As venture capital continues to shrink in Canada, a new kind of startup backed by a new kind of money is beginning to emerge.
Things have been better for venture capital in Canada. The industry has been contracting over the past five years, a trend that accelerated during last year’s financial crisis as institutional investors started looking for less risky investments. A recent study by the Canadian Venture Capital Association showed VC investment levels at their lowest in 13 years, with Ontario’s numbers dropping off more steeply than other parts of the country. The CVCA says that the industry is “in crisis” and has been calling on the Canadian Government to create a support program to help keep it afloat.
How are investors responding to this “crisis” and what does it mean for high growth technology startups in Toronto? As it turns out, the landscape is changing on both sides of the equation and what is emerging is a new kind of startup backed by a new kind of money.
15 years ago, at the height of the technology bubble, it wasn’t unusual for a startup to raise between $10 and $15 million in order to build and release the first version of a product. Today, startups are getting products to the market on a lot less. “Web-based infrastructure means technology costs are ten times less than they were. What cost us $500,000 in 1999 in the form of back office set-up costs, software development, and licensing can cost less than $10,000 now,” says David Ceolin, Managing Partner at Innovation Grade Capital, an active angel investor and entrepreneur who founded a successful startup in the mid-1990s.
To read the full, original article click on this link: Leaner, Meaner Innovation - April Dunford — THE MARK
Author: April
Dunford
