Canadian entrepreneurs don’t fear risk – investors do

By Christine Wong

Christine Wong, Staff Writer,

Penny for your thoughts?

Canada’s high tech startups would love to raise some pretty pennies for theirs. The fledgling firms are brimming with bright ideas, but can’t raise enough cash to turn them into reality.

Venture capitalists haven’t been as generouswith homegrown IT firms lately. The result: a Canadian tech sector cash crunch.

Despite this adversity, our high tech companies are faring pretty darn well. Half of the top 10 firms on the newly unveiled Fast 500 – Deloitte’s list of the fastest growing tech companies in all of North America based on five-year revenue growth – hail from north of the 49th parallel. In all, 76 Canuck tech firms made it onto this year’s Fast 500.

This means Canadian tech companies (many of which are still at a fairly nascent stage of existence) are hurting for growth capital, yet still finding ways to ring up sales, run efficient operations and compete with their better funded counterparts in the U.S.

And so, it would seem, Canada’s entrepreneurs are willing to stick their necks out — but our financiers are not.

“The entrepreneurial culture in Canada is not risk averse,” Bill Tatham, CEO of firm NexJ Systems Inc., told me recently after placing sixth on Deloitte’s Fast 500 list. “The financing and venture capital (culture) in Canada is probably more specifically more risk averse.”

When I recently covered Canada’s poor ranking (down from 10 in 2010 to 12 this year) on the
World Economic Forum’s latest global competitiveness study, Tatham’s feeling was echoed to me by Michael Bloom, vice-president of organizational effectiveness and learning at the Conference Board of Canada.

“We have very large amounts in pension funds and private equity, but we don’t spend a lot on innovation. Why aren’t our capital markets more open to spending on innovation?” Bloom wondered.

“At times it serves us well,” Bloom continued. “(Canadian) banks were less caught in the downturn than some other (foreign) banks. Being prudent is helpful. But there’s such a thing as being too prudent and too risk

The Conference Board has set up a new Centre for Business Innovation to study why Canada doesn’t measure up in global competitiveness. It will look at everything from why our capital markets are stingier towards startups, to whether Canadian entrepreneurs themselves just aren’t aggressive enough.

The folks at Deloitte Canada have already taken a quick look at the latter question. After compiling its new Fast 50 list of Canada’s 50 fastest growing tech firms (also based on five-year revenue growth), Deloitte asked the CEOs of the 50 ranked companies if they believe Canadians as a people are entrepreneurial and risk tolerant.

Just over half of the CEOs — only 56 per cent — said yes. Not exactly a ringing endorsement of confidence in … well, our own Canuck confidence level overall.

Intrigued by the somewhat weak response to that question, Deloitte went further and asked the CEOs more detailed questions to test their own entrepreneurial risk tolerance. Deloitte then compared those Canadian CEO responses with ones from American CEOs on its U.S. Fast 50 list.

“Canadian and U.S. executives came up almost identical (in risk tolerance),” said Duncan Stewart, director of technology, media and telecom research at Deloitte Canada.

Although the Canadian CEOs who showed less risk tolerance turned out to be “way less risk tolerant” than American CEOs who also had little appetite for risk in their answers, “(Canada’s) aggressive CEOs are just as aggressive as their U.S. counterparts,” Stewart said.

It’s just one study shedding only a little insight into the minds of Canada’s tech entrepreneurs. But it weakens the idea that they’re not willing to take as many business risks as their American rivals.

When you pair that with their stellar performance on the Fast 500 – even in the face of less funding — it makes me wonder: if Canada’s tech startups are successfully sticking their necks out, when is our finance community going to start doing the same for them?

Christine Wong
Christine Wong
Christine Wong has been an on-air reporter for a national daily show on Rogers TV and at High Tech TV, a weekly news magazine on CTV's Ottawa affiliate. She was also an associate producer at Report On Business Television (now called BNN) and CBC's The Hour With George Stroumboulopoulos. As an associate producer at Slice TV, she helped launch two national daily talk shows, The Mom Show and Three Takes. Recently, she was a Staff Writer at and is now a freelance contributor.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Latest Blogs

ITB in your inbox

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.