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VC Crisis? What VC Crisis?

I dropped into the Ottawa Network at the Code Factory last night to hear Shirley Speakman from Ontario’s Ministry of Research and Innovation, Matt Williams from IPeak, and Paul Dawalibi of Montreal’s St. Lawrence Capital (formerly Garage Canada) speak on Seed Funding.  It was well worth attending, although I doubt that Paul’s presentation was as well received as he would have liked.  Abrasive, confrontational and some would say hostile, his message was pretty simple — VC’s are in it for the money.

I asked Paul whether the current US downturn would affect St. Lawrence’s ability to call up cash from their committed LP’s.  He brushed the question aside with an explanation that the LP’s are committed, and the real impact is going to be on exits. This morning’s Internet news, however, brings these three stories:

The front page of the Ottawa Citizen also carried the story of Ottawa startup Bill Me Later, acquired for $945M yesterday after leaving Canada for the United States, and US funding.  The message? Canadian financing rules and financial markets make it nearly impossible for Canadian innovation to be anything but R&D for US interests.

Clearly Paul Dawalibi and St. Lawrence are swimming upstream with a great deal of optimism in a tough market.  Perhaps his hubris is simply due to knowing that St. Lawrence is one of the last funds still standing in a difficult Canadian market.

I’d still like a more considered answer to my question.  How will the downturn in the US affect the cash reserves of St. Lawrence’s LPs?  How will the downturn impact follow on financing rounds?  Should entrepreneurs be doing anything differently as a result?

Paul’s writes a blog under the nom de guerre of The VC Whisperer.  Check it out.  There are some pearls of wisdom there, but none relating to the current situation as it was last updated July 1.

{ 6 comments… add one }

  • Ian Graham October 9, 2008, 5:56 am

    Hey Alec, good to see you at the event last night and appreciate the mention in your post.

  • Alec October 9, 2008, 2:46 pm

    Thanks for dropping by Paul.

    I agree that your presentation was very direct. I'm sure you got some great feedback. You're also smart enough to know that nobody hoping to get a check from you would be directly critical.

    Looking forward to your blog post!

    A

  • Paul Dawalibi October 9, 2008, 3:21 pm

    What was "abrasive", "confrontational", and "hostile" about the message? Other than trying to help entrepreneurs to get inside the head of VCs everywhere (not just me).

    I just don't agree with your choice of words.

    The irony is that this blog post is far more abrasive and hostile than my message of "the 7 things VCs look for". But I'm smart enough to know that an inaccurate and inflammatory blog post gets more attention than an accurate and honest one.

  • Paul Dawalibi October 9, 2008, 6:16 pm

    Not sure this portrayal of my talk is entirely accurate. All of the feedback I got was overwhelmingly positive. The presentation was direct and to the point – what most entrepreneurs should be expecting from the VC they work with.

    I think entrepreneurs have the best job in the world, and I want to see them succeed.

    I have a full blog post coming soon on the downturn, but needless to say, I was giving my portfolio companies the same advice Sequoia is, when the markets turned a few weeks ago.

  • Suzie Dingwall Williams October 9, 2008, 6:51 pm

    We are definitely on the same wavelength today – must be that Semantifind vibe. I just wrote about the same issue, but asked a different question: with all the effort the venture capital industry is putting forth lobbying for federal aid, where is the entrepreneur’s share? What will happen to the current generation of innovation and innovative companies if thjere’s no direct bail of high growth companies hitting the VC funding gap?

  • Alec October 9, 2008, 7:36 pm

    Paul – I don’t want to pick a fight. Apparently you didn’t see it from the front of the room, but among those of us in the cheap seats, you provoked a strong reaction. Inaccurate? Not from where I sat. Inflammatory? Perhaps. And for that I apologize.

    I’m still interested in understanding more details on your views about how the current climate will impact VC’s abilities to make investments. Speaking as an entrepreneur, that’s top of mind for me at the moment.

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