Joshua Brown is chief representative for Canada at Tractus Asia, an Asia-based business advisory firm, and Canada activities chair at the Canada ASEAN Business Council (CABC).
The development of Asian growth markets in the past two decades has seen an evolution in the mindset of Asian investors, the rise of a large class of high-net-worth individual investors and family offices and dramatic expansion of outwardly focused Asian institutional investors. This environment presents tremendous unrealized potential for early and growth-stage Canadian companies that too often struggle to raise money during a critical period. In particular, Canada’s maturing innovation startup ecosystem and venture-capital market is well positioned to attract these sophisticated, Asia-based emerging-technology investors.
Common among this new community of wealthy Asian investors is an appetite for alternative asset-class investments both domestically and internationally. The expansion of such capital pools helped to make 2015 a record year, with investors in Asia doing 3,651 private deals with a total value of $52-billion (U.S.), according to Preqin, an information service company that tracks private-capital activity.
By comparison, the Canadian Venture Capital and Private Equity Association reports that Canada saw 536 deals with an aggregate value of $2.3-billion (Canadian) in the same year. The United States, the world’s largest venture-capital market, recorded a whopping 10,293 private deals totalling $79-billion (U.S.) in value.
Canada’s stable financial markets, a world-class R&D environment and innovation-focused companies – often available at significantly less frothy valuations than their U.S. peers – collectively provide an appealing investment environment for Asian investors. A 2011 report, Innovation Canada: A Call to Action, flagged the limited availability of risk capital as a significant pain point for Canadian early-stage companies. Some government-backed funds have since been injected into the system to address limited access to capital faced by Canadian startups,…