My responses to the fourth theme of the Canada AI Survey, focusing on scaling Canadian champions and attracting investments.
This is part 4 of “Responses to the Canada AI Survey” - a series containing my responses to the eight themes of the Canadian government’s public consultation on artificial intelligence.
Theme 4: Scaling Canadian Champions and Attracting Investments
Q1: How does Canada get to more and stronger AI industrial champions? What supports would make our champions own the podium?
Canada’s industrial AI champions should be strong in Canada - while being set up for rapid expansion broadly outside of it. But, they can’t necessarily be identified ahead of time - and they may not be AI companies in an obvious or marketable way. Therefore, I’m unfortunately proposing this question comes from a flawed perspective. Champions need to arise naturally and whether they are AI champions also falls out naturally of their business. We should not choose them, especially if doing so could come at a disadvantage to other Canadian prospects.
Q2: What changes to Canada’s landscape of business incentives would accelerate sustainable scaling of AI ventures?
Incentives should align to adoption and procurement of Canadian-built solutions - even if some uncertainty exists. There is currently an aversion to adoption of solutions from small companies and it’s widely recognized that this needs to change, across sectors, but the public sector should lead the way. This allows early stage companies to iterate on product-market fit which must be achieved before capital can accelerate growth.
Q3: How can we best support AI companies to remain rooted in Canada while growing strength in global markets?
The two goals of keeping Canadian companies rooted in Canada while growing in global markets are not diametrically opposed. We also have to accept that there may be companies who offer solutions that are perfect for the Canadian market but do not find the same success globally. These are success stories too. I think these should be treated as separate goals, so proposed by some of the other survey questions. Also, the solutions should apply to non-AI companies.
Q4: What lessons can we learn from countries that are successful at investment attraction in AI and tech, both from domestic sources and from foreign capital?
Competitive environments seem to attract the most investment. Global investors are not looking for a sure thing, they are looking for the potential of a big win. This includes the recruitment of talent, which requires talent mobility. For example, talent mobility is extremely high in California, aided by a prohibition on non-compete clauses. This also encourages the founding of new ventures in similar fields. Employment law in Canada is much murkier and varies province to province in this respect.
There is also, in my opinion, a problem of optics currently when it comes to early stage ventures. Why would global capital invest in Canadian firms when Canadians are not freely adopting their solutions AND Canadian investors are not investing in them? The Canadian ecosystem has in part responded to this by creating direct bridges to ecosystems like Silicon Valley from which to draw investments. In their own response, Canadian capital experiences a sort of loss aversion after it becomes clear they have missed out. While they may create new groups and funds to address this issue, they must proactively convince founders that they can find their first capital here.
We want the foreign investors to be the ones who feel like they are missing out.