Some say elections are about image, not issues. They're about hairstyles and sound bites, not intellectual debate. There is some truth to this premise, especially in the United States, with everyone from Donald Trump to Kanye West talking about the presidency.
Many Canadians want more from their candidates. Many of us want to talk about tangible, realistic and creative solutions to major issues like the economy. So, if you're a candidate in this federal election, take note if you want to win votes.
As a serial startup entrepreneur, executive and investor for more than 35 years, I have worked alongside some incredible leaders to help build and finance successful global technology companies. And, these days, there is no question that market disruptions, fuelled by innovations in areas such as software, mobile, networking, nanotechnology, biotechnology and soon quantum effects, are creating a knowledge-based digital economy with huge new opportunities. Increasingly, young startup companies seem better adapted to benefit from impending market disruptions.
Canada is positioned well and leading in many areas, but it needs a more active government – especially at the startup level – if it's going to compete and lead globally.
Recent studies have shown that all net-new job creation comes from startups. Furthermore, most knowledge-economy startups function globally, and typically generate important export dollars.
Early-stage companies need capital coupled with expertise and mentorship in almost equal measure. Not surprisingly, properly crafted government investments are returned many times over through payroll taxes and overall economic prosperity.
So, one would expect governments to focus on this holy grail of jobs and exports during a campaign. After all, jobs and the economy win elections, right?
The role of government in this situation is to set the right conditions for startup businesses to grow. And, to be fair, existing government programs have been helpful. These include the Scientific Research and Experimental Development program and the FedDev Ontario Investing in Business Innovation (IBI) initiative.
But is this enough? The fact is, despite these programs, Canada has a long way to go, mostly because global competition in the startup space continues to intensify.
In the U.S., venture and angel capital is significantly more plentiful. In 2014 alone, American angel investors put a remarkable $25-billion (U.S.) into young and growing companies, according to the Angel Resource Institute.
Although less data is gathered here, aggregate Canadian investment is almost certainly less than 25 per cent of that in the U.S., on a proportional basis. That means we're not even in the ball game and it's most definitely costing us jobs and investment.
Internationally, levels of angel co-investment are much higher, with many governments doubling the investments of angel investors. Canada has a long way to go and we need to get there if we want to be competitive, let alone lead.
There are creative solutions that don't involve straight-up bags of cash. For example, British Columbia has implemented an angel tax credit, which serves to lessen risk for angel investors, allowing potentially greater investments. It also enables governments to monitor and collect valuable data on levels of angel investment.
Other progressive tax options include adopting a variant of the U.S. program in which there are zero capital gains for angel investments. While this may appear to be a subsidy for the rich, it is in fact a way to attract more capital to investment-worthy companies, and thus create more jobs. Bringing more angel investment, along with business expertise, to these critical, higher-risk early-stage ventures should be a high priority for our federal government.
So, if a candidate knocks on your door during this campaign, ask them where they stand on helping startup companies scale and grow. Ask for specifics. After all, this is where the jobs are coming from in the 21st century – and Canada is falling behind.
It may not be a "sexy" issue, as the political pundits say – and it's certainly not the kind of retail, coffee-shop politics all parties seem to be practising these days. But, if the right combination of minds and money can accelerate future startup success, and hence economic prosperity, focused investments by government can significantly accelerate that.
Properly designed, such investments will pay back in jobs, exports and prosperity many times over. Our country's future depends on it.
Randall Howard is chief executive officer of Verdexus Capital and recipient of the National Angel Capital Organization's 2014 Canadian Angel of the Year Award.