Tag Cover Story | Jenifer Bartman

December 21, 2015 by Jenifer Bartman

COVER STORY: Canada’s Venture Capital Report Card- Building on regional successes to stoke the long term fire

Cover story, as published in Private Capital, Q4 2015

The Conference Board of Canada’s most recent Innovation Report Card includes some impressive venture capital benchmarks, but there’s much more to consider when looking beneath the surface.

Decreased venture capital investment levels in peer global markets, which are largely a lingering byproduct of the financial crisis, coupled with brisk, but isolated investment activity in select geographies here in Canada raises questions about our ability to sustain a high ranking when conditions improve elsewhere. Perhaps, even more importantly, these findings put the focus on what actions should be taken to bring improvement to Canada’s weaker markets, of which, there are quite a few.

The Findings

Canada

Increased venture capital investment, primarily in Canada’s large provinces, coupled with lagging investment in European countries since the recession have resulted in Canada moving from being one of the weakest performers to one of the strongest. Specifically:

Canada’s ranking has improved from third worst in 2009 to second best in 2014 in venture capital investment, relative to 15 peer countries. Canada earned a B grade and a fifth place ranking overall.
Canada’s venture capital investment has more than doubled, from nearly $1 billion (.07 per cent of GDP) in 2009 to over $2.3 billion (.12 per cent of GDP) in 2014.
The number of companies receiving venture capital in Canada has increased from 378 in 2009, to 416 in 2014. Peak levels of approximately 450 companies receiving venture capital in 2011 and 2012 have not been met in recent years.
The vast majority (80 per cent) of Canada’s venture capital investment in 2013 was later stage, with only 20 per cent taking the form of early stage financing. This falls well short of international trends where more than 60 per cent of venture capital targets early stage financing. The report notes that Canadian venture capital took a much more balanced approach in 2009, when financing was more evenly split between early and later stage.

The Provinces

Provincial venture capital investment levels and rankings vary widely, from A to D-, with six provinces receiving a D or D- ranking. Specifically:

Both BC and Quebec rank as A’s in terms of venture capital investment (representing .16 per cent and .14 per cent of GDP, respectively), outpaced only by the US (.17 per cent of GDP).
Although companies in Ontario received more venture capital money than that of other provinces, the venture capital investment level of .11 per cent of GDP was sufficient to earn a B ranking.
Propelled by two venture capital deals totaling $60 million in 2014, Newfoundland and Labrador received a C ranking.
Canada’s remaining provinces received a D ranking in venture capital investment, with Manitoba and Prince Edward Island receiving a grade of D-.
Substantial increases in venture capital investment levels from 2009 to 2014 have occurred in four provinces; Ontario (117 per cent), BC (91 per cent), Alberta (81 per cent), and Quebec (61 per cent). All other provinces have experienced declines.
In terms of the number of Canadian companies that received venture capital funding in 2014, the highest levels occurred in Quebec (151), Ontario (142), BC (60), Alberta (27), and New Brunswick (19). The remaining provinces ranged from one to nine companies receiving venture capital.

The Fuel

Canada’s much improved ranking was assisted by the fact that, with the exception of the US, venture capital investments declined in all of the other peer countries between 2009 and 2013. Canada weathered the recession better than many countries, contributing to more stable venture capital investment levels. In fact, venture capital investment levels have now returned to the pre-recession level of $2.3 billion. Contributions from the Venture Capital Action Plan (VCAP) have helped, as well as the ongoing participation of BDC Capital, which the study cites as Canada’s largest and most active early stage technology investor.

Venture capital investment in Canada from foreign sources has continued to rise. Traditionally, it has represented approximately 30 per cent of the total, but increased to more than 37 per cent in 2014 from US sources alone. Clearly, venture capital investment levels are positively impacted by foreign participation and our own public policy that encourages investment.

However, we must also be wary of the fact that Canada is currently standing out in a cohort that is performing well below its pre-recession standards. What we do next to continue to separate ourselves from the pack now could have long-standing consequences.

Viewing Canada’s current position of strength as an opportunity to make the necessary improvements to “lift the level of all boats” is a much more proactive approach than simply benefiting from the rise of the tide.

The Fire

Improving venture capital investment levels across the country and generating long term sustainability are important areas of focus. The Conference Board cites a number of factors that contribute to establishing a successful level of venture capital investment, including the presence of those with money to invest, companies that are investment worthy, and a means to connect the two.

Much could be said about the challenges of establishing venture capital pools in particular geographic areas and the difficulties of allocating a portion of funds in existing pools to investments with a higher risk profile. Regardless, fueling the venture investment process requires a stable of “investor ready” companies, enabling venture capitalists to invest well, work with high potential businesses, and generate the returns that are so important in attracting fundraising over the long term. These are critical components in generating a sustainable venture capital environment.

Venture capitalists recognize that the presence of investor ready businesses and the right approach to get there are, in many ways, the fuel for generating a vibrant investment environment. Too often, the focus tends to be on leading with capital, and although this approach might find some initial success to “get money out”, it does little to generate the level of returns to stoke the fire for the long term.

