Venture into Canada, U.S. investors told

Venture into Canada, U.S. investors told

May 14, 2009 (United Press International) -- The timing is right for U.S. investors and companies to venture deeply into Canada, a panel on cross-border opportunities said.

'Canada is a great breeding ground for U.S. investors to come north,' said Marc Faucher, partner of the Toronto's BlackBerry Partners Fund GP Inc., which focuses on companies in the mobile phone sector.

'From a cross-border standpoint, we're finding very good conditions for early-stage investments in telecom firms in Canada that we'll bring down to the U.S. for deals as the companies mature,' Faucher said at the Michigan Growth Capital Symposium in Ypsilanti.

The panelists outlined a number of reasons that make the timing right for U.S. companies seeking equity from Canadian investors or for U.S. venture capitalists looking to invest in Canada, Crain's Detroit Business reported.

They included a labor cost that's generally cheaper than in the United States, healthcare that's paid by the federal government, venture capital firms that are looking for U.S. partners and large Canadian tax incentives for early-stage companies, making such investment attractive for U.S. venture capital firms.

The Canadian venture capital industry is struggling, with first-quarter venture funding results down 25 percent to $275 million from $367 million a year ago, Canada's Venture Capital & Private Equity Association said.

One venture capital firm was so dismayed while looking for entrepreneurs to back -- and finding the cream of the crop departing for Boston or Silicon Valley -- that it funded and launched three Web companies of its own, The Wall Street Journal reported.

'We are at a crisis point in Canada's venture industry,' CVCA President Gregory Smith said.

The fund-raising gap with the United States 'must be addressed if Canada is to compete in the knowledge-based economy of the future,' he said.