Canada Must Increase Access to Seed Capital

Much of the business headlines have been heaping praise on Canada over the past several years – a solid economy, plenty of resources, and a debt-to-GDP ratio that actually seems within the manageable realm. Even our own Prime Minister attempts to use us as an example for the rest of the world, that's something many would have considered downright un-Canadian just a few years ago.

While we are certainly in a better financial picture than most, there is definitely a blemish on the Canadian economy and it's becoming more and more visible as it goes untreated. A recent article in the Financial Post commented on Canada's need to improve access to both VC and public funds. It's worth reading and there's a lot to like about much of the assertions made in the article.  

It goes without saying that Canada's economy is powered by many things but one of the main drivers is resource companies. Obviously, the need to diversify is there and technology, research and a variety of different sectors all require a combination of VC and public funds to move them forward.

The real issue still isn't being addressed, however, and this is something the article makes quite clear.

“Within the VC portfolio, access to seed capital is most restricted: of the $1.51 billion in VC invested in 2011, two thirds—$1.08 billion—went to later-stage companies. Yet without early-stage venture financing, many Canadian companies fail to bridge the gap from local micro-firms to mature firms within our national economy.”

Since much of the VC environment in Canada is spent playing the waiting game – waiting to see where the public funds are willing to place their bets – most of the equity up for grabs is landing with the more established ventures that boast plenty of government backing already. We understand why the government does what it does, but there is certainly an unintended side-effect at play here – the current approach institutionalizes the flow of capital away from early stage investing.

The truth is that VC funding is down overall and the problem is most exacerbated at the early stage level. Analyzing and interpreting risk is one of the cornerstones of success in business but risks must be made – even if it's outside of your traditional comfort zone.

Zynik Capital is a firm believer in the importance of angel and early-stage investing. Oftentimes, the money is what gets the wheels moving, but having experienced individuals come on board and assist an early stage company is what can make the long-term, tangible difference between a flash-in-the-pan idea and a winning venture.

We are about providing the assistance and expertise to create amazing products, build incredible brands and provide the right analysis in a variety of special situations.

 

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RPS Composites was acquired by Zynik Capital in January 2012. Zynik has retained the entire management team and has left us to take care of the"nuts and bolts" of the business. We have been most impressed by Zynik's focus on the long term profitability and sustainability of the Company. Under the leadership of Zynik's Chairman, Iqbal Kassam, management, for the first time in years, is looking beyond tomorrow, next week and next month. Iqbal has lead several strategy sessions for senior management over the past year that have resulted in a new business model and strategic plan for the Company. This whole process, and Iqbal's enlightened approach to business, has re-energized the Company. We look forward to continuing to work with the Zynik team to strengthen and grow our business.

Robert C. Hawkins President and CEO RPS Composites

Zynik Capital has been and continues to be an excellent strategic partner for Texada Software. They are a trusted advisor with tangible hands on expertise supporting management’s efforts in the evaluation and execution of strategic initiatives. Their ongoing support, both personal and financial, has been instrumental in the success of the company and will continue to be so as we enter into the company’s next level of growth.

Brian Spilak President Texada Software

Weber Manufacturing was acquired by Zynik in 2007, it has been a pleasure working directly with the Chairman, Mr. Iqbal Kassam. His management style is the best I have ever seen! He allows Weber management to make all the day to day decisions, yet when we need to call on his expertise in strategic planning, he provides guidance and support. The entire Zynik team has been supportive and helpful with a focus on long-term growth for Weber, creating a win-win result for Weber employees and Zynik. I look forward to working with Zynik for many more years to come.

Chris Edwards President and CFO Weber Manufacturing Technologies Inc.

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Willie Swisher President & CEO Noble Iron
Zynik has been an incredible investment partner to Eruptive Games. The management team at Zynik has truly been a contributing factor to the success of our company.
Julian Ing CEO Eruptive Games

On behalf of the Weber employees and management, I would like to say THANK YOU for eight great years of working with you. Since you purchased Weber in April 2007 many great improvements have happened for Weber and the Town of Midland. Ok, truthfully we have had a few low points, but when working under your leadership we have managed to come out ahead and stronger.

Since April 2007 we have been able to double the gross revenue, expand into new markets, developed two new product lines that are not related to tooling and we have hired 50+ new fulltime employees which is not only adding to the Weber family, but supporting many businesses/people in the Town of Midland.

Iqbal, thank you for supporting Weber management as we grow this company and I look forward to many more years of working with you!