Showing posts from 2007

Ontario government gives LSIFs one more year

In its 2007 Economic Outlook and Fiscal Review, the Ontario government announced that it will extend the LSIF tax credit one more year to 2011. The current 15% credit will now continue until 2009 before the credit is reduced 5% each year, vanishing entirely for the 2012 tax year.

The government is also boosting to $7,500 the amount that you can invest in an LSIF and qualify for the tax credit, up from the current $5,000. It says this "will provide an estimated $38 million in additional financial support to the industry over three years."

That may be an optimistic figure, but it's a bit of a reprieve for the LSIF industry. They must see that as a good sign since hardly anyone took up their cause during the election, and Roger Martin's Institute for Competitiveness and Prosperity in its recent annual report [PDF] implored the government not to back down on the phase-out of the tax credit (and even to speed it up).

Government delays onerous IP legislation ... for now

Responding to a wave of protest from across the country, the federal government has decided not to introduce its U.S.-DMCA-styled legislation -- at least not today.

The legislation was a product of some intense lobbying, particularly from the U.S. This would be the country that gave us NTP vs RIM and which recently fined a woman US$220,000 for having 24 songs in a shared folder on her computer. Yes, they're now lecturing Canada on our IP laws, trying to keep the 21st century at bay for as long as possible under the guise of being anti-theft. This lobby even managed to get the Ontario Chamber of Commerce to endorse its position.

Fortunately, the pro-legislation lobby has been overwhelmed over the last few days by critics, which include many high-profile members of Canada's high-tech community. It's a story that's been gaining momentum in the media as the outrage has built throughout the country.

It's way too early to think of this as a victory -- the legislation could …

Hamilton chamber gets it right

Kudos to the Hamilton Chamber of Commerce for doing what the Greater K-W Chamber should have done but didn't. Michael Geist reports that the Hamilton Chamber has dissociated itself from the Ontario Chamber of Commerce's call for far-reaching and onerous new intellectual property legislation -- a call that was largely based on dubious claims and fabricated data.

Unfortunately, it's looking like the federal government is about to introduce U.S.-DMCA-style legislation to Canada. Like the PR pros they are, lobbyists for these additional laws like to refer to "piracy" and "counterfeiting" -- who would defend activities with those labels? (Johnny Depp fans, maybe.) For people who only read headlines and lead paragraphs, intellectual property protection sounds like something to support. It's only when you go deeper that you see the oppressive measures some lobbyists are championing. Michael Geist's blog is a great resource if you want to dig deeper, and…

Chamber's counterfeiting gaffe

It was disappointing to see the Greater Kitchener Waterloo Chamber of Commerce's misguided endorsement of the Ontario Chamber of Commerce "Protection of Intellectual Property" [PDF] report, issued this morning.

Protection of IP might sound like something non-contentious, but this report is filled with misrepresentation and fabrication and makes the OCC look like a stooge for the copyright lobby.

Chambers of commerce usually like to make themselves out to be champions of smaller government, but the OCC is lobbying for significant increases in government power and bureaucracy, along with additional layers of legislation -- all in response to a problem it defines with made-up statistics.

As Michael Geist writes, "With today's report, the Ontario Chamber of Commerce has done little more than embarrass itself and its members."

Skapinker on venture capital in Ontario

Brightspark's Mark Skapinker discusses Ontario's shrinking VC industry and plans future posts on "the strengths and weakness of the Canadian market and ways that we can fix it by adopting some new models."

I'm not sure about his claim that Silicon Valley is the only healthy VC market in the U.S. It's clearly the top dog, but Massachusetts and Texas seem to be doing pretty well. Money usually follows results, and according to CVCA data, of the states with 20 or more VC funds, 75% of them outperform Canada for returns. UK, Germany, and France are also shown significantly outperforming Canada. But, since "go get better results" (and do it retroactively) isn't a very helpful piece of advice for the Canadian VC industry, looking at new approaches is likely the best route to take. They can complement the traditional VC model, which isn't going to vanish but might have a different look a couple of years down the road.

Interesting comment on MaRS: &qu…

Waterloo more angelic than Toronto?

Mark Evans finds it notable that a Toronto company closed an angel round of funding. That's interesting because, in the Waterloo area, we've seen a wave of angel deals over the last couple of years. Most of them have involved local business people, although it looks like another one might be closing soon with Toronto's Maple Leaf Angels.

It could be another example of the differences between the Waterloo and Toronto tech environments, although I wouldn't be surprised to learn that there's a lot more angel activity going on in Toronto than what we hear about. Certainly, most angel deals here never get announced.

But Mexicans do thumb BlackBerrys

Andrea Mandel-Campbell, author of Why Mexicans Don't Drink Molson, gave the first talk of Laurier's Innovation & Entrepreneurship speaker series tonight at the Schlegel Centre for Entrepreneurship.

Mandel-Campbell paints a depressing picture of Canadian business from a global perspective, pointing out that Canada has never produced one of the world's top 100 brands -- something that Switzerland has done a few times, even with population about three-fifths of Ontario's. We're not home to any "globally-relevant" multinational companies, generally show little entrepreneurial spirit, and are much better at coming up with ideas than in making money off them.

