- Corporate Canada and private industry have a role in supporting Canadian startups by establishing mutually beneficial partnerships and networks with them.
- Entrepreneurs must operate with 100% integrity, their word must be their bond, and they must be incredibly hard working.
- Role models for women are incredibly important and having more representation of women in business will encourage other women and girls to pursue a career in entrepreneurship.
Early stage funding and support from the government is critical in helping Canadian founders get the solid foundation they need in order to scale up. Having that base will enable entrepreneurs to pursue their ideas properly and iterate faster, thus moving them closer to the scale-up stage where they can finally help put Canada on the global map for innovation and entrepreneurship.
How would you describe the strengths and weakness of Canada’s entrepreneurship ecosystem?
I would describe Canada’s tech ecosystem as flourishing and as something with great promise. We are still early in development if you compare to ecosystems such as San Francisco or New York. However, we are growing quickly and what is really exciting is that Canada is now becoming a player on the world stage. Just in the Toronto-Waterloo region alone, the number of tech companies has increased by 10 times over the past eight years. If you think about it, it is a pipeline and only a limited number of companies that start will scale up, and that is because of two issues that we have had historically in Canada.
One is there are just not many startups. There have not been as many startups in Canada as there are in other geographies. That has changed dramatically, if you look at the startups and the amount of funding. The good news is that through a lot of different initiatives, we are getting more startups.
“Canada is known throughout the world as a great research place and we have great universities.”
Talent is a key and I view talent both in terms of how we are doing in growing homegrown talent and how we are doing in terms of immigration. In terms of homegrown talent, Canada is known throughout the world as a great research place and we have great universities. We have two of the founding fathers of artificial intelligence, Yoshua Bengio from Montreal and Geoffrey Hinton from Toronto. In Montreal, we have a higher density of students studying in AI than anywhere else in the world, and we have great schools. In Toronto, 50% of the population was born outside of Canada and we are only improving on immigration. We have great schools and that is all good. We also have positive immigration, particularly with respect to what is happening south of the border, Canada is benefitting.
“The part that has historically been missing is global ambition or thinking big.”
The part that has historically been missing is global ambition or thinking big. The thing that I have noticed amongst Canadian founders over the past five years is a significant shift in terms of how they are thinking. The problem with Canadian entrepreneurs typically was that they would sell out after making a few million dollars, buying a cottage in Muskoka or elsewhere, and that was their ambition. That has definitely changed. Shopify was a big reason for that, because people understood that we could build globally meaningful companies from Canada. When I speak with founders today, they are not talking about building a business that is worth $50 million, they are saying, “This is a billion dollar business and I want to build it in Canada.” That is very exciting. Do we have work to do? Absolutely. Are the numbers there right now? No. Do I believe that we have the foundation in place and that we are going to continue our work and that we are going to get there? Absolutely.
What actions by government, industry, and investors are needed to support building an ecosystem?
It is a real group effort, you need everybody. First of all, from a government perspective, there have been two very positive programs, the Venture Capital Action Plan (VCAP) program and then the Venture Capital Catalyst Initiative (VCCI) program, which have really helped to foster business in a very economically efficient way. They have fostered the growth of the venture capital ecosystem in Canada and that is absolutely critical. Most recently, the Canadian Venture Capital and Private Equity Association (CVCA) has come out with a call for a second VCCI program, which I believe is absolutely critical to the long-term health and viability of the sector. That is the biggest thing from a government perspective.
“Corporate Canada should continue to buy from and partner with startups.”
From a corporate standpoint, corporate Canada has a role to play in this in two areas. Corporate Canada should continue to buy from and partner with startups, and not from a philanthropic standpoint, but understanding this is good business for them and that this makes sense. I was on a talk yesterday about how corporations can partner with startups and the different approaches there because it is not easy to do, but if a corporation gets it right, and they could marry the innovative skills of the startups with their legacy assets in terms of their customer reach and their data, then you can really have a great partnership. Certainly, some corporations in Canada have taken a leading role but there is more work that can be done in that regard.
How would you describe the ideal business founder?
There are certain traits that a founder needs to have just to get on the playing field, and these are things that are almost not worth mentioning. They need to have 100% integrity, their word needs to be their bond, they need to be extremely hard working, and they need to be able to work well with people.
“The best founders go through the iterative process very quickly, because at an early stage, it is absolutely key to be able to do so.”
What differentiates the folks and gets them to the next level is interesting. When I first got into venture capital, I thought I wanted to work with experienced founders and that it would be so much easier working with experienced founders rather than working with first time founders. What I have learned is that I love working with first time founders. If you look at a lot of the tech giants, like Google and Facebook, the list goes on of how many of those great big companies were founded by first time founders. One thing I would say I do not place a lot of weight on is how many years of work experience they have. It is much more about how open they are to feedback, how eager they are to learn, how self-aware they are of their strengths and their weaknesses, and if they are naturally curious. The other thing we look at is how quickly they iterate. When you start with the cycle, they first have an idea, and maybe it is a go-to-market strategy or a product iteration, but then how quickly do they go through a cycle of testing that, learning from that, iterating, and going through to the end? The best founders go through the iterative process very quickly, because at an early stage, it is absolutely key to be able to do so. As I said, those other factors around ability really come down to the ability of the founders to grow in their role. When it comes to the whole concept of taking a company that is founded by an individual and swapping out the CEO and putting in somebody else, more often than not, that does not work. That model has a very high failure rate, and again, going back to the companies that really have had success like Facebook and Google, the founder stayed for a very long time. Look at Jeff Bezos at Amazon—the list goes on. The same visionary founders are the CEOs. The founders have that vision and they can make an excellent CEO.
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How can we improve supports for female entrepreneurs?
Two things: number one is role models. Seeing more women succeed enables other women to say, “I deserve that seat at the table and I can be successful as well.” I have seen a real shift in the last five years in terms of the media and how the media is portraying founders. Back when we had conferences in person, though now we have conferences online, there was a real commitment from conference organizers to make sure that there is a balanced panel with women and men. That does go a long way and it is a virtuous circle where the more we see women who are successful, the more women will think they can be successful too and that is a virtuous circle, so that is great.
“If there is a female investor around the table at the partner level, the likelihood of them investing in female founders doubles.”
The other thing that we need more of is more female investors. The statistics clearly show that if there is a female investor around the table at the partner level, the likelihood of them investing in female founders doubles. That is significant and the more senior level female investors we have, the more female founders we will see invested in and they will be able to build a great business.
If you had 30 seconds to pitch someone in a position of power to improve Canadian entrepreneurship, what would you say?
I would pitch the government and encourage them to continue to focus on providing early stage funding to Canadian founders, because without that strong foundation, we are never going to get the scale-ups.
We have to keep that focus on the early stage and for the later stage, the successes will come, and they will come through a network effect where we are seeing great talent, ambitious founders, and the financial support to help those companies scale up.