Monday, April 24, 2006

Does the GTA need ICT Toronto?

I read the 100+ pages of the ICT Toronto "cluster development strategy" that the City of Toronto is backing. It proposes the creation of ICT Toronto, which would promote the interests and reputation of the information communication technology sector in the Greater Toronto Area.

The report mentions a few times that the GTA doesn't have an organization like OCRI in Ottawa or Communitech in Waterloo Region. (Interestingly, it doesn't use the term GTA; it renames it "the Toronto Region" ... but it's a different "Toronto Region" from the one that the Toronto Region Research Alliance is supposed to be serving. That one includes Waterloo Region, Guelph, and Hamilton.)

The backers of ICT Toronto have to walk the line between its claims that the GTA's ICT sector is the third largest in North America ... and that it's hard done by -- a victim of government neglect (which can be righted, of course, with additional funding).

I agree that the GTA could do more to let everyone know about its ICT sector. But sometimes the report doesn't pass the laugh test, particularly when it tries to paint a picture of how Toronto companies are at a disadvantage when it comes to accessing venture capital. Yes, what a terrible blow it must be to be located in Canada's financial capital and the home to offices of most of the biggest VCs in the country. Waterloo Region didn't have any VC firms based within 75 km of here until a few years ago. Now we have one.

Of course, there are many companies in Toronto that haven't been able to make a persuasive case for their fundability. That's true everywhere and always will be. But there are scores of VCs and others in Toronto's VC ecosystem always looking for fundable companies.

You could try to make a case for the creation of a Tech Capital Partners-like organization for the GTA. It would be hard to pull off with all the VCs based in Toronto. In that environment, I don't think a new fund would be able to become the VC for early-stage GTA companies as Tech Capital has in Waterloo Region.

And there's already the Toronto Venture Group which has been working for years to help make it easier for Toronto companies to get funded. Why create a new organization to put its feet in the same waters?

I'd say the same thing for ICT Toronto's interest in lobbying to get an NRC research lab in the Toronto Region, which is already being done by the TRRA. Marketing the area's ICT cluster? Already being done by the GTMA (the group that came up with the statistic of the GTA having the 3rd-largest number of ICT employees).

(The whole thing about lobbying for an NRC lab seems so oldschool in 2006. Is Industry Canada supposed to put a lab in every city in Canada that wants to boost its economic development? The GTA doesn't have an NRC lab, but it certainly receives a lot of other funding from Industry Canada. And Toronto already has the largest university in the country ... which ICT Toronto suggests isn't doing enough to reach out to the business community.)

There are already so many organizations promoting innovation in the GTA. Does it really need another one? MaRS, which at one time was an acronym for "Medical and Related Sciences," has already outgrown that name and expanded into IT. It has taken on the role of being Toronto's OCRI or Communitech. It feels like ICT Toronto is too late to the party and is repeating a lot of initiatives that others are already spearheading.

The GTA isn't a community and won't become one in the forseeable future. It's just too big. It encompasses over 40% of the population of Ontario and extends from Darlington to Lake Simcoe to Burlington ... just short of Guelph. The quaint stories repeated in the ICT Toronto report about how everyone gathers at one spot in other tech clusters 1) are folklore anyway, and 2) will never happen in the GTA.

And, just in general -- as with almost everything written by policy wonks or academics on innovation and commercialization -- you could read the entire ICT Toronto report and never get the feeling that anyone grasps that clusters become successful when the companies within it create products that people want to buy. They aren't big on market forces and entrepreneurs.

Everything in the report revolves around having all these government organizations and associations coordinating their activities. A couple of times, it states that collaboration shouldn't be a goal in itself, and that's right. But you get the feeling that someone was just repeating a line they were told. I found it to be too navel-gazy and disconnected from the needs of companies trying to become successful in the IT space. There was little representation from SMEs and startups on the advisory committee, and it showed.

Having said all that, the report sure sounds like the kind of proposal that governments are funding these days, and that was probably its main purpose. But I wouldn't be surprised to see the whole initiative rejigged to become part of MaRS Discovery District.

