I came across an interesting article on the Canadian technology sector in the Globe & Mail this morning (see Bellwether Sector Feels Economic Pinch, September 25th). The occasion was the release of Deloitte's Fast 50 list, a list of the 50 fastest growing technology companies in Canada.
What first caught my attention was Deloitte's statement that the most profound impact on the country's tech sector was the lack of venture capital.
"”But it is the lack of venture capital funding in Canada that has had the most profound impact on this country's tech sector, he says.
The rankings show that beginning in 2002, shortly after the burst of the tech bubble, venture capitalists began tightening their purse strings, making it more difficult for companies to secure startup funding.
"Post-2002, you started seeing a massive decrease in Canadian VC financing of these companies," Mr. Ruffolo says. "It takes around five years before you really start to see the signs of actions that occurred in the past, and now we're starting to see it.
"We're seeing their top-line growth slow, largely because with a lack of financing they can't necessarily make the big bets they would have liked to have made in the past.""
But it was what was missing from the Fast 50 list that held my attention: there were no energy companies of any kind - greentech, cleantech, renewable, etc. This gap was corrected to some extent when I looked at Deloitte's original press release, indicating that cleantech companies were one bright spot in an otherwise gloomy prognosis for Canadian venture capital.
"A continuing bright spot in the Deloitte Technology Fast 50™ program is the increased quality and size of Technology Green 15™ winners. They have been able to attract venture capital and IPO attention. It appears as if any company that allows you to do more with less ― conserve energy, produce more oil and gas, use coal more responsibly ― will be the winners in the years to come."
But ... they're still not in the Fast 50.
At first glance, the change from 11 months ago when I based a post on another Globe & Mail look at Canadian venture capital (see Canadian Venture Capitalists Shy From Green Technologies?, October 26th, 2007) appears to be positive. However, its hard to find signs of significant new venture cap. investment in sustainable energy. Back in that earlier post, I noted four companies that were bucking the trend at that time, including:
I'm not aware of any others having entered the fold in the past year.
All of this makes a bit of a contrast with the picture KPMG painted in a report on U.S. venture capital investment in greentech, released earlier this week. KPMG polled 301 venture capital firms and found that 91% expect continued increases in venture funding of greentech (most of which is energy related) in 2009. A summary of KPMG's report is available here!