You may have read in the Globe this morning about BlackBerry Partners Fund’s investment in three startups. My first reaction to the article was one of disappointment as the three investments that they made in Buzzd, Digby and Worldmate were investments in the US and Israel. What, no investments in Canada? Then I realized that this is perfect. We are finally creating another world-class VC firm in Canada, one like Celtic House (also a MaRS tenant) that invests worldwide. The fact that BlackBerry Partners made no Canadian investments is exactly the right strategy.
For too long we have expected that Canadian VCs will invest primarily in Canadian firms. Using this model, a VC has to cover a very broad range of technologies, placing bets in too many areas to have a real ability to judge what is world class. Someone covering so many disciplines cannot easily understand the nuances that make successful companies in any one industry. Furthermore, by covering so many disciplines, a VC may not have the industry contacts and deep strategic understanding of the industry to properly assist in the development of its investee firms.
BlackBerry Partners Funds, being so heavily concentrated in one technology will know exactly what is first class, will be able to attract the best investments in the world, will be able to assist its investees with relationships, marketing, strategy and promote them within RIM’s ecosystem, all things that will create great technology companies.
Eventually the fund will invest in a Canadian company but only when the company is truly world class. Having a fund in Canada with money, though, will foster the creation of technology firms within the RIM sphere merely because the fund has money. Developing companies will begin to target their developments towards the BlackBerry knowing that a fund exists that can invest in them. This whole process will further consolidate Canada’s (RIM’s) position in mobile communications.
Once this fund’s strategy and Celtic House’s is seen as successful we’ll be able to create a few other highly specific funds, investing world wide in highly specific niches but once in a while in Canada. This funding strategy will raise the bar for Canadian firms and ensure that they have a chance to compete globally from the start. I see this as the re-birth of the VC industry in Canada, one with tremendous potential using a focused business model, going deep worldwide instead of broad locally.