NAO Present to House of Commons Standing Committee on Industry Science and Technology

On May 15, 2008, NAO Chairman Andrew Wilkes and NAO President W. Daniel Mothersill were consulted to make a presentation to the House of Commons Standing Committee on Industry, Science and Technology.

Andrew and Dan spoke of how Angel investments in Canada facilitate the transformation of R&D into successful businesses that public institutions, venture capital funds, public investors, and banks can then finance. They commented on ways to address the $5-billion annual funding gap in financing early-stage companies estimated by Sustainable Development Technology Canada (SDTC).

Some great information was exchanged during this meeting. See below for some great comments from the session (for full evidence, please click here):

“Mr. Johnston… you said that you actually have to start just working on the people, changing their approach to life, so that their goal is not to finish university and get a job, their goal is to finish university and create a thousand jobs.”

“Canada lacks a sufficient number of a particular breed of entrepreneur–serial entrepreneurs–with enough experience and management expertise to take small companies global.”

“MBA programs typically teach people how to work and they play an important role in teaching people how to work in Fortune 1000 companies. Great. That does nothing in terms of how to manage entrepreneurial companies.”

“Part of the problem is that we criticize our entrepreneurs when they fail. In the United States, failure is a good thing. They’ve gone out and tried to build a business and they move on to the next business.”

“In Canada, we oblige our new technology firms–at a very early point in their lives–to live without grant support and immediately capture investor support. This cliff-like step is a fundamental feature of our market, and it has great consequence for all parties.”

“One of the characteristics of angels, is that they not only provide early-stage financing–and they’re about the only people who are doing that right now in this country in any volume–but they also mentor companies… Angel investors, of course, want to make money, but they also have a real desire to give back to the community.”

“…what the Angel investor brings is the passion of doing it before. They understand the passion of the entrepreneurs, and they work alongside the entrepreneurs. They don’t charge for their time and they try to help them out.”

“One of the previous finance ministers asked us about five years ago what was the one thing that the government could do for angels to get them to put more money to work. They looked at this idea of being tax-free at the end, and they said it wasn’t the issue; the issue to attract capital was the tax credit at the beginning.”

“I think the role of government is not to try to pick sectors and solve all the problems. It is to incentivize those people who are already risking dollars and mentoring those companies.”

“Our universities have become warehouses of innovation. The problem is that we can’t get it out. Roughly speaking, about 2% of what is warehoused in universities is actually commercialized.”