A Mentality Shift: From Humble Canadian Entrepreneurs to ‘Own the Podium’
Founder & CEO
Nicole Verkindt is the founder and CEO of OMX. She launched OMX to help streamline procurement, supplier data management and key socio-economic reporting requirements. She is a Dragon on CBC’s Next Gen Den, investor on Gimlet media’s The Pitch, a political appointee to the Board of the Canadian Crown Corporation, CCC (Canadian Commercial Corporation) and a board member of the Canadian Chamber of Commerce. Nicole was named StartUp Canada’s Woman Entrepreneur of the Year. She is also the Co-Chair of The Business Council of Canada’s Task Force on Canada’s Economic Future.
OMX is a collaborative platform for accessing procurement opportunities and analyzing the economic impact of organizations in the domestic and international defence, aerospace, oil & gas, mining, automotive and construction industries, and in other complex global supply chains.
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1- Canadian innovators need support from large companies to kick-off their innovative products and services. Facing too much disinterest from risk-averse institutions will incentivize companies to leave.
2- Angel investors know the concept of risk—there’s just a limit to how much they want to take on. To enable early stage investment, the government should create tax incentives to spur investors to inject capital in young companies.
3- When it comes to innovation, being humble can only take a company so far: Canadians have to adopt an ‘Own the Podium’ mentality if we want to see our business ecosystem thrive.
The Prime Minister should look to create early stage incentives for investors and angel investors. Too many young entrepreneurs with brilliant ideas cannot get their companies to the next phase; they cannot even get their first $25,000 cheque. So, I would push for the angel tax credit or flow-through shares to get that capital moving from the angel investor community.
Do Canadian companies embrace innovation? What must be done to support Canadian innovators?
In the United States, people with bright ideas have a much easier time accessing capital. In Canada, it’s not as simple. This is something I have experienced firsthand: early stage capital is difficult to access and the traditional corporations in Canada lag behind in terms of embracing innovation. My company, like many others, has an easier time selling our technology to the United States because they embrace innovative ideas, want to improve their operations and increase efficiency with top-of-the-line products and services.
When fintech started to become a popular word three or four years ago, I remember saying that Canada has a head start on this and will take center stage; we have a concentrated banking system with only four major players so we could roll out products at a much faster pace and in a concerted effort. With all four banks upgrading their services with new payment systems, it would streamline operations and allow retailers to then adopt fintech technologies themselves. You could roll out a new, say “payment” tech solution to all Canadians and retailers by just getting 4 banks on board as opposed to the incredibly fragmented banking in the United States.
“There needs to be a sense of urgency among Canadian corporations to engage with the business ecosystem and to want to improve their services, because if companies like mine can’t raise money in Canada’s innovation community and can’t sell to Canadians, then innovators won’t be incentivizedto stay here.”
Instead, quite the opposite happened. In hindsight, I believe we didn’t win the fintech race because there isn’t as much of a competitive nature between Canadian banks. Whereas in the United States, there is a plenitude of diversification with all banks competing against one another, and this makes them more prone to embracing innovative products.
There is a positive side to being more risk averse. Canadais well known for its respectable banking system that—through strong regulations—protected Canadians against the 2008 economic crash better than other jurisdictions did. However, there are ways to move forward with more openness that will strengthen the Canadian business ecosystem.
Large Canadian corporations have so many talented entrepreneurs and companies at proximity; they should explore and commit to funding new ideas that interest them. There needs to be a sense of urgency among Canadian corporations to engage with the business ecosystem and to want to improve their services, because if companies like mine can’t raise money in Canada’s innovation community and can’t sell to Canadians, then innovators won’t be incentivized to stay here.
What support, and from who, would you like see to enable Canadian entrepreneurs to scale?
When I launched my tech company eight years ago, it was impossible to raise capital as an early stage business. Although capital is not out of reach today, I still meet many entrepreneurs with inventive ideas that can’t move to the next phase—they can’t even pick up their first $25,000 cheque.
It takes a big, aggressive investment upfront for entrepreneurs to scale and expand; and investors, or angel investors, are the ones to allocate it. The risk is huge. The use of flow-through shares (FTS) for angel investors would make a huge difference because the one thing start-ups and innovators are skilled at is losing a lot of money upfront or investing a lot of money in innovation. I am an angel investor myself and among the twelve companies I have invested in, many of them have failed, which is normal, but the tax credit would entirely change the way I view risk.
“The use of flow-through shares for angel investors would make a huge difference because the one thing start-ups and innovators are skilled at is losing a lot of money upfront or investing a lot of money in innovation.“
There needs to be a way for investors to feel comfortable injecting capital in an early stage company. This is an area where government can help. I think the Prime Minister should focus on getting early stage tax credits for investors because that can ease a lot of their concerns with their early stage investments. For example, the business ecosystem should have an incentive similar to flow-through shares that are issued to junior resource corporations in the mining, oil and gas, renewable energy and conservation of energy sectors. Early stage businesses face difficulties in raising capital just like junior resource corporations face them when looking to finance their exploration. FTSs benefited the resource sector, and the Canadian business ecosystem should have a similar tax incentive. In this way, angel investors can leverage and use some expected losses towards their own portfolios or existing portfolios. It would incentivize them to provide more early stage investment.
