August 13, 2013

Canada’s Startup Ecosystem Needs BlackBerry

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After a valiant but apparently unsuccessful attempt to get back in the smartphone game, BlackBerry’s future is bleak. This includes the distinct possibility that BlackBerry will pull the same disappearing act as Nortel.

BlackBerry’s demise is tragic for many reasons but if the company does, in fact, have its assets (cash, patents, security technology) picked off in the same fashion as Nortel, it will be a huge blow to Canada’s startup ecosystem and the community of Waterloo.

Truth be told, large high-tech companies are good for the growth of Canadian startups. The more companies that hire, train and nurture engineers, developers, marketers, salespeople, product managers, etc. the better.

Armed with valuable experience, some of these people have the passion and financial ability  to create their own startups or play integral roles in helping startups establish themselves as viable businesses.

You only have to look at the number of startups created by ex-employees of companies such as Nortel, BlackBerry, Newbridge and Mitel to see how they serve as powerful entrepreneurial engines. Without large high-tech players, Canada’s startup community will suffer the loss of an important pillar.

The party-line from the optimists is the possible loss of BlackBerry will be mitigated by flourishing startup ecosystem. While it’s good people are confident, the startup scene in Waterloo and Canada would be much healthier if BlackBerry managed to stick around rather than evaporate into thin air.

Stepping back, the news about BlackBerry reflects an inherent weakness in Canada’s high-tech sector: the dearth of large companies. You could probably count on your hands the number of Canadian high-tech company (not subsidiaries of U.S. players) that have sales of more than $500-million.

The reality for the best and most promising Canadian startups is they’re snapped up long before they ever get the chance to grow up. For Canadian entrepreneurs, the acquisition sweet spot seems to be $20-million to $30-million – enough to make them comfortable and their investors happy.

Why aren’t there more large Canadian high-tech companies?

It could be a lack of confidence or a global vision. It could be lack of growth capital that would allow a promising and innovative startup to power hyper-growth. It could be that Canadian entrepreneurs aren’t willing to think big.

The bottom line is Canadian startups needs large players such as BlackBerry so there’s a healthy and vibrant ecosystem that can drive growth and create more jobs. If BlackBerry does go the way of the dinosaur, it will take more than entrepreneurial optimism to improve the situation.

More: At the GROW conference, Boris Wertz talked about how there are two ways to build $100-million tech companies.

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