In the first nine months of 2011 Canada’s venture capital industry invested $1.1 billion in 400 deals. During the same period, U.S. venture capitalists invested $21.2 billion in 2,725 deals. These numbers come from Thomson Reuters.
True to historical patterns, the U.S. continues to invest 20 times what Canada does into innovation-driven entrepreneurial ventures, although on a per-capita basis, more Canadian entrepreneurs actually got their deals funded. The fact that the U.S. economy – as broken as it is – somehow continues to fund its venture market at 20 times Canada’s performance should be no surprise. This is what the U.S. does.
What is a surprise is that thought leaders in the U.S. believe that they have an innovation crisis despite such a huge investment edge over Canada. This tells you something about both U.S. and Canadian attitudes to innovation.
Judy Estrin, former CTO of Cisco Systems, a highly regarded Silicon Valley innovator and entrepreneur, is the author of “Closing the Innovation Gap.”
She writes, “our national research community is suffering from neglect. … The OECD recently ranked the U.S. 22nd in the percentage of GDP devoted to non-defense research. Developing a research discovery into a commercial application can take decades, and the damage caused by underinvestment often is not visible until it is too late.”
Another view is provided by Steven Ezell and Robert Atkinson of the U.S. Information Technology and Innovation Foundation (ITIF). “In the 21st century global economy, nations can no longer be indifferent to the industrial and value-added mix of their economy. Indeed, with the sole exception of the U.S., virtually all nations have consciously adopted national policies to intervene in the market – in this case to make it easier for corporations to invest in higher value-added activities that create higher-wage jobs in their nation.”
Adds noted U.S. venture capitalist Pascal Levensohn, “The answer for America is not trade protectionism – the answer is for our country to be proactive as opposed to reactive in addressing the innovation crisis by implementing policies to attract, educate and retain the most skilled and ambitious scientists throughout the world. We want these domain experts to continue to have compelling incentives to pursue breakthrough innovation in our country.”
Say what? And we simple northern neighbours thought that the U.S. was already doing all of that. And top U.S. innovation experts now point out that as public policy, Finland spends 10 times as much as the U.S. per capita on R&D, never mind China!
So what does this mean for Canada and B.C.?
Well, our public agenda is obsessed with finding new ways to pipe our energy products either into the U.S. or to the B.C. coast to ship to Asia. We can’t develop mines fast enough to ship commodities to Asia, and we can’t develop the Asia market fast enough for our forest products. It’s a shame that these Asian customers would prefer to get our raw logs so as to pay for as little Canadian labour as possible. Obsessively compulsively obsessed.
Innovation? A footnote.
The reality is that we are very fortunate to have these resource- extraction opportunities to goose our economy during these troubled times. But … there is simply not enough labour market expansion to be had from resource extraction in a part of Canada with a very fast-growing population. These industries have been shedding jobs in B.C. for the past 30 years. Of particular concern is that over 50% of B.C.’s population lives in the Lower Mainland, and most of the resource-sector jobs don’t get created here.
What does exist in the Lower Mainland is post-secondary seats in universities and colleges geared up to teach innovation-related skills to our young people.
It is most convenient for our politicos to ignore the great expense of building an innovation economy when B.C. can pull an enviable 3%-plus growth from resource extraction these days, but, unfortunately, failure to create a true innovation economy in the Lower Mainland will condemn too many of our youth to low paying service-sector jobs in our communities if we aren’t particularly thoughtful about this.
Where are B.C.’s thought leaders regarding the critical importance of investing in our innovation economy? They should be putting our leaders’ feet to the fire to match our global competitors’ commitments or Canada will fall further and further behind. •
