Skip to main content
The Globe and Mail
Get full access to globeandmail.com
Support quality journalism
Just $1.99 per week for the first 24weeks
Just $1.99 per week for the first 24weeks
The Globe and Mail
Support quality journalism
Get full access to globeandmail.com
Globe and Mail website displayed on various devices
Just$1.99
per week
for the first 24weeks

var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){console.log("scroll");var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))}pencilInit(".js-sub-pencil",!1);

Getty Images/iStockphoto

When we get around to writing the history of Canada's next generation of technology companies, the tale just might begin with a gathering this summer on the deck above a Muskoka boathouse owned by Magna International CEO Don Walker.

The session was called the "Dock Unconference" by its organizers at San Francisco-based C100, a networking group founded by Canadian-born executives who now live and work in Silicon Valley. The day saw 30 top Canadian tech executives and colleagues from California head to Ontario's cottage country to chat with the Magna boss and CEOs from a handful of leading companies, including George Weston, Royal Bank and Manulife.

Around lunch, a police boat pulled up at the end of Mr. Walker's dock, signalling the arrival of Prime Minister Justin Trudeau. He spent the afternoon in discussions on innovation, artificial intelligence and what's needed to foster the next generation of cutting-edge tech companies.

Story continues below advertisement

It's that final point – how to keep Canada's technology leaders and their companies in Canada – that continues to reverberate in government and finance circles. Domestic business leaders and politicians have watched too many Canadian tech startups blossom, then get snapped up by foreign buyers. There's a general recognition in Ottawa and on Bay Street that policy makers and financiers need to do more to nurture promising Canadian growth companies into global tech champions.

However, there's a hot debate over the role banks, insurers and pension funds will play in this nurturing process.

This summer, at least three financial initiatives are making the rounds, all aimed at providing patient capital for small to medium-sized businesses in an attempt to ensure they remain independent and Canadian as the companies expand.

As detailed Monday in The Globe and Mail, one concept is to create a bank-backed private sector fund, modelled on Britain's five-year-old, £2.5-billion ($4.3-billion) Business Growth Fund. The idea is to create a $1-billion-plus Canadian fund that invests in small business and backs up that capital with skilled advisers, business development and networking events.

The approach has its advocates, with the Bank of Canada, CIBC and private equity CEOs pushing for a local version of the British fund. Critics in the banking sector argue that the fund would be a poor use of their capital, and that money alone doesn't solve the problem of helping small businesses expand into global markets.

Another option is extending flow-through share financings to virtually any small business. Junior mining and resource companies have successfully used these equity offerings for decades to fund exploration; investors embrace these offerings because the money they commit is deductible from income. Politically, expanding the flow-through share concept would be difficult to swallow, as creating new tax deductions for Canadians in top tax brackets runs against the Liberal Party's election platform.

Finally, there's talk of increasing the capital available to Canadian startups by mandating that a certain percentage of pension fund assets be earmarked for investment in small to medium-sized businesses. In theory, similar thresholds could be imposed on all institutional investors: Insurers and mutual funds could be asked to carve out a certain portion of their portfolio for venture capital. The pension fund crowd would fight such a move, arguing that any arbitrary restriction on where they invest will hurt performance, and the priority should be seeking out the best possible risk-adjusted returns for retirees.

Story continues below advertisement

There's a school of thought that suggests the challenges facing small Canadian companies with big growth plans is one of corporate culture, not finance. Many startup companies run into problems building revenues and graduating from small contracts with a few clients to large relationships with several major corporations. Think about it: Big companies, Canadian and foreign, are trying to increase efficiency by doing more business with fewer suppliers. That's not an approach that helps unproven companies.

On a Muskoka dock this summer, there was no clear consensus on the best way forward. Mr. Trudeau didn't make any commitments. Bankers and tech executives say delivering on the Liberal promise of an innovation economy is one of the two or three major files on Finance Minister Bill Morneau's desk. If there's a new approach in the works to funding small business – a massive venture capital fund, flow-through shares or government mandates on pension investing – the Finance Minister will set the agenda.

But the C100 meeting in cottage country between Canada's top tech talent, Silicon Valley expats and the heads of major financial institutions, an auto parts maker and a grocer shows there is a recognition of the challenges that come with building great global companies, and a willingness to work together on answers.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies