"Nurture" tech startups: d'ya think?

All the Canadian papers are carrying a story or two about a report from the Information Technology Association of Canada that makes some recommendations for what's needed to do better in the technology sector. Here's one from The Globe and Mail. The report was authored by Doyletech Corp, of Ottawa, whose namesake, Denzil Doyle, looms large in Canada's nascent tech sector -- particularly in the Ottawa/Kanata region. Dave Ebner's lead paragraphs:

Canada has to figure out ways to nurture high-tech startups so that they flourish at home rather than getting scooped up by foreigners, says a new study published by the Information Technology Association of Canada.
From 1993 through 2003, as many as 125 emerging high-tech companies in the Ottawa area were bought by foreigners, mostly from the United States, the study indicates. The problem is that promising startups end up becoming mere branch offices of foreign companies rather than growing into well-established, publicly traded, Canadian-based companies.

The point here is not that there is a report nor that it makes some recommendations that, if followed, may increase the number and global value of home-grown technology companies. My point is that the recommendations are motherhood -- at least as outlined by the media. It's changing the investment culture that's the hard work.

IMO, Canada's best and brightest juniors will continue to be bought up by foreign investors at early and even later stages because Canadian investors, by and large, want a sure thing with big winning odds. And, when they do come to invest, they're more likely to put out little drips and drabs of dough. Enough to feel it if you lose it but far from enough to make a splash of the business being invested in. More than that, we seem to be a very collegial bunch of investors: we like a crowd (like when everyone was getting into Nortel, or JDS, etc.). So, the Yanks, with stronger stomaches and the willingness to invest the money that will get the attention of executives who feel mandated to get the best value for their shareholders, will continue to take the best and leave branch offices in Canada.

Amen.

Posted by Grayson at April 19, 2004 07:47 AM