CVCA-Canada's venture sector urged to build on success

Fri May 27, 2011 12:21pm EDT

* Big venture wins help sector to gain momentum

* Need to build on "shoulders of giants"

* Urged to embrace incentives like stock options

By Pav Jordan

VANCOUVER, May 27 (Reuters) - Canada's venture capital sector needs to build on major new success stories and embrace an incentive culture that includes stock options if it want to become a vibrant industry, according to a partner at one of Silicon Valley's most storied venture firms.

"Entrepreneurship is like art or science, where you have to build on the shoulders of giants," said Bing Gordon, who heads investing in social Web technology at Kleiner Perkins Caufield & Byers, the Silicon Valley firm that has helped launch companies like Google.

"You need a culture and you need a couple of big wins that everybody knows about," he told Reuters on the sidelines of the Canadian Venture Capital and Private Equity Association (CVCA) annual conference in Vancouver.

More than 600 investors are attending the conference this year, including about 100 from the United States, Europe, China and Brazil, drawn to Canada's economic stability and a private equity scene that is having successes not seen since before the global economic crisis.

Companies like Google Inc (GOOG.O) and Microsoft (MSFT.O) have been active acquirers in Canada over the past year and the technology giants attended the CVCA conference in Vancouver this week for the first time in its 23-year history.

"We believe there are as many as 600 startups in a 50 mile radius of our office, many of which we are in constant conversation with," said Steve Woods, director of engineering at Google Canada's research and development offices in Kitchener-Waterloo, the center of Ontario's tech sector and home to companies such as Research In Motion RIM.TO.

"I think it is a very exciting time, but I'd love to see people do more deals in Canada, and we're starting to look for opportunities to do that."

But even as private equity thrives, Canadian venture capital continues to stumble along, despite a legacy that gave birth to companies like RIM, the maker of the ubiquitous BlackBerry smartphone.

SUCCESS STORIES

For Gordon, however, Canada needs more success stories to revive the industry, adding that the story of RIM's remarkable launch is fading faster into memory than the Toronto Maple Leafs' last National Hockey League championship decades ago.

He says venture capital could take a page from winning sports franchises.

"To some degree it's a little like winning a Stanley Cup. Detroit, for the last 20 years, just takes for granted we are going to be in the hunt," said Gordon, a consummate sports fan.

He should know about success stories, having been part of many of the technologies driving social networking today.

The so-called sFund he leads at Kleiner is betting on social media, with investments including Amazon, Facebook, Zynga, Comcast, Liberty Media and Allen & Co and has made 14 investments to date.

For Gordon, a key to driving entrepreneurial spirit in Canada must be the birth of a culture of stock options, so that companies can afford to grow and attract talent.

"In a place like the Silicon Valley ... there's enough people who've met others who hold stock options that kids in college and people in their career start to think about it as a possibility -- but you kind of need a critical mass," he said.

"Not valuing options is like not valuing royalties in the movie or TV business. If you don't value that upside, you're pretty misaligned." (Reporting by Pav Jordan; editing by Rob Wilson)

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Comments (1)
privateplace wrote:
Agreed. Canadian innovation, however, is top notch and underrated. One day Canadian entrepreneurs may prove everyone wrong.
Paul Azous
www.ppm.net

May 29, 2011 12:56pm EDT  --  Report as abuse
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