Readers may have came across an optimistic report that we published on Tuesday in which McRock Capital proclaimed that a profound culture of innovation in Canadian venture capital is about to take flight.
That may be so, but one Canadian organization is arguing the opposite. The Conference Board of Canada released its report today called “How Canada Performs: Innovation” and graded the nation “D” in venture capital.
Despite a decade or so of innovation agendas and prosperity reports, Canada remains near the bottom of its peer group on innovation, ranking 13th among the 16 peer countries.
“Canada remains near the bottom of the pack among its peers on innovation,” said CEO Daniel Muzyka. “While governments, other organizations and individuals have done many things right, the gaps in innovation investment and activities create serious consequences for our economy and society. More importantly, we have now reached a point where we are seriously impacting the wealth and opportunities for following generations.”
How Canada Performs is a multi-year research program at The Conference Board of Canada to help leaders identify relative strengths and weaknesses in Canada’s socio-economic performance.
While Switzerland, Sweden and the United States attained “A” grades in innovation, Canada performed poorly on most of the 21 indicators in this year’s “revamped Innovation report card”. The rate of venture capital investment in Canada amounts to less than half of that of the “A” performers.
“Canada needs a larger and more dynamic equity and venture capital industry that is ready to invest in and provide guidance to Canadian seed, start-up, and early-stage companies,” read the report.
It went on to explain that Canada has the good universities, engineering schools, teaching hospitals, and technical institutes and that it produces globally respected science. But Canada “does not take the steps that other countries take to ensure research can be successfully commercialized and used as a source of advantage for innovative companies seeking global market share”.
“Canadian companies are thus rarely at the leading edge of new technology and too often find themselves a generation or more behind the productivity growth achieved by global industry leaders,” read the report.
On an overall innovation scale this doesn’t all mean that Canadian inventions are inferior, but quite the contrary. Canada produces great inventions and investors. The nation’s low grade in this report card indicates that as a proportion of its overall economic activity, Canada does not rely on innovation as much as some of its peers.
Canada has been slow to adopt leading-edge technologies as countries that are more innovative are passing the nation on measures such as income per capita, productivity, and the quality of social programs. “As other countries develop and adopt more innovation-related business methods, their companies are gaining in productivity more rapidly than Canadian companies.”
Interestingly, this study overlapped with McRock’s finding that several past studies on Canada’s innovation performance have offered explanations based on beliefs and opinions rather than concrete evidence. How Canada Performs said that so far there are no answers and that a major roadblock for business and government is lack of comprehensive data and information for diagnosing the problem.
To help bring about major improvements in firm level business innovation, they’ve set up a Centre for Business Innovation (CBI). While it remains to be seen how effective the Conference Board’s attempts will be, at least they are admitting that they don’t have the answers and that past attempts have failed to provide them as well.