$300 million in emergency first-aid

Saunders-45X64.JPGPosted by Alec Saunders
In It’s time to venture ahead on technology, Barry Reiter makes the distinction between research and development spending and venture spending, venture spending being the money spent to actually commercialize the fruits of research and development. Canada tends to fund research spending well but when it comes time to commercialize that research, we come up short.
Reiter says that promising Canadian companies are increasingly looking to US venture firms to capitalize their companies. In fact, Reiter is dramatically understating the facts. I am not aware of any new Canadian venture in the last five years that hasn’t had securing US financing as a goal. The information technology industry has been consolidating around major players like Microsoft, Oracle, IBM, and Google for the last decade. As that has happened, the local technology industry has become progressively “hollowed out”. The most realistic exit for any Canadian venture is to a US firm, and most are structuring themselves for that eventuality, beginning with seeking funding from US financial sources. With our lower dollar, lower cost of living and generous tax incentives, Canadians start-ups are becoming innovation “sweat shops” for US buyers.
[The] announcement of the creation of the new $300 million Tandem Expansion venture fund, backed by the Business Development Bank of Canada, is welcome. However, when placed in the context of the $30 billion that the American government is to spend on technology projects, it’s clearly not enough. Our venture industry is already sick. $300 million funds the ventilator to keep the patient alive, but not a cure. Moreover, government created funds do little to incent the private sector, where the bulk of the capital to finance new ventures should be found, to invest.
A much more ambitious approach is required. Click here to read more of Alec's post.

Submit a comment

Please leave your name, which will be used to sign your submission to the SCANsite. Thanks for contributing your thoughts. Come back again. Tony Patterson, Editor & CEO.

© 2006 - 2009 SCAN
Site by Citadel Rock