Posted by: Peter Carrescia | 09-02-2010

Entrepreneurship, Universities and Venture Capital

I recently wrote about the need for focus in building the next generation of Canadian technology companies.   I want to follow that up with what I believe is the first and most important ingredient – Entrepreneurship.

Today, there are simply not enough people catching the entrepreneurial bug and starting their own companies.  It really is a numbers game – increase the supply of new companies, and there will be a proportionate increase in the number of successful companies.

The cultural change required needs to be instilled in us at the earliest possible opportunity, while we’re still in school and have little to lose and everything to gain.  It is infinitely more difficult to convince someone to take risk when they have a mortgage, car payments, a spouse and children.  It won’t work out for many that try, but for those that it doesn’t they will be better employees later for having tried, and better prepared should they perhaps try again.

Today our universities and colleges are focused on ensuring their graduating students are employable.  Nothing wrong with that, but we need to do more.  Educate someone to be an employee, and they will fill a job. Educate them to be an entrepreneur and they will create many jobs.   Perhaps in exchange for the subsidized education most of our students receive, they should be required to receive a mini-credit in a short Entrepreneurial Studies course?

Finally, there is a mistake made by some that new company formation is  strongly correlated to venture capital, and that by increasing the supply of venture capital there will be a corresponding increase in startups.  That may be, but I would argue that the quality of those companies will be suspect as will the motivation of their founders.  While there is no doubt a shortage of venture capital in Canada, new companies should not typically be looking to VCs for funding (of course there are some exceptions).  Instead, they should be looking to bootstrap their business through their own time (and money) and other means including friends and family and angel investors.

And if you’re particularly successful, you may never need venture capital!

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Responses

  1. Peter,

    Good observation and you are not alone in this assessment. There are a bevy of student entrepreneurship organizations:

    * Impact – http://impact.org/
    * SIFE Ryerson – http://www.siferyerson.com/

    And others, that are all struggling to do this. My concern is that we are not establishing, as Rick Segal so eloquently put it, the Farm Team. Students helping students is one thing, but we need to teach and encourage entrepreneurship as a career path.

    Required reading for all students should include:

    * The Capital-Raising Ladder http://www.readwriteweb.com/start/2009/06/the-capital-raising-ladder.php
    * Founders at Work http://foundersatwork.com/
    * How Startups will save Canadian Venture Capital http://www.startupnorth.ca/2008/07/16/how-startups-will-save-venture-capital-in-canada/

    We’re fighting the good fight with Founders & Funders, StartupEmpire and other connection points. But they are moments in time, and there needs to be massive change in the institutions and the individuals setting the policy (fiscal/taxation), doing the governing, and educating.

  2. I agree with many of the issues you raise. I’m currently a 2nd year MBA at CU-Boulder Leeds School of Business, in Boulder CO, USA. We (the entrepreneurial community including founders, founders in training and investors; students and the University) are actively trying to create a dynamic, collaborative and entrepreneurial driven environment. I welcome you to check out some of the great programs that are in existence here in town and at the University. Leeds has established a very strong center for entrepreneurship, with about 40% of the students specializing in this area, resulting most either starting their own businesses or going to join other fledgling startups. We’ve also been able to re-capitalize an angel-styled venture fund, with matching capital from the University Foundation to use as a seed investments in local startups.

  3. Yesterday’s USA Today had an op-ed piece by Rich Dad/Poor Dad authoer Robert Kiyosaki (link to it here: http://bit.ly/a69asX).

    He talks about the need for educating entrepreneurs not just workers. His idea is to have a two-track education system with a US Academy for Entrepreneurs.

    While I agree with the premise, we should not force people to select a different education track.

    Every engineering/comp sci class should have an introduction to entrepreneurship with supporting programs to encourage experimenting/failure/learning.

    Even my own U of Waterloo co-op program, a cutting edge idea at the time, missed the mark on this. We learned how to find jobs in tech companies, not create them.


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