Canadian VCs who I asked to  provide their thoughts about David’s tweet.

Looking for help to jump-start your startup marketing, let’s talk! 

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  • http://twitter.com/JHenwood86 John Henwood

    Interesting. And I certainly agree. Many entrepreneurs read Techcrunch, Venturebeat, etc and envision millions of dollars awaiting their half considered idea.

    • http://davidcrow.ca/ davidcrow

      There isn’t. You have to work hard for the money. Building a growth company is hard work.

  • http://twitter.com/epodubni edward@crowdhelps

    I agree, plenty on gust.com and angel.co.
    Toronto need more meetups, co-working places and real mentors.
    crowdhelps.com was born in NYC and moved, opened in Toronto with hope to remain in Canada.

  • Pingback: Are Canadian Startups Starving?: Canadian VCs Answer

  • http://michael.lewkowitz.com/ Igniter

    The messy part of course is that space between the idea and the successful company that is ready for vc. It’s that space where there are the greatest opportunities to build successful ‘startup ecosystems’, but it takes a long-term view, culture shift, and plenty of smaller successes and failures to get there. The ‘recent’ wave of accelerators, incubators, and angel groups is part of that… but it’s just a part along with all the events, content, and individuals (like you) that keep driving to try and build a this ecosystem up.

    So underlying the startup capital question is the startup ecosystem question. Capital will always be most available where the risk is least. But the quantity and quality of startups will be determined by the ecosystem supporting those who tackle things where the risk is greatest. So hats off to those with the guts and vision to take that challenge on. Keep on provoking everyone involved. There will always be more to to.

    • http://www.markevans.ca/ Mark Evans

      Thanks for the comment and the insight. It makes for a fascinating discussion to look at where we’re at, where we could go, and what needs to happen.

  • http://startupcfo.ca/ Mark MacLeod

    Awesome comments David. Venture works best at accelerating something that’s working, not creating something that may or may not work.