Canadian Innovation Economy In The Doldrums France Offers An Example Of How To Fix It. Ten years ago […]

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Tobi has struck a vulnerable nerve with his painfully accurate comment that Canada has a cultural problem, a “go for the bronze” mentality.” He is not the first to point out Canada’s lack of clothing WRT commitment and investment in innovation and entrepreneurship. Canada frankly has never been keen on risk capital. It’s just not Canadian, eh? Tobi joins Richard Florida and other Canadians in making similar awkward observations. The greatest irony is that Tobi’s remark that we need an “Own the Podium” program for Canadian innovation, was first proposed by former UBC President Arvind Gupta in a Vancouver Sun editorial some 10 years ago. Predictably, nothing has happened since then, and nothing will likely happen now.

This is yet another excellent article questioning the Canadian tech industry’s appreciation of its significant deficiencies and challenges. It reflects my own view after much research and many interviews. It is also the view of UoT Professor Richard Florida who published a similar article in the Globe & Mail recently. Venture capital is anemic, but many also believe that there is a lack of scale-up management talent. Another factor is deeply-embedded Canadian conservatism, as evidenced by the bizarre entry of high street banks’ debt offerings to entrepreneurs. 

In one of the more bizarre recent articles on the state of the Canadian venture investment market, The Globe & Mail offered this story of the entry of Canadian commercial banks like CIBC, RBC and TD into the world of entrepreneurial finance. Not more than a few weeks ago, Toronto University Professor Richard Florida also published an opinion piece in the Globe & Mail, in sharp contrast which is entitled “Canada is losing the global innovation race”, describing the long term decline of Canadian venture capital and decades of poor investment in basic R&D compared to its other OECD industrialized nations.  Recently, a colleague in Canadian venture capital told me of his retirement, citing the enormous difficulty his firm had raising capital from the Canadian financial industry. This is prima facie evidence of how disconnected Canada is from the reality of entrepreneurial finance and venture capital. The Canadian financial industry mindset is Problem One. Name another major entrepreneurial ecosystem that operates like this.

Five years ago, I wrote a post on this blog disparaging the state of the Internet of Things/home automation market as a “Tower of Proprietary Babble.” Vendors of many different home and industrial product offerings were literally speaking different languages, making their products inoperable with other complementary products from other vendors.  The market was being constrained by its immaturity and a failure to grasp the importance of open standards. A 2017 Verizon report concluded that “an absence of industry-wide standards…represented greater than 50% of executives concerns about IoT. Today I can report that finally, the solutions and technologies are beginning to come together, albeit still slowly. 

Over five years ago now, March 11, 2013, I published this mayo615 blog post on the Alberta bitumen bubble, and the budgetary problems facing Alberta Premier Alison Redford, and the federal Finance Minister Jim Flaherty at that time, both of whom were surprisingly candid about the prospect for ongoing long-term budgetary problems for both the Alberta and Canadian national economies. Fast forward five years to today and the situation has essentially worsened dramatically.  The current Alberta Premier Rachel Notley is facing another massive budget deficit, just as Alison Redford predicted years ago, and was forced to call a new election. My most glaring observation is that despite years of rhetoric and arm-waving, almost nothing has changed. Meanwhile, the Canadian economy is on the precipice of a predicted global economic downturn which could easily become a global financial contagion.

I was very interested yesterday to read the article in the Globe & Mail by University of Toronto Professor Richard Florida, and Ian Hathaway, Research Director for the Center for  American Entrepreneurship, and Senior Fellow at the Brookings Institute. The article by Florida and Hathaway draws the same conclusions as my research, providing even more precise data to support their disturbing conclusions. It is not hard to find many additional articles on these issues.  Ironically, also yesterday, a LinkedIn connection shared a post by Sciences, Innovation, and Economic Development Canada with a very upbeat, positive assessment of venture capital for startups in Canada. This is the essence of the problem. Since I came to Canada years ago now, I have seen a pollyannaish state of denial about the true situation for entrepreneurship, immigration policy, and the lack of “smart” venture capital for Canadian startups. No amount of counter-evidence has changed this mistaken rosy outlook. Without a recognition of these problems, nothing will change. 

Another Silicon Valley reckoning is on the horizon.  We have seen cyclical events like this before, the 2001 bubble burst being the most recent memorable reckoning. The talk in 2001 was about too much “dumb money.” The coming reckoning, however, is on a massive, unprecedented scale, fueled by the same excess of global capital that has fueled the bubbles in housing markets in attractive locations around the World. The problems with Uber, Travis Kalanick, and the now obvious difficulty of the Uber Board of Directors to exercise meaningful governance should have been the “canary in the coal mine.” CNBC’s reporting on the excessive Silicon Valley “unicorn” valuations and media reports that New Enterprise Associates would divest $1 Billion in startup investments that cannot be made liquid have made the situation blatantly obvious. After a long silence, the Wall Street Journal has finally joined the reporting on the crisis. What more does one need to take to the exit?