What should Canadian governments be doing to enable entrepreneurs to scale?
I don’t think it’s in our interest to have entrepreneurs spending their time filling out complex paperwork to get funding from governments. This approach quibbles innovation. It ends up rewarding companies that spend their time in bureaucratic steps instead of getting out in the field and winning business.
Other than enabling tax credits for investors, I see governments’ role as creating the environment to motivate and incentivize entrepreneurs to do certain things, which Canada does really well; there is an abundance of free trade agreement and there is the new Accelerated Capital Depreciation rules. However, even with these bridges and keys to international doors, data shows that other nations are much better at getting a head start in exporting their products here than we are to foreign countries. We see this happening with the Comprehensive Economic and Trade Agreement (CETA) which opened the doors to Europe not too long ago; Europeans are much better at trading than Canadians. You can see the data with shipments leaving Canada going to Europe vs the opposite. It is sad. This is a new agreement, but there are already signs that the Canadians lag in exports.
So, it’s time we turn our attention to the Canadian business community itself, to say: “It’s your turn to step up.” Government can only do so much—they can’t actually make it happen for you. To me the call to action should more be to the big Corporations in Canada to embrace innovation. If the Canadian business community itself is not embracing innovation to gain a competitive advantage or exporting through our FTAs, we cannot expect government to do it for them.
What are your recommendations on how we can get Canadian entrepreneurs to embrace risk and think bigger?
Canadians are known for their noble traits: inclusive, agreeable and humble. Although wonderful, these traits sometimes don’t quite align with being aggressive and competitive. And that plays a role in our business culture.I do think it can give us a competitive advantage – our diversity and ability to relate to the whole world.
“Canadians are known for their noble traits: inclusive, agreeable and humble. Although wonderful, these traits sometimes don’t quite align with being aggressive and competitive. And that plays a role in our business culture.“
The American economy has so much more competition. When I meet my American counterparts, I see right away how much quicker they are in embracing innovation because they want to be the best in their sector. They’re seeking it. There are more than just three telecom companies; there are more than just four banks; there are so many more companies in every sector. This creates an innate spirited business culture that rewards the aggressive competitiveness needed to win, which also makes for a more individualistic society. I think this is the root of why we are seeing so much success in the United States, particularly around innovation. The culture is to be the best and win.
So, it comes back to striking a balance; keeping our Canadian qualities but telling ourselves that it’s okay to strive and to be in it for the win. I think many of us think it and want to say: “We want to win.” I think we need to instill an ‘Own the Podium’ mentality and approach, the same way we did during the Vancouver Winter Olympics. During the Winter Olympics, Canadians came together and rallied behind one goal and poured resources into a concentrated group.
I think the Canadian business ecosystem needs to set an audacious goal, double down on it and work together behind it. For example: “In five years, Canada will increase its exports by a factor of X.”We need to get to work and actually make these exports happen and grow, to getthese projects to move forward, to get big companies to feel the urgency and embrace innovation. I am hopeful; I am not going anywhere; I am Canadian through and through.
As a young NextGen Canadian entrepreneur, what is your vision for the future of Canada’s economy?
As Co-Chair of the Task Force on Canada’s Economic Future initiative, led by The Business Council of Canada, our goal is to zoom in on redundant roadblocks in administration and regulation that tax the Canadian business ecosystem. The root of so many of these problems is the administrative burden we have in Canada. There are roadblocks that stop us from basic infrastructure developments, such as the installation of pipelines or getting a permit to build a basic building. These processes, which take two weeks in the United States, can take up to two years in Canada.
Too much regulation, too many layers of government, too much complexity; all that trickles down to companies. At OMX, we experienced this ourselves: a major supply chain data management contract fell through because the energy company in question did not see the value of facing the regulatory burden. When projects cannot move ahead in any sector, it impacts many suppliers and entrepreneurs. So, in Canada’s future economy, I envision a much more streamlined approach to processes and protocols, where they speed up business rather than halt it.
Also, I would like to see more bridging between innovative economies and young entrepreneurs. When I took part in the season of Next Gen Dragon’s Den, we saw 30 or 40 different pitches and only a dozen of them went to air because there was so much duplication. Many of the young entrepreneurs who had just graduated presented on the two things they knew most about: ordering late-night food or dating.
“I would like to see bright young Canadians working together on different sectors and be integrated in the traditional Canadian business ecosystem at an earlier time to work on fresh designs, themes and ideas for them.“
We are seeing impressive cases of isolated innovation in areas where students have a lot of experience and I would like to see bright young Canadians working together on different sectors and be integrated in the traditional Canadian business ecosystem at an earlier time to work on fresh designs, themes and ideas for them.I would like to see a myriad of innovations in all of the traditional sectors. Innovations that can truly move the needle for big sectors of our economy making us more competitive around the world, and I look forward to it.