Last week I wrote a column citing all that had happened in the East Coast Startup Community in first half of the year. It dealt with a broad range of things that happened on several fronts, from new events, to co-working spaces, to funding, to organizations.
As we go forward, I think the community needs slower work on a narrower front. It simply defies logic that there will continue to be so many initiatives launched at the pace we’ve seen recently. If there are, they’ll likely be less effective than the recent announcements.
In the next six months, the one thing I’d like to see is an initiative that was mooted in the 4Front Atlantic action plan. It said: “We recommend a private‐sector led organization to develop an innovation ecosystem of high‐growth companies across the region.”
There are people talking about this and I have no doubt it will be a reality before too long. The 4Front plan said it should create “stronger linkages to external networks such as Silicon Valley, angel investors, Canadian venture capital funds, universities, and other players in the system.”
I’d like to weigh in and support all these efforts, but I’d like to ask what it means by “other players” and how the organizers define “the system”.
My thinking is the startup community is at the point in its development at which it must be less insular and think of itself more as part of the broader business community – both within Atlantic Canada and the big, wide world. As I’ve alluded to before, New Brunswick should probably serve as the model because the tech community and the business community are far more integrated than in other provinces.
This change in attitude is needed for four main reasons.
- Links to Industry. The biggest shortfall in creating a startup community in Atlantic Canada is the lack of Big Business. Large companies are frequently partners and early adopters for startups. If you walk into the Communitech accelerator in Kitchener, Ont., you can’t help but notice the corporations that have a presence in the space, such as Google, various banks and Canadian Tire. Atlantic Canada suffers from a puny corporate sector, so the startup association should work doubly hard to reach out to the companies that are here.
- Big Local Tech Companies. In the next five years (probably faster that many of us think) there are going to be handful of companies from the tech or biotech space that become major employers and exporters. These are companies that we now think of as startups and should remain members of the startup community. But they should also be part of the broader business community and the association should help facilitate that transfer.
- Government Programs. The startup community has been more vocal lately on tech education and a proposal for a regional equity tax credit. Both are hard sells. Entrepreneurs would do well to sell chambers of commerce and other groups on these programs and ask them to support the lobbying effort.
- Access to Capital. We’re trying to build big companies but we think of venture capital as the top of the food chain in providing capital. It’s not. Canadian companies raised $1.5 billion via VC last year, but they raised $1.8 billion through initial public offerings in Toronto. And that was in a relatively weak IPO market. The region’s entrepreneurs have to start thinking beyond VCs and make some connections with small-cap fund managers investing in the public markets.
The 4Front group took the right approach by writing about high-growth companies rather than startups. Already there are companies in the community like Unique Solutions and Verafin that have outgrown the startup label. And the new association should accommodate these companies and help the tech/biotech/cleantech companies step into the broader business community.