There's no disputing that Canada has a pretty sad track record. Run through the list of Canada's largest corporations and there are very few which have products well-known outside of this country. That's certainly not a new observation, and Mandel-Campbell seemed to be more interested in usin…

A look back at Entrepreneur Week

The fourth annual Entrepreneur Week wrapped up Friday with a talk by Jim Estill. I missed Doug Hall, the guy from the first season of American Inventor, but attended all the other "Startup Camp" sessions, as well as BarCampWaterloo. Larry Borsato provided some terrific summaries in his blog entries, and there will be video (edited) of all the presentations available online soon, so I won't review the content.

There were early-stage entrepreneurs from a wide age range -- which I was glad to see, since it's been a peeve of mine when entrepreneurs are segregated by age. You can start a company at any age, and there were entrepreneurs born in the 1950s, 60s, 70s, and 80s all sitting together (maybe some older than that, and it won't be long until the 1990s are represented). The speakers also covered the same age range, from their 20s to their 50s.

Almost all of the sessions addressed a key topic for startups. There were sessions on life as an entrepreneur (that's w…

Still looking for an alternative for LSIFs

Continuing on LSIFs ...

Some background: LSIFs operate like VC funds except that they raise money from individuals (or "retail investors") instead of institutions. They have been a popular option for Ontarians at RRSP time, since -- in addition to the usual benefits of putting money into an RRSP -- LSIFs have also offered a 15% federal tax credit and a 15% provincial tax credit. They began in Quebec and federal tax credits were introduced in 1987. Four years later, Ontario tax credits were added under Bob Rae's government.

The funds ended up coming under attack from the left and the right, from sources as diverse as Buzz Hargrove and the C.D. Howe Institute. Within the investment community, the most common complaints were that LSIFs delivered poor returns while spending a high percentage of the invested funds on management fees.

Dalton McGuinty's government declared a moratorium on LSIFs in 2004, saying it would review the program to see if LSIFs were still "an app…

LSIF critic spins tales for Fraser, Howe instututes

The Fraser Institute just published a report on labour-sposored investment funds (LSIFs) that is almost identical to a report published earlier this year by the C.D. Howe Institute. And with good reason: both papers have the same lead author -- Douglas Cumming.

Cumming doesn't think much of LSIFs and thinks governments in Canada at provincial and federal levels should discontinue the tax credits provided to LSIF investors. Ontario has already announced that it is phasing out the LSIF tax credit.

There are legitimate criticisms that can be made of LSIFs, but for years Cumming has been augmenting these bona fide critiques with ideologically-driven spin on what is often dubious data to begin with.

Reports from Howe and Fraser are usually so driven by ideology that you rarely have to read past the title to know what they're going to say. That's particularly true for these reports, since Cumming has been distributing different versions of the same report for the last seven years.…

How much funding for Canadian startups?

How much money have investors poured into Canadian startup companies so far in 2007? You may think you've read that number recently, but you haven't. The actual answer is "nobody knows." Of course, no one likes that response, so they go count the things they can count and then pretend they know the answer. It's like the old joke about the guy looking for his car keys under the street light -- "this isn't where I lost them, but the light's so much better here."

Whenever you read about the aggregate level of venture capital investment, the main source of that information is news releases and other voluntary disclosures, either from the company receiving the funds or their investors. There are also securities commission filings for some investments -- some funds have to put their financial information on SEDAR and, in Ontario, many deals will will be listed in the OSC Bulletin. But most investors are not required to make any public disclosure. They …

Going gold at 65

Bob Lefsetz suggests that Paul McCartney should have given away his recent album, Memory Almost Full, because it's only going to sell about 550,000 copies in the U.S. There could be some good arguments to support that view, but Lefsetz constructs a bizarre case for giving songs away. He says McCartney fans found the price of the album too high and that "everybody" would listen to it if it was free. The knowledge that "all [his] fans" would be listening would have motivated McCartney to put out a great record.

Okay, even if it was free, there's no reason to think people would be tripping over themselves to download the new album. Neil Young gave away all of Living With War. What percentage of people who consider themselves to be Neil Young fans downloaded those songs? (And Living With War turned out to be a pretty good album.) Memory Almost Full is available from eMusic for $3.50-$4.30, depending on your subscription level. That's less than $1 in 1973 dol…

Maybe it really is Web 2.0

Apparently, it was more than 14 months since I posted anything on my blog. Between writing a bunch of proposals, position papers, and funding pitches last year, as well as having the Waterloo Tech Digest and my column in Rex Magazine, the last thing I wanted to do in my spare time was write anything. Okay, not really the last thing, but it never came close to the top of the list (although I did seem to find time for a few thousand Wikipedia edits before moving on).

I didn't even read any blogs in that time, at least not any personal ones. I kept track of updates to a few websites through their RSS feeds, but that was about it. I can see that RSS has come a long way over the last year. Not the technology, but its use. When I posted through my blog a backlog of 10 Waterloo Tech Digest issues from the past year, the traffic to my website jumped nearly 500% that day. Two days later, it was still up about 300%. The extra traffic was all generated because the content of the Tech Digest i…