Canadian Senator Colin Deacon joined participants from ventureLAB ecosystem to discuss “Bridging the Valley of Death”: Creating an attractive investment environment for Canadian scaleups, with a live audience. Luckily, for those who missed the roundtable, they can find it here!
Insights came from the following participants
- The Honourable Colin Deacon, Senator, Nova Scotia, Senate of Canada
- Moderator, Avinash Persaud, Vice President, Hardware Catalyst Initiative, ventureLAB
- Hugh Chow, CEO, ventureLAB
- Sarim Zia, Associate Principal, Business Development Canada
- Dejana Dua, Managing Partner, Anexa Capital; Investment Readiness Program Lead, ventureLAB
- Peyvand Melati, General partner at Archangel Network of Funds, CEO at Micro Interface Design
- Alex Qi, CEO, Pontosense
Key takeaways - Or don’t take our word for it and watch the whole thing!
- The new economic situation is both a challenge and an opportunity. The obvious threat from US tariff policies and the new Canadian government presents an opportunity to attune government policy more closely to the needs of the innovation ecosystem.
- Hardware companies face unique challenges. Investment in hardware companies, which have longer development cycles and can take many years to return on investment, was already declining. Now these companies need to deal with shifting tariffs on key parts and products, exacerbating an already difficult growth environment.
- Canadian startups are supported, scaleups not so much. The Canadian government provides nondiluted funding for early-stage companies, and the ecosystem has many resources for them. This is not the case when a company begins to raise capital and generate revenue.
- Organizations like ventureLAB can help overcome hurdles. Pontosense made significant use of ventureLAB’s intensive advising support and access to expensive lab equipment that would otherwise have cost significant capital - founders should take advantage of ventureLAB and similar organizations to lower barriers of entry and link into networks to meet investors, hire talent, and acquire customers.
- IP and ownership are key. Canadians need to be able to own and control their IP, or the profits from their inventions will leave the country. Academic policies that don’t allow founder control of IP, and lack of government focus on IP have been problems in driving IP creation and ownership.
- It's all about incentives. Canadians - investors, government, corporations, pension funds, citizens - need incentives to invest in Canadian companies. Laws and regulations can play a role, as can tax incentives to buy and invest in Canadian companies. The UK and Germany are both examples of countries that have created impressive environments that incentivize supporting local entrepreneurs.
- Procurement reform is a must. The Canadian government should mandate some level of buying from Canadian companies, and create incentives to encourage even more. Government procurement can legitimate an early-stage company and provide a revenue stream.
- Capital is nice, revenue is better. Revenue is the best source of funding for a company to grow - but the government can do more to help companies find buyers, or be that buyer. A revenue-rich company can survive a downturn in capital markets.
- Risk-aversion is riskier than taking risks. The Canadian government and Canadian investors are too risk-averse, which in the long-run leads to an uncompetitive position for both. Policies should be created that help derisk investment. Inaction has been, and will be, more costly than taking risks on Canada’s ambitious entrepreneurs.
Resources mentioned in the roundtable
- Podcast with the IIAC - Investment Industry Association of Canada. Part 1: From Lions to Lambs – The Decline of Canadian Competitiveness: https://www.linkedin.com/posts/senatorcolindeacon_from-lions-to-lambs-the-decline-of-canadian-activity-7325832922924552192--RYW/
- Podcast with the IIAC - Investment Industry Association of Canada. Part 2: From Lambs to Lions – Competition is the Path to Competitiveness: https://www.linkedin.com/posts/senatorcolindeacon_from-lambs-to-lions-competition-is-the-activity-7326301791162097664-NLYa/
- Senate Standing Committee on Banking, Commerce and the Economy Report. Needed: An Innovation Strategy for the Data-Driven Economy: https://sencanada.ca/en/info-page/parl-44-1/banc-data-driven-economy/
- Discussion Paper: Federal Programs for Business Innovation https://www.colindeacon.ca/federal-innovation-programs
Not discussed, but relevant for university IP licensing (an attempt at standardizing legal contracts): Simple Agreement for Innovation Licensing (SAIL): https://www.howtosail.ca/
