2011: Glass Half-Full or Half-Empty for Canadian VC?

Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in February 14, 2012 on MarkEvansTech.com.

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First, the good news about Canada’s venture capital landscape. In 2011, investment activity climbed to the highest level in four years ($1.5-billion), a 34% increase from 2010, although it is still significantly below the record activity ($2.1-billion) reached in 2007.

The bad news is there’s still not enough supply to meet rising demand, plagued by “continued weakness” when it comes to fund-raising.

The good news-bad news scenario was spelled out in the Canadian Venture Capital Association’s annual report. For those of us in the glass half-full camp, the increase in investment and the number of deal is cause for optimism.

As well, 2011 saw a spike in M&A activity with 34 deals, including two each by Google, Facebook, Zynga and Salesforce.com. And there was a flurry of incubators and accelerators established, including Extreme Startups last week.

Before anyone gets carried away, Canada’s venture capital landscape is a long, long way from being solid, let alone robust. There’s still not enough venture capital for seed, series A or major rounds. And don’t expect U.S. investors to pick up the slack.

In a press release, CVCA president Gregory Smith said there is concern about whether enough fund-raising can be dong to support the demand for investments. This situation was illustrated by the fact new commitments to Canadian VCs were flat last year at $1-billion.

“Canada has a historic opportunity to become an innovation leader,” Smith said, adding that “in order to act decisively on this opportunity, we must first overcome challenges to supplying VC funds that, in turn, supply entrepreneurs.”

So what’s the solution? How can Canada’s venture capital community do a better job of supporting the startup community? There is not easy answer to a problem that has been around a long time and doesn’t look to be changing any time soon. It’s not going to be an easy fix from government or U.S. investors or institutional investors waking up to the idea of venture capital investing.

Perhaps the answer to the problem is this: success. If more startups and mature high-tech companies are acquired, that could (emphasis on “could”) encourage investors (angels, VCs and institutional) to get more involved. Success has a strange way of helping people to see the light or new opportunities that they otherwise would have dismissed or not seriously considered.

That said, success is a double-edged sword. Without enough financial support, it is hard for startups to have enough powder to become acquisition targets. If they’re not interesting targets, there’s no acquisitions and, likely, less interest from investors.

So which side of the fence do you sit on? Are you bull or a bear about Canada’s VC landscape?

Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in February 14, 2012 on MarkEvansTech.com.

OMERS Ventures ramps up with Howard Gwin & Derek Smyth

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It’s has been a long time since Canadians have seen the creation of a new 200MM+ venture capital fund. It was back in June 2010 that OMERS announced the creation of the INKEF fund. OMERS and ABP have since gone their separate ways with ABP running INKEF Capital focusing on high tech startups in the Netherlands. And OMERS creating OMERS Ventures focused on “investments in the Technology, Media, Telecommunications, Clean Technology and Life Sciences sectors in Canada and the US”.

A little more than a week ago, OMERS announced that they had hired Howard Gwin (LinkedIn, @howardgwin). Who I’ve been quoted as saying “he really is the best VC in Canada”, mind you Howard was buying the drinks at the time…

And it looks like they have added fellow Edgestone alumni Derek Smyth (LinkedIn, @derekjsmyth). I’ve heard the announcement is due later today, but OMERS Ventures announced Derek Smyth as part of the team today, Derek’s profile is already part fo the team at OMERS Ventures. Derek is another rockstar going to OMERS. Prior to joining OMERS Ventures, Derek co-managed two VC funds at Edgestone Capital Partners. He also has operational experience that includes his former roles as President and CEO of solutions provider Bridgewater Systems, and as COO of California-based Ironside Technologies Inc.

Derek and Howard were instrumental at Bridgescale in running the Digital Puck and Mentor Monday events that helped connect Canadian entrepreneurs. I’m hoping that these guys continue to invest in connecting, engaging and supporting all entrepreneurs (along with their portfolio). The ongoing support of the C100 and AccelerateTO already show that OMERS has a larger operational budget that allows them to support and sponsor community activities.

The future looks bright for OMERS Ventures.

Getting Attention

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Mark Evans’ post about Do Canadian Startups Get Enough Attention? annoys me. It is not Mark, it is not Canadian startups, it is the assumption that Canadian media outlets should write about Canadian startups.

“But the fact is there are a lot of great startup stories that go unreported or receive a smidgen of the coverage they deserve. It is a situation that frustrates entrepreneurs, investors and people within the startup community who believe the spotlight should be burning a lot hotter.”

Let’s start by answering Mark’s implication that “startups stories go unreported or receive a smidgen of the coverage they deserve“. Bullshit! They don’t deserve coverage. They have to earn coverage. They are noise. And as an entrepreneur you need to learn how to rise above the noise and tell stories that the media want to share with their readers.We have many examples of Canadian startup success and failure stories that have managed to figure out how to tell media friendly stories. Sarah Prevette at Sprouter managed to become a media darling:

Why was Sarah Prevette so much more successful in getting press coverage for her startup than other entrepreneurs? Is she smarter? Does she have more hustle? Is her startup more successful? I challenge Mark’s assertion that Canadian startups deserve coverage. I think the first step is doing something worthy of coverage. And as entrepreneurs we need to understand the stories that media want to tell, and begin to hustle to take away time and space from the big players. Tim Ferriss told his story about getting on national television, From First TV to Dr. Oz: How to Get Local Media…Then National Media. You have to work at crafting a story, building relationships and being newsworthy. So rather than assume that all good startups deserve coverage, how about we as entrepreneurs go out an earn it. Aim higher. Make something newsworthy.

Resources for Getting Media and PR Coverage

  • PR Tips for Startups: How to Get and Keep Media Attention
  • Getting Press and Media Coverage for your Startup Company – Who needs a PR Firm?
  • Tips for Getting (Follow Up) Press Coverage for Your Startup
  • From First TV to Dr. Oz: How to Get Local Media…Then National Media