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Ottawa Tech Sector is Live and Kicking!

May 19, 2008

The following is a guest post by good friend Harley Finkelstein in response to an article from reportonbusiness.com entitled: A tech saviour’s manifesto:

Harley Finkelstein

Mr. Macdonald,

I recently read your manifesto article in the globe and mail.

To be honest, and as a 24 year old Law/MBA grad student and concurrently the founder of a tech venture firm, I think you may be out of touch with what’s really going on in the Canadian tech scene.

Silicon Valley wasn’t built because of companies like Cognos, it achieved its real success because of garage startups like Google and Paypal (which you mentioned in the article).

Cognos and ATI are NOT the current Canadian tech scene, the real tech scene are these amazing young startups that will eventually become the next RIMs and Skypes, and many of these guys have yet to even bring their ideas to market (which is when I prefer to invest in them).

The main reason I moved to Ottawa at 21 years old was to take advantage of the amazing grass roots entrepreneurial climate in Ottawa’s tech community.

And thus far it seems the Canadian startup tech scene is alive and well, albeit most VCs wouldn’t know it.

With a fund that is probably smaller than your daily payroll, my shop, Innoventure Capital, invests in local talent and their startups and in the last 3 years we have been inundated with amazing opportunities. Young tech wizards cringe at the idea of pitching an idea to a grey haired VC committee, and when we meet with them they seem relieved to see we are young, ambitious, and just like them. There is a real dichotomy and gap between the next great tech startup and the Canadian VC community, yet WE are getting more pitches and great ideas than we can even read.

I recently had the opportunity to meet some of the gents from Sequoia in California, and what immediately struck me was that they were the antithesis of the VCs we work with in Canada (Bay street and in Kanata).

The real problem in Canada is that conventional VC is a dinosaur, yet the Canadian shops are still cherry picking for homeruns and mandating overly restrictive covenants (which in itself is a dinosaur of a contractual concept).

Innoventure’s key to success has been investing small (5-10k) amounts of funding into strong people, and NOT strong businesses. We let the entrepreneurs focus on what they know best, and often we even pay their living expenses while they are doing so, while my partner and I focus on finding ways to make their ideas profitable. Most of the guys we invest in would never consider putting on a suit and heading into First Canadian Place (and neither did Jobs, Gates or Dell in the 80s), but once we show them that together we can make money most of these entrepreneurs always come back for their 2.0 idea.

The solution in Canada may be that the VCs need to recalibrate, and if we are so concerned with achieving success like in S.Valley than why aren’t we acting more like them.

I can show you 3 to 5 online businesses based in ottawa alone who are right now in need of financing, and whose companies have the potential to be market leaders. Innoventure prides itself not on our ability to fund even the smallest businesses, but rather on the mentorship and guidance that comes along with being our partners, and we look for these types of people.

I would love to continue this conversation if you’d like.

I mean no disrespect from my email, and in fact am somewhat in awe of you and your company’s success…I hope to one day enjoy even half of your good fortune.

Thank you in advance, and I hope you will respond.

Best regards,

Harley

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One comment

  1. Great letter Harley.



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