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Venture Capital in Canada: Lessons for Building (or Restoring) National Wealth

Venture Capital in Canada: Lessons for Building (or Restoring) National Wealth Canadian policymakers and regulators have been praised for avoiding many of the policy blunders that, when combined with excessive risk‐taking by the banks, nearly brought down the U.S. financial sector. But, as the global economy begins to recover, policymakers everywhere need to find ways to stimulate the creation of new ventures. On that score, Canada's record is not encouraging. The returns on Canadian venture capital investment have been dismally low, particularly in its government‐run funds. In a recent survey, 40% of U.S. venture capital partners identified Canada as having the least favorable treatment of investors of any country they had dealings with. And perhaps most troubling, half of the Canadian corporate executives responding to another survey cited “inability to retain talent” as the biggest threat to their firms. The authors begin by suggesting that these findings are all related. Without investors and the know‐how and networks they bring with them, a country's ability to attract, develop, and retain top talent—business and managerial talent in particular—is significantly reduced. And as the authors go on to argue, the key to building a successful venture capital industry is to match talent with capital in such a way that all three parties—talent, capital providers, and the “matchmakers” who bring together talent and capital—are rewarded for superior performance and held accountable for failure. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Applied Corporate Finance Wiley

Venture Capital in Canada: Lessons for Building (or Restoring) National Wealth

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References (33)

Publisher
Wiley
Copyright
Copyright © 2010 Morgan Stanley
ISSN
1078-1196
eISSN
1745-6622
DOI
10.1111/j.1745-6622.2010.00264.x
Publisher site
See Article on Publisher Site

Abstract

Canadian policymakers and regulators have been praised for avoiding many of the policy blunders that, when combined with excessive risk‐taking by the banks, nearly brought down the U.S. financial sector. But, as the global economy begins to recover, policymakers everywhere need to find ways to stimulate the creation of new ventures. On that score, Canada's record is not encouraging. The returns on Canadian venture capital investment have been dismally low, particularly in its government‐run funds. In a recent survey, 40% of U.S. venture capital partners identified Canada as having the least favorable treatment of investors of any country they had dealings with. And perhaps most troubling, half of the Canadian corporate executives responding to another survey cited “inability to retain talent” as the biggest threat to their firms. The authors begin by suggesting that these findings are all related. Without investors and the know‐how and networks they bring with them, a country's ability to attract, develop, and retain top talent—business and managerial talent in particular—is significantly reduced. And as the authors go on to argue, the key to building a successful venture capital industry is to match talent with capital in such a way that all three parties—talent, capital providers, and the “matchmakers” who bring together talent and capital—are rewarded for superior performance and held accountable for failure.

Journal

Journal of Applied Corporate FinanceWiley

Published: Jan 1, 2010

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