{"id":157,"date":"2016-06-27T12:59:48","date_gmt":"2016-06-27T19:59:48","guid":{"rendered":"http:\/\/52.40.65.116\/?p=157"},"modified":"2016-06-27T13:06:15","modified_gmt":"2016-06-27T20:06:15","slug":"investors-think-globally","status":"publish","type":"magazine","link":"https:\/\/brainstation.io\/magazine\/investors-think-globally","title":{"rendered":"Canadian Investors Need to Think Globally to Compete with US Counterparts"},"content":{"rendered":"

In the wake of the CVCA conference<\/a> in Toronto last month, I have been reflecting a lot on the state of the venture capital landscape and how Canadian investors can improve to better serve their country\u2019s tremendous pool of\u00a0entrepreneurs and engineers. Canada is building a healthy startup ecosystem with several vibrant hubs around the\u00a0country, yet there\u2019s still much more work to be done.<\/p>\n

First, let\u2019s look at where Canada is. In 2015, Canadian funds raised over $1.2 Billion CAD; and in just the first quarter\u00a0of 2016, we\u2019ve already raised $929 million (that\u2019s 77% of last year\u2019s total). The number of investments is the best\u00a0we\u2019ve seen since before the 2008 financial crisis.<\/p>\n

According to data from the CVCA, Canadian VC investment was\u00a0strong, at $2.2 billion in 2015 (a 12% increase over 2014). And we\u2019re already at $881 million invested in the first\u00a0quarter 2016. Exit numbers give us even more reason for optimism: there were 41 total exits for Canadian startups\u00a0in 2015, netting a $4.3 billion transaction value.<\/p>\n

As positive as these numbers may be, they still represent just a fraction of the activity in the U.S, where close to\u00a0$60B (USD) was invested in 2015. The population ratio between the U.S. and Canada is 10:1, while the difference\u00a0in investments is a staggering 30:1 ratio.<\/p>\n

Canada is producing more world-class entrepreneurs than ever before and some of today\u2019s major tech players call\u00a0Canada home. But, Canadian unicorns are still few and far between. Canada has basically produced one tech\u00a0anchor company every ten years: Nortel in the 1990s. RIM in the 2000s, and Shopify in the 2010s. Surely we can\u00a0do better than one a decade.<\/p>\n

The question is why does Canada have such a vibrant startup ecosystem, but have trouble scaling its promising\u00a0companies up to the billion-dollar or ten-billion- dollar level? In part, it\u2019s due to a general lack of senior talent in the\u00a0country. Top global companies churn out top global talent. With tech giants like Apple, Google, and Facebook,\u00a0Silicon Valley and San Francisco benefit from a very, very large pool of senior management talent. These\u00a0individuals have seen how top companies do things and have direct experience scaling companies. There\u2019s a\u00a0chicken and the egg problem here: fewer tech giants mean fewer senior execs swimming in the local pool.<\/p>\n

In addition to senior talent, we need world-class funds and investors to help build companies and create\u00a0meaningful exits in Canada. This doesn\u2019t just mean a Canadian investor should make frequent trips to San\u00a0Francisco. It requires a change in mindset about the role an investor should play.<\/p>\n

For years, we have been hammering home the message that Canadian entrepreneurs need to up their\u00a0expectations and think globally in order to create a big company in Canada. It\u2019s not enough to be the top SaaS\u00a0company in Toronto or New Brunswick; you should aim to be a top player on the global stage. Now it\u2019s time that\u00a0we as investors think beyond domestic opportunities too.<\/p>\n

In the past, many Canadians VCs invested geographically. The problem with this approach is twofold. First, it limits\u00a0the exposure to opportunities and companies. By looking beyond the back door (and even beyond the U.S. to the\u00a0rest of the world), investors are exposed to a greater number of opportunities and companies. This provides a\u00a0better perspective and expectations of what \u2018great\u2019 looks like, in terms of management team, talent, ideas,\u00a0products, etc.<\/p>\n

Second, it\u2019s hard to develop any kind of area of expertise when your portfolio is focused on geography.<\/p>\n

The best investors\u2014whether they\u2019re in Silicon Valley, Canada or Boston\u2014differentiate by developing and\u00a0leveraging deep expertise in a specific area. For example, at Version One, we focus on SaaS, marketplace, and\u00a0social platform start-ups (all network effect companies). Other investors narrow their focus to IoT, mobile, etc.\u00a0By developing a core expertise, investors can provide a lot more value to to their founders than just writing a\u00a0check. We can add our own experiences and ideas and to the conversation, as well as have the right connections\u00a0and resources on-hand to help start-ups navigate the specific challenges in their industry.<\/p>\n

The goal for any investor is to help build a better company. By looking globally, Canadian investors can grow their expertise, find world\u00a0class companies, and be more ready to build great companies anywhere, including their own backyard.<\/p>\n","protected":false},"excerpt":{"rendered":"

In the wake of the CVCA conference in Toronto last month, I have been reflecting a lot on the state of the venture capital landscape and how Canadian investors can improve to better serve their country\u2019s tremendous pool of\u00a0entrepreneurs and engineers. Canada is building a healthy startup ecosystem with several vibrant hubs around the\u00a0country, yet […]<\/p>\n","protected":false},"author":47173,"featured_media":69269,"menu_order":0,"template":"","meta":{"_acf_changed":false,"footnotes":""},"categories":[13],"tags":[],"magazine-region":[],"magazine-series":[],"magazine-topic":[],"class_list":["post-157","magazine","type-magazine","status-publish","has-post-thumbnail","hentry","category-News"],"acf":[],"_links":{"self":[{"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/magazine\/157","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/magazine"}],"about":[{"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/types\/magazine"}],"author":[{"embeddable":true,"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/users\/47173"}],"version-history":[{"count":0,"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/magazine\/157\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/media\/69269"}],"wp:attachment":[{"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/media?parent=157"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/categories?post=157"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/tags?post=157"},{"taxonomy":"magazine-region","embeddable":true,"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/magazine-region?post=157"},{"taxonomy":"magazine-series","embeddable":true,"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/magazine-series?post=157"},{"taxonomy":"magazine-topic","embeddable":true,"href":"https:\/\/brainstation.io\/wp\/api\/wp\/v2\/magazine-topic?post=157"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}