CVCA, #FFdemoday and AccelerateMTL

Chris Arsenault (LinkedIn, AngelList, @chrisarsenault) sent me a message yesterday about writing about the CVCA conference. And I was looking at the conference trying to figure out why as an entrepreneur that I might want to attend this event. It is “the premiere networking and professional development event for Canada’s venture capital and private equity industry”. Well I don’t work in venture capital or the private equity industry, and the professional development I can get that at Ladies Learning Code or Udemy or O’Reilly. So why should I care? Maybe a “free Blackberry Playbook” would get me to pay for the registration. Disclosure: RIM is a sponsor of StartupNorth, though we don’t have any free Playbooks.

Then it struck me.

My goodness, this is an incredible opportunity for Canadian entrepreneurs. If you plan this correctly, you can connect with investors, other founders, folks form NYC, Boston, the Bay area. While the specific sessions at CVCA aren’t necessarily my cup of tea, you could sit in the lobby at the Fairmont Queen Elizabeth and meet every investor in one shot.

CVCA attendees will have a “free Blackberry Playbook” . Just like LinkedIn, I’d be building an HTML5 optimized version of my application and making sure as hell it works like gold on a Playbook (which has a great implementation of WebKit browser). You could call the Fairmont and set up an espresso stand and give away coffee to everyone that demos your application. Hell if nothing else a big sign with “Free Latte” for all of the hung over CVCA attendees and have a student running to a local coffee shop for fulfillment. Great opportunity to get out and hustle.

On top of all of this you get to see some brilliant demos at Founder Fuel. This is going to be a killer event, and you could make it a very interesting opportunity to get in front of potential investors, partners and folks from outside Canada for relatively little cost.

2011: Glass Half-Full or Half-Empty for Canadian VC?

Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in February 14, 2012 on MarkEvansTech.com.

Some rights reserved by waferboard

First, the good news about Canada’s venture capital landscape. In 2011, investment activity climbed to the highest level in four years ($1.5-billion), a 34% increase from 2010, although it is still significantly below the record activity ($2.1-billion) reached in 2007.

The bad news is there’s still not enough supply to meet rising demand, plagued by “continued weakness” when it comes to fund-raising.

The good news-bad news scenario was spelled out in the Canadian Venture Capital Association’s annual report. For those of us in the glass half-full camp, the increase in investment and the number of deal is cause for optimism.

As well, 2011 saw a spike in M&A activity with 34 deals, including two each by Google, Facebook, Zynga and Salesforce.com. And there was a flurry of incubators and accelerators established, including Extreme Startups last week.

Before anyone gets carried away, Canada’s venture capital landscape is a long, long way from being solid, let alone robust. There’s still not enough venture capital for seed, series A or major rounds. And don’t expect U.S. investors to pick up the slack.

In a press release, CVCA president Gregory Smith said there is concern about whether enough fund-raising can be dong to support the demand for investments. This situation was illustrated by the fact new commitments to Canadian VCs were flat last year at $1-billion.

“Canada has a historic opportunity to become an innovation leader,” Smith said, adding that “in order to act decisively on this opportunity, we must first overcome challenges to supplying VC funds that, in turn, supply entrepreneurs.”

So what’s the solution? How can Canada’s venture capital community do a better job of supporting the startup community? There is not easy answer to a problem that has been around a long time and doesn’t look to be changing any time soon. It’s not going to be an easy fix from government or U.S. investors or institutional investors waking up to the idea of venture capital investing.

Perhaps the answer to the problem is this: success. If more startups and mature high-tech companies are acquired, that could (emphasis on “could”) encourage investors (angels, VCs and institutional) to get more involved. Success has a strange way of helping people to see the light or new opportunities that they otherwise would have dismissed or not seriously considered.

That said, success is a double-edged sword. Without enough financial support, it is hard for startups to have enough powder to become acquisition targets. If they’re not interesting targets, there’s no acquisitions and, likely, less interest from investors.

So which side of the fence do you sit on? Are you bull or a bear about Canada’s VC landscape?

Aaarggh – VC Funds Are Drying Up?

Yesterday and today I’ve been trying to make sense of two different data points that came out on the Canadian business scene.

One data point confirms that we are having a banner year across Canada. Check out the numbers:

* Q2 private equity deals worth C$5.7 bln in Q2
* Total deal value more than in all of 2010
* Deal volumes up 40 percent over Q2 2010

(Side nostalgic note, I love that Berkshire bought Husky, it was actually my first co-op job and I have always had huge respect for Robert Schad – a giant amongst Canadian entrepreneurs)

As you know from several of my posts on exits, this and this, the startup high tech scene are big contributors here.

So, this means that we are returning capital on investments made into companies in Canada, right? Which means, since there is a healthy market for exits, folks should be willing to supply funds to VCs to start companies…. right?

Well, according to CVCA, it looks like VC fundraising fell flat on its face.

Smith said slow fundraising by venture capital funds was undermining deal-making, with new commitments sliding to C$132 million in the quarter, from C$308 million last year.

“VC investment, which has historically been the catalyst for knowledge-based economic growth, cannot effectively do this job until we take determined steps to ensure more stability,” Smith said.

Falling fundraising is part of a continuing trend.

In 2010, new commitments fell 24 percent from the previous year to their lowest level in 16 years. They fell further in the first three months of 2011 against the first quarter last year.

WTF!?!?! Did VCs forget to cut cheques to their LPs? Are the companies getting bought out not VC funded? Something feels out of whack here. Are there simply not enough fund-makers ala Radian6 to make a reliable return on investment? We are doing some digging to get to the bottom of this. It does resonate that entrepreneurs should focus less on VCs for funding and need to be looking towards angels & incu-ellerators for their early stage funding needs.

UPDATE: This article from the Globe really outlines how VC funds have been in long decline.

Year VC invested/Companies Financed
1998 $1,511,000/807
1999 $2,617,000/810
2000 $5,876,000/1,007
2001 $3,747,000/720
2002 $2,583,000/663
2003 $1,613,000/615
2004 $1,677,000/545
2005 $1,699,000/558
2006 $1,701,000/406
2007 $2,051,000/402
2008 $1,406,000/388
2009 $1,039,000/337
2010 $1,129,000/357

These numbers tell something interesting – apparently in Canada its gotten more expensive to start companies??? In 1998 $1.5mm resulted in 807 companies getting financed, while in 2008 $1.4mm results in 388 companies getting invested. What gives?