Monday, April 12, 2010

The Immigrant Opportunities Fund

...Okay, there isn't one. But there should be. Here's why:

1. Regional venture capital has lost its appeal. If you ask any North American VC left standing(or bettter yet, their former limited partners), they will tell you that there is very little appetite for the classic venture capital model in any region outside Silicon Valley.

2. As traditional lps lose interest in general venture capital, new players are embracing purpose-driven opportunities. Regional funds focusing on investments that make the world better (clean water, social philanthropy, micro-entrepreneurs) in have particular done better in attracting investors.

3. Helping immigrants who are innovators prosper is not only part of our business history, it's great business today. There are only 33 million of us in Canada, and while we are all thinking as hard as we can, we lack a critical mass that would allow us to play a meaningful role in innovation (and attract meaningful investment) unless we grow our entrepreneurial base through acquisition. It won't do to wait for our base to grow organically, either. The only person ever to profit from natural evolution was Darwin.

4. Current global conditions seem to be creating a unique opportunity. Innovation clusters in places such as Israel and South Africa are finding themselves short of growth capital as US VCs close up shop and retreat. Our own tech entrepreneurs, many of whom have strong ties to both regions, may be able to leverage our proximity to the US with the US limit on work VISAs to attract and grow a larger pool of entrepreneurial talent.

5. A fund focused on investing in (and attracting) immigrant innovation may better leverage government money: there is a growing realization at all levels of government that job creation comes from emerging business, not established ones. Last weekend, the New York Times' Thomas Friedman quoted Robert Litan of the Kauffman Foundation: " Between 1980 and 2005, virtually all net new jobs created in the U.S. were created by firms that were 5 years old or less....That means that established firms created no net new jobs during that period." Government funding available for job creation in high growth industries makes Canada a compelling candidate for emerging immigrant businesses and is a compelling partner for any private fund investing in this sector.

6. Canada has only a few years at best before we lose the ability to carve out a leadership role in this niche: The need to attract and retain foreign students and entrepreneurs has reached mainstream discourse in the U.S. Right now it seems as if the failure of Congress to figure out how to pass any legislation is all that stands between it and immigration reform. It would be nice to lead, not follow.

Canada is replete with unspent fund of funds money, and business magnates with strong ties to their countries of origin - the ideal set of limited partners. Is there anyone who'll take on the task?

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