Out of the 20 winners of the "CIX Top 20" competition at the recent Toronto conference (www.canadianinnovationexchange.com) there was only one, bitHeads - not exactly a young start-up, out of Ottawa this year. Most of the presenting companies were from Toronto, Waterloo or Montreal area. What's wrong with us, guys?
Here are some of my observations and impressions from this event which covered most of high-tech, focusing on ICT and Digital Media, but without clean-tech.
· There is still an acute sense of a shortage of capital pools for high tech investments in the country. 2010 data shows ~ $1.1B VC capital deployed in Canada versus ~$6B spent in the year 2000. In comparison, this year, US-based VCs will invest ~ $26B.
· There is a growing pressure to push the governments to institute policy-based incentives, such as angel investment tax-credit and even a corporate VC tax credit, to help address the shortage of risk capital.
· The times, they are a-changing… It is much easier now than ever to get a start-up going. 10 years ago it used to be $0.5M to start plus $5M and 2 years to see if you got anything. Now it is $50K to start plus $0.5M and 6 month to sell for $3-5M.
· For high-tech veterans like myself, there is a remarkable shift in the composition of start-ups from 10 years ago and even from 2008 when I pitched my last time - winning the "CIX Top 20" for KABEN. Practically all the companies this year are from the internet and mobile apps space. I have not spotted a single hardware-oriented start-up. As an example of what folks are doing these days, here a sample of some of companies which caught my attention:
Wave Accounting - online, banking integrated accounting software for SMBs (<9 staff)
TribeHR - HR software for SMBs
Recoset - mining data for ads
Vanilla Forums - weeding out "bad" comments and users from online forums
Massive Damage - location-based mobile gaming
Achievers - rewarding employees web-based software
NexJ - CRM software
Polar Mobile - publish to mobile media apps
Quick Mobile - mobile event apps for smartphones
Shoplogix - real time manufacturing data software
Going back to the lack of Ottawa-based start-ups presence, perhaps the reason in the above context, is that the former strength in telecom and hardware, due to the presence of Nortel, Newbridge, etc is no longer in vogue while at the same time Ottawa high-tech has not yet developed software, mobile and internet critical mass to spin out new-style innovative start-ups.
