Venture capital is at a crossroads, a leading industry figure says, and Canada is well-positioned to reap the benefits.
David Rubenstein, co-founder and managing director of Carlyle Group, said yesterday that the next boom for venture capital investments may well be in the "clean tech" sector, with environmental companies attracting major investments from venture capital entrepreneurs.
"There's no doubt that the world is yearning for more technological innovations that will make our lives better, clean tech being a very good example," Mr. Rubenstein said in an interview in Quebec City, where he is attending the North American Venture Capital Summit.
"You will see enormous amounts of money pouring into this area.
Most of the investments will probably not yield a good rate of return but there will be a Google or a Microsoft equivalent in that area. And we don't know today what it will be."
After some difficult years, Canada is poised to attract investments from U.S. venture capital groups that now view their northern neighbour as a much more attractive place to invest, he said.
"United States venture capital companies are spending more time looking at companies in Canada," Mr. Rubenstein said. "The Canadian economy is booming, it has a strong currency, Canada has enormous energy self-sufficiency... and in many ways people are beginning to look north."
Mr. Rubenstein said venture capital is being redefined. Many venture capitalists are looking at more developed companies, later-stage companies and buying up control, if not outright ownership. The trend is toward controlling companies rather than nurturing them from startups to mature businesses.
"Venture capital recognizes that given the amount of capital to be deployed, they need to find more than just startups," Mr. Rubenstein noted. He added that this could lead to major venture capital investors such as Carlyle Group taking a closer look at Canadian companies, which have demonstrated the technological know-how to innovate and grow such as Research In Motion, which developed the wireless handheld Blackberry.
"We haven't done it yet, probably to our detriment because a lot of things have come along (in Canada) that we probably wish we had invested in," he said.