Canada has had a problem developing, incubating, and commercializing the type of products that create new economies and new jobs. According to Richard Remillard, executive director of the Canadian Venture Capital Association, while the Canadian population is 1/10 the size of the US market, our venture capital industry is only 1/12 of that in the United States. Thus, after startups are bootstrapped in Canada, they are starved for cash, and unable to find sufficient rounds of investment to commercialize their product, forcing them to consider relocation outside of Canada.
POSH View Media, for example, is a company that develops interactive touch-screen surfaces. POSH is trying hard to remain Canadian, but the investors they have solicited have primarily been American, including Apple and Microsoft.
The reason why Research in Motion succeeded in Canada, is because of early Canadian government adoption of the Blackberry. It has been recommended that the government should revise procurement practices to help commercialize Canadian innovations (similar to the policies adopted by the UK). But according to Bruce Good, executive director of the Conference Board of Canada, governments procurement departments in Canada have steered clear of risk.
The existing Scientific Research and Development (SR&ED) program offers substantial refundable tax credits for startups; however, many startups lack the expertise to successfully access these credits. A small number of firms have begun to offer SR&ED financing to assist high-tech startups to extend their project runaways. However, more support needs to come from the government. Although the latest federal budget has set aside $400 million to boost venture capital funds, further investment will be needed in order to spearhead a new Canadian economy.