September 21, 2015 by Jenifer Bartman

COVER STORY: Managing People- Understanding the strengths and weaknesses of your team

As featured on the cover and published by The Canadian Society of Club Managers in CMQ (Winter, 2015)

It’s obvious that people make the business world “go round”, and clubs are no different. The complexity associated with people only increases when you enter the senior ranks, as club managers are typically faced with staff related tasks and relationships that include many components: recruitment, motivation, role definition, performance management, and broader supervision are only a few. These areas must be considered specifically in terms of team members in senior level roles, which typically have a significant impact on an organization (positive or negative), more complex tasks, and a limited talent pool from which to draw candidates. Perhaps, the result of this complexity is that the human resource aspect of a club management role often isn’t addressed as fully as it should be.

There is a lot that club managers need to consider and understand when it comes to dealing with staff members, particularly in terms of their senior team. This includes knowing when action is required, in terms of hiring, firing, supervising, and simply providing support and giving people room to do their job. Such an uncommon talent, of what to do and when to do it, can best be cultivated through personal awareness and practice, while keeping in mind the ultimate goal of creating a senior team that has the right skills and experience and well crafted roles, as well as a balance of support and direction. Sound unachievable? Think of it as something to strive for and an opportunity to seek out practical advice that can help to guide the process.

As discussed in the last issue, there are fundamental skills that successful senior leaders typically exhibit and consistently practice, in terms of the approach that is taken to fulfil their role on a personal level. Here’s more about the why making a concerted effort to manage people well is so important at the leadership level.

Trouble in the Club

Like many businesses, clubs are busy places. When the list of tasks is longer than what can be reasonably achieved in a day (or a week, or a year), it’s human nature to focus on the areas that represent a “comfort zone” of where we feel most competent in terms of our ability to make progress. This often doesn’t include human resource matters!

Human resource related responsibilities, such as recruitment, performance management, and coaching can be time consuming and often represent the proverbial “can that gets kicked down the road”, particularly in busy times. There is considerable risk in this practice, in terms of both strong and marginally performing team members. Too often, marginal performers are allowed to continue in their role (“he/she isn’t doing that badly…”), while the “stars” become frustrated by a lack of progress and obvious inequity amongst team members (and who can blame them? No one likes to have to compensate for a marginal performer).

The big risk, which is often surprising to leaders, is that their best performing team members will leave the organization, due to frustration, a lack of fairness, and better career options, leaving behind the marginal performers. This is a disaster in the making for any club manager, especially when a reputation of not dealing with problem situations is created within the candidate pool of potential employees. Not to mention having to manage a club full of less than stellar staff members!

Leading Large

Skilled leaders know how and when to take action when it comes to managing people and never let this important area slide. They recognize that the rewards are many, including better performance that benefits the organization and an improved sense of fairness or equity within the senior team. Here’s how to get the managing people aspect of a senior leadership role right:

Hire slowly, fire quickly. This advice might sound obvious, but, too often, it simply isn’t followed. Be sure to take the necessary time to fully understand the particular role that needs to be filled before undertaking the recruitment process. Once this has been done, let the needs of the organization and the role guide the candidate recruitment and selection process. Similarly, when a team member is not working out as expected, act on a timely basis and take the appropriate performance management steps. Carrying a marginal, weak, or disruptive staff member doesn’t help the organization or the team.
Lead with quality, not quantity. Managing people effectively at a senior level isn’t about hovering or offering up frequent (but unnecessary) advice, it’s more about understanding the stage of development of each team member, their strengths and weaknesses, and when to provide support. Empowerment, creating opportunities for tangible learning, and the quality of the coaching message are what matters.
State the obvious. Although some leaders might think that knowledge or information should be obvious or implied, people like to be in the know and understand what is expected of them at all times. New initiatives, key results and targets, strategic direction, and opportunities to improve are all important areas to share with a senior team, so don’t keep them guessing.
See situations as they really are. It might seem hard to believe, but some leaders operate on the basis that if it is possible to resolve a particular problem, it will be done, regardless of the actual ability of the team member to do so. This dangerous practice is analogous to the “out of sight, out of mind” concept, so be sure that your expectations are realistic and identify areas where training and support are needed.
The sky is the limit. Experienced leaders recognize that when they are fortunate enough to have a real star on their team, they perform best by having the freedom to do their job, within organizational guidelines and policies. These people consistently generate great results, are reliable, and will ask for assistance when required. Let them do their job and don’t meddle, as a much better strategy is to use your time to work with team members who are not as savvy.
Recognize that a big part of a leadership role is coaching. At its essence, leading is all about assembling a team that can successfully execute on its business plan, to the benefit of the organization at hand. Senior roles are less about doing the front line work and more about helping others to be successful in their role. Making this a reality requires coaching, feedback, and support on an ongoing basis.

Leaders are often judged by the company they keep, and integral to this is people. Understanding who your team members are, in terms of ability and developmental requirements, as well as what their role is puts you in the best position to support their success. Don’t miss out on this important opportunity.