Canadian Prime Minister: $400M to Strengthen Canadian VC

Canadian Prime Minister: $400M to Strengthen Canadian VC(globalnews.ca)

38 points by mpr3 13 years ago | 20 comments

I do not believe government should be in the business to fund VCs. Canada has several pension funds and mutual funds and most of then seem to be doing well; if American VCs can raise their funds from their pension funds, why do the Canadian VCs need a hand out from the government even while Canadian funds are actively participating in American Venture funds. Most likely the Canadian VCs who do receive government money under this program will do so because of their political connections and they will end up funding their cousins's start-ups.

arikrak 13 years ago | |

It's true that long-term the government shouldn't be investing, but it can sometimes help to get things going. Israel was successful in this regard - it gave some funding in the 90's and then got out of the way. The questions is if Canada really needs that same boost.

pokoleo 13 years ago | | |

Is having a boost the wrong thing to do? In any case, it strengthens the country's economy, if spent correctly.

canadiancreed 13 years ago | |

I'm hoping that it's not a national version of the PMP program that PEI had (and may still have) a few years ago, and will be spread out to those needing funding instead of folks that know the right people. But you're right it's got that slightly fishy smell to it. Guess the only way we'll know for sure is if we see all the money flowing into Conservative held ridings and/or associates. It'd be great for my current employer (startup out in the middle of nowhere in a Conservative riding that is getting government grants), but it's not the way it should be done.

bmmayer1 13 years ago |

This just takes money from taxpayers who won't see a dime of the upside and gives it to VCs so they won't have to risk a dime on the downside. Why is this a good idea?

marekmroz 13 years ago | |

It is not.

It is Steven Harper and Jim Flaherty privatizing profits and outsourcing costs to the people, business as usual.

Remember ~$2 billion dollars disappearing into thin air[1]? Well, I mean, there was the $2m fakelake[2], an unlawful prison[3], and a 'terrorist' was caught[4] (and released[5]) but I still think Canadians did not get their money's worth. Sonic cannon's manufacturers, on the other hand, made out quite nicely. Oh, Canada...

[1]http://www2.macleans.ca/2010/06/17/why-host-a-billion-dollar...

[2]http://www.cbc.ca/news/canada/story/2010/06/23/g20-fake-lake...

[3]http://www.cbc.ca/news/canada/toronto/story/2012/06/28/toron...

[4]http://www.torontolife.com/daily/informer/from-print-edition...

[5]http://www.cbc.ca/news/canada/toronto/story/2012/05/15/toron...

gyardley 13 years ago | |

Venture capital largely gets spent on employee salaries. At worse, the money while it lasts will create good jobs - think of it as a Keynesian stimulus, something the Conservative government's not usually known for. At best, it jumpstarts a lot of legitimate growth, like Israel's 1993 Yozma plan.

I suspect most of the people in this thread are just grousing because they don't like their government, and therefore don't like anything it does. But Canada's been starved for venture capital for a long time, which has resulted in a lot of unnecessary brain drain. No program is guaranteed to succeed, but here Harper's doing something quite smart.

bmmayer1 13 years ago | | |

It's impossible to create something out of nothing. It just takes money that was being spent in one place and spends it in another. Every job that is created by the stimulus in one place is a job that can't be created somewhere else. You just see the jobs that get created and don't see the jobs that don't get created.

ekianjo 13 years ago | | |

A Keynesian stimulus hardly works. It's been tried many, many times, with always the same results: close to none, or ending up in worse situation in the mid-term, by modifying the market incentives and removing cash that would be invested somewhere else by private entities. It is not about not liking one's government, this kind of government intervention is opposed to democracy and free market.

bparsons 13 years ago |

Stephen Gordon has a good take on this: http://www2.macleans.ca/2013/01/14/stephen-harper-state-vent...

gyardley 13 years ago | |

Stephen Gordon doesn't know what he's talking about. Take this, for example:

In a market economy, the excess demand for venture capital would be closed by a price adjustment: entrepreneurs would be obliged to accept smaller injections of capital, would have to offer more control of their firms, or some combination of the two.

This is only true if entrepreneurs have to stay entrepreneurs, have to stay in the Canadian market, and have to take venture capital, no matter how crap the deal. Since none of these things are particularly true, Canada ends up with fewer entrepreneurs, emigrating entrepreneurs, and entrepreneurs who simply do without and grow their companies more slowly - and none of those are particularly great for the Canadian economy.

maxxpower 13 years ago |

I will believe it when they start making money available, being an Ontario based business in the GTA owned by a white male non minority not in the middle of the sticks.... youre gonna be out of luck.

I went through no less than 50 funds available for companies in Ontario and didnt qualify for a single one. Yet, if I was in North West Territories and native... I would have millions at my disposal.

tsieling 13 years ago | |

Yeah they hand out million dollar bills to anyone who isn't white. It's happening everywhere and you're missing out. Boo hoo.

Get over your centre of the universe racism and make something of value.

msie 13 years ago | |

Yeah, I don't know why you didn't secure funding because you're coming off as incredibly thoughtful and charming right now.

marekmroz 13 years ago | |

Why not move then? It's millions, man! Millions!

seivan 13 years ago | |

Martyrdom much?

outside1234 13 years ago |

Is that a stack of greenbacks they are flipping through? :)