Here’s why GE Ventures thinks Canada’s digital startups are ripe for partnerships
Note: This article originally appeared in National Post. Story by Denise Deveau
Sue Siegel, chief executive of GE Ventures, was at MaRS Discovery District in Toronto last month to talk about why GE’s venture capital and technology partnership arm sees Canada, and the country’s tech entrepreneurs as a rich source for partnership and acquisition. In an interview with FP contributor Denise Deveau she talked about GE Ventures mission, as well as the opportunities and challenges she sees for Canadian innovation. Following is an edited version of that interview.
Q: What is GE Ventures?
A: GE Ventures was formed as part of Jeff Immelt’s mission to transform GE into a digital-industrial company. To that end, there has been a huge effort made to diversify GE’s portfolio toward digital versus capital market assets. I was recruited three years ago to play a part in creating an entrepreneurial ecosystem for GE. To date, GE Ventures has 75 portfolio companies. Since 2013, we have deployed $375 million to early stage companies through incubators and venture capital partners, with cheques typically ranging from US$1 million to US$15 million. In terms of footprint, we have a presence in eight different parts of the world; most recently in Canada.
Q: What is the status of GE Ventures in Canada?
A: We are looking at how sustainable the entrepreneurial ecosystem is in Canada. We are working with government, universities and incubators to identify startups that could benefit from underutilized GE intellectual property and understand the terms of engagement for enabling growth. In other words, we’re figuring out what a sustainable strategy for startups will look like here.
Q: What’s unique about your model?
A: GE Ventures is not just about equity investing. One unique aspect is we are taking ideas that are already developed within GE and licensing them to technology startups with the right expertise. In that way we can build out an ecosystem that will help communities start building capacity. Our work in Canada is particularly unique since we are working on formalizing a licensing program rather than doing this on a one-off basis. The hope is that we can take the model we develop in Canada … around the world.
Q: What have you done in Canada so far?
A: We have struck three licensing agreements. The first to be announced is a partnership with Vadu Inc. in Alberta, which is using some of our imaging technology algorithms to create a business around tracking and monitoring in-store behaviour of consumers. This has led to a program for providing similar opportunities for Alberta businesses and entrepreneurs.
Q: What’s next?
A: When economic growth is moderate or compromised we have to creatively think about where to get growth. The world has seen what Silicon Valley has done to create a sustainable ecosystem. Companies such as Yahoo, Facebook, Apple, and LinkedIn had to start somewhere. Canada is doing the same: The technology transfer we’re seeing generated by University of Toronto, for example, or the government support behind accelerators like the MaRS Innovation Centre is impressive.
Q: How is Canada’s performance in supporting startups?
A: Canada has a very robust and active startup ecosystem. Ontario, Quebec and B.C. governments are taking the lead in this area in terms of the amount of companies being invested in, especially in areas such as healthcare, energy and agriculture. In Vancouver, there is a lot of innovation coming out of universities around energy and healthcare, and particularly in the area of genomics. And believe it or not, despite that the oil and gas industry is challenged, Alberta also has a pretty robust entrepreneurial ecosystem that simply requires partnerships and infrastructure to grow. We’re definitely looking at Alberta to understand what might be helpful there, as well as Eastern Canada.
Q: What is GE Venture’s plans for Canada moving forward?
A: We are focusing on two areas. The first is growth funding. We are working with a number of venture capital funds to address that. The next phase will be catching companies entering the Series C stage and supporting commercialization. That’s something that needs to be worked through so we can cultivate a culture of growth. To build a sustainable culture you need companies that have gone through cycles that can coach new enterprises. That takes time, typically a 10-year window. I would say Canada is four or five years into that cycle which represents a significant opportunity.
Q: What do you see as the biggest challenge for Canadian entrepreneurship?
A: One major challenge entrepreneurs face is knowing how to scale to handle the U.S. and rest-of-world markets. That’s always a big question, because you don’t want to take that early growth and move it somewhere else. The question is how can we maintain a presence in Canada and build growth capabilities for Canadian companies to get real market penetration? That’s one of the reasons why we’re here.
Q: What do you see as the biggest advantage?
A: Canada is such an immense of space but at the same time it is very accessible. It’s a friendlier type of environment that allows for real business partnerships. It also has a rich and diverse ecosystem that crosses many verticals. So we are working on what kind of relationships we can form and figuring out how to cultivate them to create a market space. We’re learning as we go. With the Canadian GE team and the entrepreneurial ecosystem we see, we feel it’s the right way of doing things.