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You are here: Home / Science and Tech / Canadian tech: thriving, not vanishing

Canadian tech: thriving, not vanishing

07/09/2012 By backofthebook.ca Leave a Comment

Image: High-tech TSX trading boardBy Mark Evans

According to a feature story in Saturday’s Globe and Mail, Canada’s tech sector is vanishing. Not only that but “the air is quickly coming out of Canada’s high tech sector – or what’s left of it.”

First reaction: this is a troubling situation.

Second reaction after reading the lengthy story: It’s an over-the-top feature that highlights many of the troubling parts of the Canadian high-tech sector such as RIM, and exaggerates some issues (e.g. the venture capital landscape) while ignoring the positives, such as the booming startup ecosystem and the entrepreneurial renaissance happening across the country.

To be clear, Canada’s high-tech sector is not without its warts, but there are so many good things happening, it seems inaccurate, if not unfair, to thrust the problems into the spotlight while brushing aside or ignoring the growing number of success stories such as HootSuite, Wave Accounting, Freshbooks, Beyond the Rack, etc. In a recent post, I talked about the growing number of “tween” startups emerging — another encouraging sign for the high-tech sector.

Here are just a few items within the Globe and Mail article that I take issue with:

– “High-tech companies now account for a razor-thin 1.6% of Canada’s benchmark stock index, the TSX composite.”

Comment: The number of high-tech companies on the TSX composite would, in an ideal world, be higher but it is arguably not the benchmark to assess the sector’s health. It is a different capital marketplace in which many high-tech companies never trade publicly, either because they get acquired or remain privately owned.

–  “But unlike the U.S., there was almost no risk capital to support the growth of the tech industry here.”

Comment: This may have been true a few years ago but the growing number of incubators, accelerators, and VCs providing seed capital are helping to make more risk capital available. It’s not a perfect situation but it is getting better.

– “The few Canadian venture capital firms that do take on tech investments tend to lack the experience, appetite for risk, and know-how to help their portfolio companies – unlike U.S. venture capital firms, which typically employ one or more successful entrepreneurs.”

Comment: This is a sweeping generalization that ignores people such as Mark Macleod, Chris Arsenault, Scott Pelton, John Eckert, Robin Axon, Duncan Hill, John Albright, Mark Skapinker, J.S. Cournoyer ,and John Ruffolo who have the experience, expertise, and appetite for risk to help their portfolio companies.

If The Globe and Mail were to ask me to write an in-depth feature story about Canada’s high-tech sector, the angle would be 180-degrees different from the doom-and-gloom perspective offered up on Saturday.

I’m excited and optimistic about Canada’s high-tech sector, and the amount of activity happening. Sure, it would be great to have large, multi-billion dollar companies trading on the TSX, and a venture capital sector oozing with capital, but the fact they don’t exist shouldn’t be taken as evidence that Canada’s high-tech sector is struggling to survive.

– First published on markevanstech.com

Filed Under: Science and Tech Tagged With: Canada, finance, Globe and Mail, Research in Motion, startups, Toronto Stock Exchange

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