Sunday, April 23, 2006

The word is "premier"

As someone who has typed "reigns" for "reins" more than once (I stopped after my mother-in-law was kind enough to point this out to me), I know it's easy to be tripped up by homonyms. And, in the Web era, typos are something you learn to expect and ignore.

But these days, I seem to see an example every week -- in documents that have been formally prepared -- where the word "premiere" is confused with "premier."

The most recent case? I'm reading the ICT Toronto report that was issued last week (and prepared by a professional communications firm) and just read that Toronto "is a premiere location for ICT R&D and commercialization."

A quick scan of news releases on my computer found these other recent examples:
"MADD Canada, the country's premiere anti-impaired driving organization."
IMS, March 23, 2006
"enhance our position as a premiere provider of integrated flight operations solutions to airlines"
Navtech, March 17, 2006

", a premiere online fan site for the popular TV program"
LiveHive, February 27, 2006

"Waterloo Region is becoming one of North America's premiere technology centres."
Communitech, January 6, 2006

"Navtech's strategic goal of becoming a premiere supplier of integrated flight operations solutions to airlines around the world"
Navtech, November 22, 2005

"tour one of Ontario's premiere trades and technology facilities"
TechAlliance, October 26, 2005

"We are extremely pleased that we have secured Class B certification with NOVA, one of the premiere processors in the U.S."
RDM, September 1, 2005
There have been MANY more examples.

Premiere refers to the first showing of something -- usually a play, movie, or TV show. Everything else is "premier," which is usually defined as "first in importance" and can often be replaced in a sentence by "leading." It really isn't difficult.

This has gone far beyond a simple typo. I thought it was pretty funny for a while. Now it's just getting embarrassing.

UPDATE: I see Mark Evans typed "reigns" for "reins" today (which may be fixed by now), so I'm not alone on that one! Maybe my mother-in-law can read his blog.

Wednesday, April 12, 2006

No Canadian VC money for startups?

Mark Evans today in his blog says there's little high tech venture capital in Canada and "no money for start-ups," since overly-cautious Canadian VCs insist on investing in "companies with customers, revenue and a track record."

You hear that a lot, but from a Waterloo perspective it's hard to make the case that Canadian VCs have set the bar too high.

Sure, we could always use more funding options, and customers are unquestionably a huge milestone -- one that makes it easier for any start-up to attract funding.

But there's hundreds of millions of dollars sitting out there ready to be invested by VCs eager to find fundable deals.

Just in Waterloo alone, Tech Capital Partners manages nearly $100 million in capital and has over $40 million waiting to find a good home. Very few of its portfolio companies -- no more than two, I think -- had customers or revenue when the deals were made. Most communities don't have an equivalent of Tech Capital, so the Waterloo experience probably isn't typical.

But it's not just Waterloo. GrowthWorks has an entire fund -- albeit a small one -- devoted to companies that are typically pre-revenue. BDC and EdgeStone both have Waterloo-based companies in their portfolios that were funded before customers existed.

In fact, I can't think of a single start-up company in Waterloo Region over the last few years that should have been VC-funded but wasn't able to find a Canadian VC to take the deal. The only start-up companies I can recall that needed to go outside the country to get funding are ones that I wouldn't have touched with a bargepole while wearing rubber gloves. There may be an exception I'm forgetting, but I doubt there's more than one.

I wouldn't want to make it sound like it's easy to get VC money. Of course it's not. Few companies will clear that bar -- and that's equally true in the VC-rich U.S.

I said a couple of weeks ago that if people want to complain about the scarcity of VC money, they should be able to identify companies they think should be funded but haven't been able to get a deal. Maybe in Toronto and Ottawa there are lengthy lists of such companies (if there are, maybe they should just move here). But I'm skeptical about that. And in Waterloo, I'd be hard pressed to come up with one.

Now, angel-level funding, on the other hand ... is a topic that will have to wait for another time.

Can Windsor use a non-snub to energize a focus on innovation?

OMG, did you hear? There's a new $100 million "Innovation SuperCorridor" initiative from the province introduced in the budget...