Thanks for the opportunity to participate on this thread.

As a student of the venture capital scene and public policy, many of the comments that I have read resonate with me.

1 - the importance of angel investing and lack of value-add being provided by VC funds in the overall scheme of things

2 - the optimal exit strategy and value for an entrepreneur.

On angel investing….I’m a very keen supporter of any model that assists and encourages both “check book” and supreme angels. I subscribe to the view that Angels are often best to turn 10kt companies into 24kt opps….a great quote from Jim Fletcher. I’ve seen a number of companies come through our programs such as Aspreva that began with a business plan, committed entrepreneurs (a key feature) and yes…angels with a penchant for risk.

On exit values….I remember being part of a UBC exit value…and I was amazed how quickly BC companies exit….the nubmer…and the relatively low value…though a good multiple for founders. Hmmm….the house…the condo…the boat…and I’m good…. as oppossed to building the next Crystal Decisions.

As for fixing the marketplace. Policy wise I think there is still much to do involving X Border investments and clearance certificates. Also, the Cdn tax laws on foreign LPs investing in Cdn VC funds are repressive.

Fact is I believe that BC does have a healthy angel marketplace…and thank good for that particularly for those companies in the Digital Media field. But with the “clean tech” phenom…we do need well capitalized VCs…since this space is more equivalent to project financing.

Cheers,

Todd

Interesting post and I agree with some, but not all, of your expressed sentiments.

You suggest that VCs have a dependency on entrepreneurs and so somehow have a duty to give-something-back to the entrepreneurial community.
In my view, this is corkingly simplistic. The relationship is one of co-dependency. There are many, many entrepreneurs and relatively few VCs. Good entrepreneurs will likely find good VCs, and vice versa. The trick for Canadian entrepreneurs, in my view, is one of geographic mindset.

But all too often, Canadian entrepreneurs implicitly build domestic - or even provincial - limitations into their business plans/ambitions and also in investment searches. This narrow mindset not only restrains value-creation (smaller business size) but can be a self-defeating spiral, with small ambitions not attracting investment.

By international standards, the Canadian VC market is of modest size and - at best - modest average returns. That said, there are some very successful domestic VC firms. And some Canadian VC firms are increasingly taking an international viewpoint - such as Chrysalix offering energy venture capital to international companies.

So I’d suggest to you that that entrepreneurs should not ’stop starting companies’ so that the ‘VCs would eventually die off’, but rather than Canadian entrepreneurs should be remove geographic shackles and be empowered to have greater international ambition. Big, bold ideas of commercial substance (and revenues) get plenty of investor interest. Modest ideas and seed financing are best suited for the, well developed, angel market.

To the extent that BootUp Labs helps stimulate ambitious, promising success stories of the future then you have my complete support.

When I moved to Vancouver almost three years ago the city was described to me as a ‘branch’ town. What this meant then and still does today is that there are not too many big Corporate Head Offices based in……

As in …

They get to choose what they invest in, so arriving at the conclusion that it’s broken because not enough startups get early funding seems to be looking at the issue from a strange position indeed.

What’s “broken” is that there is lots of isolated innovation, and no amplifier for the signal that begins to be set apart from the tremendous amount of noise. in other words, there might be 500 startups, and ten might be really, really interesting and could potentially be large companies.

The first half of the above statement doesn’t help much .. of course they get to choose, that’s part of the issue re: such new territory as digital aggregation and distribution and a general lack of deep understanding about possible new business “logic” (see Umair Haque’s stuff) combined with skimpy proof leads to little risk-taking.

The second half is bang-on, I think, and there is a role for both local VC’s and the tech community to identify and encourage less isolation, more (potential) consoldation, and solid and consistent amplification.

On 21-Jul-08, at 6:34 PM, Bob de Wit wrote:

Danny,

Thanks for this — I’m with you in spirit, if not on all the points of your article. There’s definitely a dearth of funding and support for early stage tech companies in this town, especially Web 2.0 companies. In most cases it’s simply because investors here don’t understand the opportunities in front of them, but it’s also because in most cases these new ventures have a trifecta of challenges: introducing a new technology/product in a new/non-existent market (technology AND market risk) with inexperienced teams (people risk).

I noticed that Rory Holland is on your distribution list. I’d be interested to hear his take? Although I like what you guys are doing at BootUp labs, it’s eerily similar (at least on the surface) to what the “Accelerators” of the late ’90s were trying to do. To my understanding, all of them failed (Rory and Dave’s, garage.com, etc, etc). How would you distinguish yourselves from those past efforts?

Also, as for local support for start-ups, I’m surprised you discount (or not consider? not know about?) some of the things that *are* happening. New Ventures BC (www.newventuresbc.com) among them. I’d appreciate your brutally honest take on why that’s not part of your picture.

Cheers,
Bob

What’s “broken” is that there is lots of isolated innovation, and no amplifier for the signal that begins to be set apart from the tremendous amount of noise. in other words, there might be 500 startups, and ten might be really, really interesting and could potentially be large companies. but they don’t get the mentorship, help, advice, and connections needed to amplify the potential. this isn’t the VCs fault - it’s the fault of the community itself.

Bootup Labs is doing something about this, and it’s a great thing. It’s what TechStars has done, I’d like to think.

In short, I think your arrow points to the right place in the timeline. The problem is at the start. But VCs don’t live at the start! The community does.