Spring Loaded: Not the whole Way

This is a response to a Chronicle Herald article:

NowNS: Firms like Spring Loaded Show Way of November 9, 2015

Spring Loaded: Not the whole Way

Start-up company. New Technology. Local people. Team effort. Everyone is excited. A good news story. Right?

Yes and no.

First I want to make it clear I have nothing but best wishes for Spring Loaded. Nova Scotia needs thousands more Mr. Cowper-Smiths and Mr. Garrishs. I hope they become billionaires.

However several points to ponder:

1. The company is partially subsidized by government (ACOA, Innovacorp & BDC) and more money is needed. There is no future with corporate welfare as it is bad for the economy, leave this to private investors.

2. As someone with an investment background I note the very high risk of the investment. According to the Wall Street Journal 75% of all U.S. startups fail. Given we are not in the U.S. but in an impoverished corner of a less successful national economy I doubt the rate is lower. The very real possibility of failure and the substantial losses that would result are not hinted at in the article.

3. The crying need for an effective regional/local private venture capital industry! Venture capital flows on its own to where it can earn a good risk-adjusted return. Nova Scotia has a problem with venture capital since our lousy economy and anti-business attitudes have created an environment of risk aversion. And our lousy economy and anti-business attitudes are the direct result of the chronic economic mis-management by government.

We need to ‘Show the Way’ to lower risk for business by fundamentally shifting government’s approach to create conditions that are favorable for firms such as Spring Loaded.

Jonathan Dean