Canadian Entrepreneurship and Private Capital

Why is entrepreneurship important to the Canadian economy? 

I represent both venture capital and private equity. A lot of people often forget the private equity portion but that is really fueling entrepreneurship in mature companies. Many people focus on the early stage and growth stages, but the entire spectrum of entrepreneurship is completely aligned with the growth of the companies that will create employment for Canadians. 

Why is access to capital important for Canada’s entrepreneurs and small and medium-sized enterprises? 

If someone asked me why access to capital is important, I would say that access to capital is the fuel that will enable our startup companies to bloom and the engine that will make our more mature companies grow. When I think about that growth, I think about businesses’ ability to export and their ability to grow in the market. A number of years ago, when entrepreneurs began forming companies and growing companies, many times they thought about the US market only. Today, in order to get growth capital, you have to have a global outlook, so that capital is really going and injecting dollars and strategy into companies that have this global reach. 

Should entrepreneurs consider pursuing more global opportunities, particularly in technology sectors where international borders create fewer barriers? 

The importance of the technology sector and the amount of capital that flows into it is key. Sixty per cent of all venture capital goes to information and communications technology (ICT) companies. Those dollars are not to grow companies that are focused on Canada. Really, what investors are looking for is that technology or company that will be able to grow and amplify their footprint from Canada but be able to reach consumers from across the world. We are talking healthtech, fintech, artificial intelligence (AI), and IT platforms that will really be able to capture a larger footprint of consumers. 

How competitive are Canadian entrepreneurs internationally?  

We see a lot of entrepreneurship in Canada, especially from the business schools. We are very good at starting companies and in terms of the growth of companies, we will continue to see entrepreneurs holding longer and really building businesses for the global market. Shopify is the example that many people will turn to, but when I look at Lightspeed, one of the biggest initial public offerings (IPOs) that we had in Canada, the entrepreneur that started Lightspeed had a really strong vision for a global company.  

“As entrepreneurs in Canada start their companies and see their peers holding the course and building these companies for the world, Canada will find its place and will succeed within that global marketplace.” 

I do believe that success influences more success and as entrepreneurs in Canada start their companies and see their peers holding the course and building these companies for the world, Canada will find its place and will succeed within that global marketplace. 

Who do you identify as the most important stakeholders in supporting Canadian entrepreneurial success, and what should they do to boost our entrepreneurs’ future success? 

If I was asked which stakeholders are the most important to the future of our economy, I would start by saying the government is the underpinning of the ability to do business and how seamless corporations can grow, the lack of red tape, and just making sure that Canada is a place where things can get built, be built easily, and grow. They have done a tremendous job in terms of our access to global markets through trade agreements and we are trying to attract more entrepreneurs to come and build companies in Canada. The ecosystem and the environment in which we grow them is really important. 

“The government is the underpinning of the ability to do business and how seamless corporations can grow.” 

The second thing I would say is talent, and talent is a combined effort. The job that the government has done on the turnaround on visas of two weeks has been tremendous. My organization works hand-in-hand with the government in the Startup Visa program, so if an entrepreneur somewhere around the world thinks Canada is a place where they would like to grow their company and they have a venture partner who is interested in their growth, we will facilitate their entry into a visa program for Canada. My organization will accompany the government in that.  

Really, once you have an entreprenuer here, you have to retain them. It is not just to attract people only for a few years—you have to demonstrate that Canada is a great place to live, that we have great institutions, that their kids are going to get a great education, and that Canada should be their home for the foreseeable future. 

“You have to demonstrate that Canada is a great place to live, that we have great institutions, that their kids are going to get a great education, and that Canada should be their home for the foreseeable future.” 

The rest of it is just making sure that our members are deploying enough capital for the business to grow and that the ecosystem is being fueled by more entrepreneurs. It is not one person’s responsibility; it is a joint responsibility. 

Where do you see the biggest private capital opportunities across Canada? 

The cities I see the most opportunities for growth in private capital in Canada are Montreal, Quebec and Toronto and the Toronto corridor, including Kitchener and Waterloo. Vancouver will probably be that third market. My biggest surprise was Saskatoon. I spent a number of days visiting Saskatchewan, both in Regina and in Saskatoon, and was really blown away by the work that they are doing and maybe not creating a large amount but really creating quality companies. I can think of Coconut Software. There is a really strong foundation of entrepreneurship and successful entrepreneurs that are giving back to the Saskatchewan ecosystem.

“Many people thought that you have to be in a large centre to get the dollars, but some of these companies are proving otherwise.” 

The life sciences in Edmonton were really impressive, as well as Verafin in Newfoundland with $515 million in one round. They are a very dominant player in Newfoundland that also inspires other entrepreneurs in the Atlantic to say, “You can build here and the dollars will come.” Across the country in small communities everyone is thinking, “How do I support my entrepreneurs and my ecosystem?” We see Sherbrooke in Quebec being higher up on the list in terms of the number of startups that they are creating and all around I would say many people thought that you have to be in a large centre to get the dollars, but some of these companies are proving otherwise. 

Are there also opportunities for private capital in Indigenous and other underrepresented groups? 

The question of capital going into the Indigenous community is something that the government has turned their attention to through that fund-to-fund program called Venture Capital Catalyst Initiative (VCCI). Their Stream 2 was for diversified funds in underrepresented populations. I know some dollars are going there. The level of entrepreneurship in Indigenous communities will grow as the capital is there, but it is very challenging. We have not spoken about the allocation of dollars to women entrepreneurs—they receive less than 5% of all of VC funding and there are a number of women entrepreneurs out there. When you think about Indigenous entrepreneurs and these small, underrepresented groups, they are really fighting a dominant market where dollars are allocated mostly to, often unfortunately, all-male teams. 

“The level of entrepreneurship in Indigenous communities will grow as the capital is there, but it is very challenging.” 

In terms of immigrant entrepreneurs, Dream Maker Ventures is one VC in Toronto which is all about diversity and making sure that they are supporting entrepreneurs that are of a diverse background. Yes, some dollars are allocated there, but in terms of the number and the share of the pie, we still have a lot of work to do to grow that. 

What would be your 30 second pitch about improving Canada’s entrepreneurship ecosystem, and who would you direct it to? 

If I was asked to pitch, and I only had 30 seconds to convince someone as to why Canada’s entrepreneurship sector is where we should hone in, I would turn to the government. We need to ensure that this emerging asset class—because private capital has reached a level where we are starting to play, but we need to see consistent return—does not have to stay there forever, but they should stay the course a bit longer. 

On talent, we have to work with the government to make sure that we continue to attract talent and that the ability to enter Canada’s workplace and our work stream is facilitated. In terms of our operating environment, be it taxes or red tape, we need to make sure that we can do it as easily as we can while paying our fair amount of tax and just giving back to the community, but really making sure that the business environment is really top notch.