Kenneth Cheung

Once again the Canadian government FAILS to understand the problem I would know, I founded and ran a tech company for a decade and raised MILLIONS from investors And it was HORRIBLE doing business here Let me explain This isn't a "money issue" This is a regulatory, economic and taxation issue combined with a deep cultural problem Back in 2015 I founded a tech company, using my own money from working in the Alberta oil field We developed our MVP in Montreal and launched our proof of concept right here in the West Island Our first ever investors were our own first clients. We raised $150,000 from them But things got harder when it came time to raise our seed round I met with EVERY SINGLE VC in Montreal. All told us NO Why? Too risky lol... its the very definition of Venture Capital They wanted a pitch deck, projections on 5 years, cashflow, business plan, go-to-market strategy, communication strategy, marketing strategy, Tech reviews, C.V. of founding team, financial disclosure etc We spent more time preparing documents for them than we did scaling our business Worse of all, they all wanted something different and would give contradicting requirements I remember this interaction at the Espace CDPQ, the headquarter for all Venture firms in Montreal ie: Investor: How much do you need Me: $1 Million Investor: So if you only raise $750k what happens? Me: Well we'll adapt XYZ Investor: So then never EVER tell me a fix number. Give me a range. $750K-$1.5M or else you look foolish I went home, reworked the pitch deck The very next day: New investor: How much you need Me: $750K-$1.5M New investor: What... you don't even know your number??? Me: well... yes but what if we raise less or more New Investor: No, you look foolish We said screw it. Approached American Investor Our first was a VC firm out of Houston, Texas Took less than 1 month from initial pitch, to closing. In USD. For more money than what Canadians wanted to offer. Best of all, they understood the fluid nature of a startup. No onerous and rigid plan. No overburdened documentation. Every second wasted on non-operating activities was sucking productive time away from scaling. But Elliot... what about BDC and other AMAZING institutions in Canada We did business with the BDC. a $250,000 loan. Which I had to personally guarantee. Which 25 year old has assets and the balls to guarantee that amount? Very few. It's prohibitive. And reduces capital available to our homegrown companies And this was AFTER MONTHS of explaining to them what we were doing. It was clear the BDC was setup to support traditional brick-and-mortar companies only. Think Manufacturers or Commerces. But a tech startup? They could NOT wrap their heads around it. Canadian banks? Forget it. Outright. Too risky Then I watch fellow startups do the same. And move to the US. Why wouldn't they? In Quebec, I had to pay an extra 15% on top of my payroll as taxes. QPIP, QPP, FSS, CNESST... all to satisfy the government non-stop appetite. Consequences: Well for a startup where every dollar counts, this means lower salaries thus harder to attract top talent (vs American competitors) or I simply hired less staff... thus slowly growth for both my company and the country's economy. But wait it gets worse. Revenue Quebec and CRA both required a plethora of compliance documents filled monthly or quarterly. GST and QST tax fillings, CNESST Salary equity (yes lol) documents, Source deduction documents, RL-1 fillings, Income tax (both QC and CAN), Workplace sexual harassment policy, OQLF policy, CNESST training and certification... the list goes on At least 1 day a month was spent by me and some of my executives preparing and fulfilling these documents. This means we were't scaling our business and instead working for FREE for the government. Then there is the tax burden. Why would top talent want to come here and get taxed at up to 52% marginal rate? While a Miami startup offers higher salary and the State taxes you 0% Finally investor behaviour In Canada... safe. steady return. Great for a Series C. Great for an established companies. No desire for risk. No understanding of the ecosystem. HORRIBLE FOR VENTURE Meanwhile the U.S. , they understand the ecosystem. 90% of their investment will go down to 0. But the few that survive will go on to earn them BILLIONS and change the world. So this new announcement of $1.75Billion won't change the underlying issue that makes us uncompetitive. At best, it will go to startups who will flee to the US the very second the money hits At worse, it will just be another slush fund given to friends of the government and I fear its the latter as usual