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VC in Canada: Is this time really different?

June 13, 2010

I just got back from a great trip to Toronto. The purpose of the trip was mainly to visit family but I also took the time to catch up with some local VCs and tech luminaries with whom I have been in contact over the past few months via the C100

Toronto –and Canada in general– has had a checkered past with venture capital. There have been a couple of false starts and for one reason or another the asset class didn’t really take off.

But the message I heard in Toronto this week from my various contacts was consistent, this time it’s different.

I would really really like that to be the case but I have to admit I’m skeptical. When is it ever really different?

However, the rationales I was given are compelling:

1) LPs have grown up and are asking for real returns.

In my opinion, this is a major problem with VC in Canada, LPs have not been sufficiently demanding of GPs. Fund managers have been able to get money from a variety of government sources and therefore have never felt the real pinch of being forced to provide outsized returns. But apparently that has changed and the profit demands from LPs in putting new pressures on GPs.

2) There is a new class of entrepreneurs and VCs emerging, many of whom have lived and worked aboard and are bringing back with them new skills and new ways of doing things.

Again, I really hope this is true. I believe strongly in the value of importing new ideas not just to Canada but into any country. The C100 has been active in trying to get some of the Silicon Valley culture to rub off on Canadian technologists.

If this 1-2 punch of more demanding LPs and more worldly entrepreneurs are already in full swing then maybe this time will be different. Through my job, I’m actually in a position to test the “this time it’s different” thesis…so we’ll ll see.

From → Canada, Technology

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