Earlier this week, Brightspark’s Mark Skapinker got “quoted saying some harsh things” in the Wall Street Journal. The gist of the post was that “the venture capital model was broken in Canada” and that “there are no significant repeat entrepreneurs here.” Understandably, passions were inflamed…

Wellington’s Mark McQueen took issue with several points in the article. JLA’s Rick Segal likened the WSJ post to friendly fire or getting hit from behind. Mark Skapinker has since posted a clarification of sorts.

While the WSJ post was off message, there really is a problem up here. It is not a lack of good ideas or backable founders. The pool of available financing is drying up. A global problem, sure. But our pond is smaller, so we’ll feel the pain sooner.

There are those who will argue the rules are changing, that to start something less funding is needed than ever before. Maybe so. But there is a difference between running lean… and starving. We are simply not feeding our young. It is beyond short sighted, it is economic suicide.

Provincial governments seem to know this is happening, that there is a risk of losing a generation of entrepreneurs, companies, jobs, growth. They are announcing programs left and right (albeit with seemingly little industry consultation), but letting meaningless paperwork kill cross border deals.

Financiers definitely know something is amiss, funds are not or can not raise another round. Instead of closing on a fresh $100M, they are closing up shop. But if they didn’t deliver returns, can you blame LPs? Typical venture funds need to deploy large amounts of capital to move the needle. They aren’t in the seed stage investing business, their business model does not allow it. It is possible that there just weren’t enough seed stage opportunities to choose from… maybe.

So more early stage financing for more companies, it is easy to like the sound of that. Unfortunately, it is just not that easy. There really is not much money to be made doing this. Run the numbers for yourself, we have, it is not a particularly scalable venture so to speak. And still it needs doing.

One thing is for sure: this problem isn’t going to solve itself…