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.
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.
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