As venture capital declines, Canada risks losing an entire industry to the U.S. – again
Thomas Park is the lead partner of the BDC Deep Tech Fund and co-founder of the Asian Canadian Ventures Collective.
But while we still have plenty of capital to invest in Canadian deep-tech founders, we’re concerned about current market conditions and their long-term impact on the deep-tech ecosystem. The deep-tech sector includes startups whose business models are based on high-tech innovation in engineering, or significant scientific advances in areas such as quantum computing, photonics and foundational AI. Their times to market are much longer than those of other companies, yet their impact on the broader economy has the potential to be transformational. For example, quantum computing startups are developing computational capacities that far exceed those of existing supercomputers.
Continued volatility in public markets coupled with anemic economic growth forecasts means there will be no quick return to easy VC money, especially in deep tech, where VCs have hit the brakes at a faster rate than they have in other sectors. Paradoxically, now is one of the best opportunities to invest in Canadian deep tech. Downturns mean that the most resourceful founders stay the course, highly specialized talent becomes available and the best investors remain in the market.
We’ve seen this before. In the mid-2000s, a weak deep-tech ecosystem meant that foreign investors were able to acquire Canadian intellectual property in AI. Today, Canada has some of the top AI researchers in the world, and yet many are in paid partnerships with foreign tech companies, exporting publicly funded research for others to commercialize.
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