Yesterday Canada’s Venture Capital & Private Equity Association (CVCA) called upon the federal government to commit to a national technology strategy to address the current technology policy deficit. In a speech to industry leaders in Toronto, CVCA President Gregory Smith stated, “The businesses launched by private capital have contributed nearly 270,000 jobs in the past several years and, together, our venture capital and buyout sectors account for about 3% of Canada’s GDP.”
That’s a pretty conservative estimate considering what the National Venture Capital Association (NVCA) is claiming in the United States. In a recent report, the NVCA claims credit for creating 12 million jobs and generating $3 trillion in revenue – a whopping 21% of the United States’ GDP. In the software industry (which includes Internet/Web 2.0), they stake claim to 81% of the all jobs created.
In a guest post on TechCrunch earlier this week, entrepreneur turned academic Vivek Wadhwa was amused to read that the NVCA believes companies like Microsoft and Google “…would not exist today without the funding and guidance provided during their early stages by venture capitalists.”
While the Canadian association’s research and numbers don’t have the same impact (and reaction) as their sister organization south of the border, there is no doubt that there is a state of emergency in Canada’s venture capital sector. The lack of funding presents a very real risk that Canada will not be able to fully capitalize on its multi-billion dollar investment in research and development.
The CVCA has proposed a five-point commercialization support program to help meet the global competitive challenges facing Canada. The program calls for the government of Canada and provincial governments to:
- establish and grow fund of funds structures
- make improvements to the SR&ED tax credit program
- improve the incentives for corporations to invest in venture capital funds
- actively promote investment in Canadian venture capital funds as part of the offset agreements that are negotiated with major government contractors
- improve measures be taken to improve the attractiveness of venture capital to retail investors
Will this be enough?