Canada’s augmented and virtual reality industries are in “desperate” need of homegrown investors to keep profits from seeping across the border and overseas, said some of the country’s top innovators in the sector.
“Why should investors in China, Silicon Valley and Dubai make the money from our tech companies and our government money?” Alan Smithson, the CEO of consultancy company MetaVRse, said in a discussion about AR and VR’s future at the Cantech Investment Conference in Toronto on Wednesday.
“We are missing massive opportunities and need to figure out the funding model to keep the funding in Canada.”
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Smithson and panellists from companies including Google said there shouldn’t be a lack of homegrown investment. They said Canadian AR and VR talent isn’t scarce, the country’s tax incentives and government grants are generous, and businesses can nab considerable savings as developer pay is a quarter of what those in San Francisco earn.
They believe investors should also be less hesitant because prominent Canadian companies are experimenting with such technology, reaffirming its usefulness and viability.
The panellists noted Cirque du Soleil uses AR and VR to design sets for shows because it allows them to try out the placement of elements before actually installing them. AR has even appeared at the Art Gallery of Ontario, where its current ReBlink exhibition lets visitors step inside a painting using a custom phone and tablet app that unlocks an immersive experience.
Even with such successful adopters as an example, the panellists hypothesized Canadian AR and VR investors are partially shy to open their wallets. They said that when the technologies first started emerging, forecasts predicted massive profits and growth, but didn’t account for how long it would take to see those returns.
The stereotype of Canadian politeness also comes into play. The panellists agreed that Canadian companies were not being as aggressive in marketing themselves to investors as their rivals to the south.
“Canadian pitches do not think big at all. The revenue projections are a third to a half of what Americans think they can do – and that is not a good thing, because at the end of the day, investors want to see big money,” said Tom Emrich, a partner at Super Ventures, an early-stage fund dedicated to augmented reality.
What Canadian companies do have though is a knack for content.
Google’s Alex Katzen said she’s read that 84 per cent of Canadian AR and VR companies are focused on building content as opposed to platforms. She said this is positive because she suspects content will be an area that will “really move the needle” as the technologies continue to evolve.
The technologies are seeing a surge in Vancouver, which is quickly becoming a Canadian hub for VR companies – but still not generating as many investors as the U.S., said Smithson.
The last time he was looking for AR and VR funding in Canada Smithson said he got his hands on a list of investors and how many related ventures they backed. Many of the U.S. ones had invested in between 10 and 30 companies, but in Canada, there were only a few investors and most had only funded one company.
That’s why the U.S. and other countries are being turned to by investment seekers like Myles McGovern, whose led companies behind the Black Eyed Peas’ first 360 music video, and livestreaming hundreds of events including the 2016 Olympics with the 360 technology.
McGovern said in recent years he flogged one of his ventures up and down Sand Hill Road in California, a mecca for venture capital seekers.
Many of the investors out there told him, “Why would I invest in a company in Canada, when I can walk down the street and invest in someone down the street? I like your tech, but why don’t you move down here?”