The government could give Canadian start-ups a push

One of the problems with ranting on about the lack of support in Canada for Canadian high-tech companies and the lack of financial assistance for entrepreneurs is that someone eventually gets fed up with you and asks “What would you do to change things?”

Actually, I have not been asked, which may be another sign of apathy, but I thought I would pretend that someone had posed the question – and so to my pontificating.

Normally, I am against government sticking its nose into commercial matters because they usually make a mess of it. But when Canadian industry seems to have its head in the sand in matters regarding the well-being of industry as a whole, then government intervention is the only thing left.

So, I would suggest that the government initiate a program to rectify the omissions of the great Canadian industrial complex.

Now, just throwing money at a problem is neither a very original nor economically-feasible idea. For years, there have been government assistance programs and these have, in some cases, had very satisfactory results. Unfortunately, they have little, if any, follow through and are usually totally disconnected from each other. They give you the paint but not the paintbrush, and have no idea where you can get a canvas, never mind an easel.

Another little problem is that developing a great product on government money is useless unless there is marketing assistance to move the product to market. Make no mistake, moving to market is much more important these days than the product.

Several years ago when on a fund finding mission I was told that, in the opinion of several high-placed executives in U.S.-based software companies (and we always believe the Yanks?), product was no longer important. What was important was if you had “captured the channels” and got your advertising “pull-throughs” working.

So how should the government go about it? For the development part of our dilemma let us suppose the government built an “Entrepreneurial Park” with several 2,000 square-foot offices complete with telephone exchange (donated by Bell?), facsimile machines and copiers (donated by some manufacturer), modest printing capabilities and secretarial services. All this overseen by a group of experienced commercial pundits, retired or otherwise, who could offer experience and sensible assistance.

Now, when an entrepreneur was found with a worthwhile product he or she would be allowed to set up in a facility at no cost and be given some development funding. The pundits, who would have to be of the commercial guerrilla variety and well versed in the black art of marketing in the real world, would advise, guide and generally keep the entrepreneur’s feet on the ground. A board made up of notable marketing officers of suitable companies and technical government staff, as well as the advisory pundits, would select these entrepreneurs.

This board would have the facilities to analyze the potential market and determine the worth of the new product. The difficulty here, of course, is providing a facility that suits someone in Nova Scotia as well as someone in British Columbia.

Personally, when I was in my entrepreneurial mode, I would have moved to Hull from Toronto because the funding I was chasing was from Quebec and they more or less inferred that it would be a good idea for the company to be in Quebec.

To me, such a move was all part of the entrepreneurial burden. (Incidentally, I did not get the funding because I had not – yes! you’ve guessed it – captured the channels or had successful advertising pull-throughs).

If one does not like the above idea, it could easily be replaced with other methods. One that springs to mind is creating the same board but with power to allocate money to existing Canadian companies to develop the product in its own facilities with its own or additional contract staff.

But let us assume we now have several small start-ups beavering away and we have a few excellent offerings that could be taken to market. The big problem now is how do we get them to market?

Many inventors sit with viable products but have no finances, no experience and no “captured channels” to get into the market. This is where heavy government effort would be needed.

There are some Canadian companies with effective marketing mechanisms. The government could convince these companies to use these to launch the newly-developed products. For instance, Corel (cheerio Michael, hello Bill) could launch a program developed to add security to Microsoft Outlook.

Cognos could offer through their channels a “notebook” program designed for those fed up with complicated contact manager programs. The Canadian answer to Merisel and Tech Data, EMJ Data Systems, could put in their catalogue a new low-cost fax board with fantastic performance.

Thus government could persuade these large Canadian companies to test market externally-developed products as if they were their own. Naturally companies would be able to resist such persuasion if the product had all the characteristics of a flop, such as inferior specifications or an unreasonable price tag.

However, if we assume that such a suggestion is feasible we still have at least one major problem, and that is cash.

No company, Canadian or otherwise, is going to finance an external entrepreneur. They have their own ideas, agenda, target market and five year plan (oh yes, that dreaded five year plan) and are unlikely to co-operate unless some large amount of hard cash is contributed.

Make no mistake, these companies will want more than adequate compensation. So where does this money come from? Well, I have an idea, but I fear that it is as radical as the above. You will just have to wait for the next column.

In the meantime, just think about what you can do for your Canadian industry. Do you buy your coffee and doughnut at an American chain or a Canadian chain? Just asking.

Robinson has been involved with high-tech Canadian start-up companies –

including Cisco, Sytek, and Comten – for more than 30 years. He can be

reached at [email protected].

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