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opinion

Khanjan Desai is the founder of Neverfrost, a nanotechnology startup based in Waterloo, Ont.

On May 9, The Globe and Mail published Canadians can innovate, but we're not equipped to win, by former Research In Motion co-CEO Jim Balsillie. This is part of a series responding to and expanding on that essay.

Founding a startup is incredibly hard, and if there is anything you can leverage to increase your odds of success, do it.

This was the advice given to us during our time at Y Combinator, the U.S. seed fund, last summer when we were trying to decide whether to keep Neverfrost in Silicon Valley or return to Waterloo, Ont. We eventually decided to come back to Canada, but not for the reasons you might imagine.

It doesn't frost in California. If we were going to commercialize an anti-frost innovation, we would have to be in a place where we could run field tests locally and be able to regularly interact with our customers to learn from their experiences. It's a practical reason. But if Silicon Valley had the same frigid conditions as Canada, we would have stayed, without a doubt.

Silicon Valley is superior to any startup ecosystem in Canada. That's a fact. Access to top-tier capital, world-class advisers and internationally vetted talent (especially for software startups) is second to none. Gaining access to such resources is a proven way of increasing the odds of success, and Canada is lagging.

When we made the decision to return, we had to accept the advantages and disadvantages of being in Canada, but it didn't take long to notice the differences: The investor landscape is conservative, top talent prefer to emigrate to the larger pond down south, many entrepreneurs and investors are dreaming too small and government grants are great for slow death, but not rapid success.

However, we also saw a glimmer of hope in the ecosystem. We met angel investors who wouldn't quibble over terms and instead focused on the vision and metrics of a startup. We met venture capitalists who were pushing founders to dream of creating multibillion-dollar companies, not short-term exit plans. We met entrepreneurs bold enough to persuade talented individuals to move their lives from Silicon Valley to join startups in Waterloo. They are an exciting subsegment of our startup ecosystem that are leading by example.

Supporting startups through this change are forward-thinking programs such as the Creative Destruction Lab at the University of Toronto and Velocity at the University of Waterloo. Velocity offers entrepreneurs an environment in which they can experiment with their startup in the early stages. For startups further along, the Creative Destruction Lab offers the strategic and tactical advice necessary to build a rapidly scalable business – this advice comes from extremely successful entrepreneurs who've been there and done it themselves.

The bad news? This small portion of the ecosystem alone isn't going to solve the problem. We all (founders, investors, advisers, government granting bodies and support programs) need to think bigger. We also need to give up on trying to chase down the software successes of Silicon Valley. Just give up – it's not going happen. This is not to discredit software opportunities; there are going to be many new innovations and successes there. But the end goal should be about making Canada the centre of gravity for another ecosystem.

In the words of Wayne Gretzky, we need to skate to where the puck is going to be, not where it has been.

The hardware opportunity has already become mainstream, and other ecosystems have already pounced on it, but Canada isn't far behind. We are creating companies to solve complex problems in the health-medical and wearable-technology spaces, and applying complex nanotechnologies to revolutionize conventional markets.

Nanotechnology engineering graduates from the University of Waterloo are now starting companies at the same pace as any other program at the university, and a venture fund for innovations exclusively in the quantum domain was just created in Waterloo. Wearable-technology and machine-learning startups are booming, with the University of Toronto alumni leading the charge, and we're just getting started. The Creative Destruction Lab is launching a separate stream to support machine-learning startups and Velocity recently launched the Velocity Foundry program to house startups that build physical products.

If Canada is going to become the hotbed for wearable technology or create a Quantum Valley in the Waterloo region, we need to commit to it. It's much better to be extremely good at one thing than be mediocre at many things. We need founders who will think about building world-changing companies all the way to an initial public offering, not bank on small exits. We need investors who will stop quibbling over minute terms, but will instead fund deep-science ideas in addition to Internet and mobile startups. They also need to invest in bold founders earlier than they currently do. And we need government granting bodies to focus their funding on bold ideas that can be rapidly commercialized, not tax credits that lead to a slow death.

Putting Canada on the map as the hotbed for deep-science startups will also help us reduce the brain drain that currently plagues our country. To prevent top-tier talent from fleeing to greener pastures, we need to build world-leading companies here at home. Retaining that talent will, in turn, lead to the creation of more world-changing opportunities here, as those employees go on to found other startups.

Isn't it about time we developed a new identity for Canada besides the land of hockey, maple syrup and poutine?