Canadian entrepreneurs need to take responsibility for their industry, not blame others for its failures.

We don’t have a venture capital problem, we have a culture problem!

Canada has a lot of things going for it. We have a close geographical proximity to the economy that drove most of the growth for the past century. (I might argue this is a weakness not having close proximity to Chindia). We have good universities. We have strong intellectual property rights. We have an advanced economy. And we have generally favourable tax laws (though this is debatable, and many would argue that Section 116 helps keep foreign investors out of the Canadian market helping to augment the perceived venture capital problem). We have a diverse population and active immigration policy of foreign professionals.

What we have is a culture problem. We like to play the "blame game.” It’s the fault of government, of policy, of taxation law, of the investors.

As entrepreneurs we need to take the responsibility. Venture capitalists have their own issues and their own fights. The venture capital industry in Canada has fallen on hard times. But this reflects a global downturn in venture returns. The 10-year period between 1998-2008 was not kind to Canadian VCs, their average 10-year return of 1.8 per cent was dismal when compared to the U.S.

But we need to understand that they are not the panacea, they are not the silver bullets to the challenges and struggles. They provide a very valuable service to a small set of companies: growth capital.

“The reality is that VC’s have one goal – to maximize the amount of money they return to their investors.” - Steve Blank

Venture capital is just one part of the larger ecosystem that needs to be built and supported in Canada. As entrepreneurs we need to change our culture. We need to accept responsibility for our own fate. We need to strive to find sophisticated customers and create vibrant entrepreneurial cultures.

Sophisticated customers

We need to get out of our ivory towers. We need to stop relying on SR&ED, IRAP, and other tax credits that support an ecosystem of zombie startups. This doesn't mean that they are not valuable programs and cannot be used by entrepreneurs. Entrepreneurs need to understand that these programs are not operational lifelines. They are designed to support research and development. SR&ED is a research imperative. It is not a growth or operational capital solution. They are about industrial science and invention. We need this but let’s not mistake it for creating customers or markets. We need to teach entrepreneurs the difference between invention and commercialization. Between finding out if you have a solution to a problem, and whether that problem has customers and a market.

We need to find real customers. We need to find real markets. These customers and markets don’t need to be located in Canada. In fact, Canada can often serve as a providing ground, an incubator, for a variety of market segments. We need to leverage the unique attributes of a diverse population of immigrants for the creative tension of differing viewpoints, and to help forge connections with remote markets.

Venture capital is something you raise after you've tested your market and product hypotheses with real customers. You raise money because you think you’ve found a product/market fit and you want to scale. Venture capitalists can’t help you determine if you’ve got a product that meets the needs of a market, but they can help you grow. Canada provides a unique opportunity for access to sophisticated global customers and proximity to the largest economy of the past century.

Vibrant entrepreneurial cultures

We need to build a culture of connections.

It is the force of thousands of butterflies flapping their wings. All of the blogging, tweeting, attending conferences, showing up to events, participating online. It’s about the DemoCamps, Launch Parties, StartupDrinks, Social Media Breakfasts, Third Tuesdays, Founders & Funders, NEWTECHs, SproutUps, Meshes, and everything else. It is a cumulative effect. It doesn’t take a lot of extra effort, but it adds up to the rest of the world paying attention to the noise.

But it is up to us, as entrepreneurs, to make noise. It’s up to us to build successful companies. It’s up to us to make Canada a better place for startups. No one is going to walk in and make it easier. We all have to participate and build a vibrant entrepreneurial culture. We need to talk about entrepreneurship as a career path. We need to talk to politicians about policy decisions.

So the first rule of being an entrepreneur is to reach out. Invite a friend. Make a connection. Tell a customer. Most of all, do the things that make the ecosystem better for you.