Ontario politicians asked to address deteriorating VC climate part 2
Ontario continues to experience declining VC funding, and the recent stats suggest the beating isn’t over quite yet.
As you may recall, a few venture funds tried (“Ontario politicians asked to address deteriorating VC climate“, October 1-07) to make the deteriorating Ontario VC climate a bit of an issue in the recent provincial election campaign. While there was some media interest (“BNN interview on VC funding woes“, October 4-07), we couldn’t get any of the political parties to even acknowledge that a dramatic drop in new investment (and the associated jobs) was worthy of discussion – let alone action.
The OBJ story today from Ottawa paints a dark picture:
“Venture capital investment in Ottawa-area companies fell again in the third quarter after a rebound in the previous period, according to the latest release by the Ottawa Centre for Research and Innovation.
The report said that total disclosed funding for the region fell by 72.8 per cent year-over-year to US$23.2 million, with a total of three disclosed deals for the quarter. In the third quarter of 2006, five Ottawa companies received a total of $85.3 million in venture capital financing.
The numbers were also significantly lower than in the second quarter of 2007, when five companies received venture capital totalling $68.9 million.”
Ottawa is just one important centre, but the stats from Waterloo, for example, are sadly no better.
Now that election is over, and the Ontario public service is now able to re-engage with the venture capital and university commercialization community, perhaps some strategies can be put to work to immediately address the dramatic drop in the funding of early stage Ontario-based technology and life sciences firms.
The Ontario Liberal campaign platform included a $20 million “fund” for rural and eastern Ontario SMEs, but that just isn’t going to cut it. Our provincial government needs to consider what B.C. and Quebec have been doing of late, and ask themselves why investment in those two provinces has rebounded, while Ontario has waned.
If you don’t recognize that the patient is sick, you can’t find a cure. The provincial gov’t needs to stop hoping that the next quarters’ VC stats will prove them right, after 16 or so consecutive quarters of declining trends.
MRM
Good Post Mark.
To follow my comment posted during the election. I did send a note to both the Premier and John Tory regarding early stage business funding in Ontario. I didn’t receive a response from either.
Early Stage funding (pre-seed and seed) is almost non-existent in Ottawa and I suspect the same for the rest of Ontario. I am speaking from experience as someone seeking funding for my own project and advising a couple of other early stage businesses.
I am familiar with the programs the government has in place in Ontario and while they are generally good for the public institutions they do next to nothing for private industry where the real commercialization occurs. Something like the BMEP program means the local economic development agency increases headcount by 2 – 4 people rather than put funds in the hands of entrepreneurs. More money for entrepreneurs and fewer bureaucrats would likely be a good start.
If Ontario really wants to promote a model of commercialization success it means directing funds to both public and private interests NOT just public.
That Said, I always get a little nervous when governments are in the business of handing out money. Better to provide the tools and resources to private industry to encourage early stage funding. Can you say LSIF.
Lots more to say but this is enough for now.