Last week I interviewed Ottawa-based entrepreneur Terry Matthews as the national spokesperson for the Canada Advanced Technology Alliance ( CATA) and its “Innovation Nation” platform. While you can read his full lament for the state of that particular nation here, I wanted to highlight one comment:
“You know what Im doing? Im investing in companies outside of Canada, and I dont feel good about that either. Im investing in the U.K. and the U.S., because their environments are better. Out of the four technology companies I start every year, three of them are outside of Canada. Now, isnt that sad? I talk to many people of like mind, within government and business, and they agree with my observations.”. Coming from Canada’s eminent technology entrepreneur, with some 40 startups to his name (and some very big exits), that’s a damning indictment.
And he’s not alone. I heard a fair number of similar observations last night at Deloitte’s Technology Fast 50 gala in Toronto. There was much talk about the economy and the ramifications of Wall Street’s financial crisis, but mostly, these leaders from high-growth tech firms were just trying to keep their chin up. Deloitte’s press releasetells a grim tale, and it was reflected in the conversations I had. Several award winners acknowledged that the cumulative 5-year revenue growth numbers (by which they are ranked) are likely to be smaller next year. Venture capitalists told me that money is tight already (see my colleague Joe Castaldo’s storyon the subject), and that the growing financial crisis in the U.S. will only further shrink the pool. Some entrepreneurs said that it’s hard to attract U.S. VC money with onerous Canadian tax rules. Other people said that software companies, which once boasted about the low Canadian dollar being a boon to developing in this country, are scrambling to outsource development.
And one founder of two successful companies made it clear that within two years, his company will move to the U.S. Why? Canada offers no reward for wealthy entrepreneurs, and the U.S. does. And it will be easier to get the attention of big tech firms in the Valley to buy them up. He also said that most of the engineers he’s interviewing and hiring in Canada were born in India, China or Eastern European countries.
What stuns me is that we’re in the middle of a federal election campaign. Are anycandidates talking about this? Cultural funding is somehow the topic of the week. But these are the companies that are forming the foundation for the future of the economy. And it’s not all just whiz-band Web 2.0 stuff with flimsy business models.
I know my local candidate claims to support “A strong economy with investment in innovation”. But when I e-mailed to find out what she meant by that, I got no response.
The fact that initiatives to build an strong, innovative economy have completely fallen off the radar does not bode well.