Monday, May 04, 2009

Conceding risk capital in Canada

Another story about a Canadian researcher being lost to the US due to budget cuts.

This shouldn't be dismissed as another example of Canada's "brain drain." Sure, Canada and many other countries will always lose talent to the US because it is a bigger market, more things are happening, and there will always be more opportunity.

But there is no reason why this trend should be exacerbated by budget cuts. Quite the opposite, money should be spent in order to stem this tide as much as possible. This isn’t a cost, it is an investment in the future (yes, I know this is clich├ęd)

There are two clear negative repercussions to losing R&D talent:

1) It will be more difficult to attract foreign investment, especially VC money, to fuel innovative industries. People invest risk capital in countries where they see new products and services being developed. A leading indicator for this is the relative health of the local R&D community. A non-existent community means no innovations, which mean no outside risk capital coming into Canada.

2) It threatens Canada's future as a hub for innovation. If Canada wants to diversify its economy away from just commodities, then it needs to make this sort of long term investments. The hope of Canada becoming a center for any sort of innovation will be dimmed without active R&D investing, which will lead to the commercialization of products and the creation of industries later down the line.

What is the point of creating an "urban paradise" if no one is around to enjoy it?

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