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of the ecosystem they will prevent the growth of smaller trees. 22 The now apparent, stifling effects of ‘big tech’ on competition is a vivid illus- tration of this principle. The long-term health of the Canadi- an innovation ecosystem is critical as we continue to navigate the im- pacts from the COVID-19 pandemic. It is imperative that we continue to grow the capital available to Cana- dian entrepreneurs, especially at the critical early stages of a business. Policy-makers need to understand that connectivity is a fundamental component of entrepreneurial eco-
systems. The shrinkage or loss of one component in the ecosystem damages its overall effectiveness. A decrease in angel activity has re- verberating and long-term impacts across the innovation ecosystem. Policy-makers must therefore en- sure that Canada continues to have a healthy angel investor community by recognizing that angel capital is vital to Canada’s economic recovery and future growth and acting upon this. It may be appropriate to prioritize financial support for structured an- gel activity over tax credits for an-
gel investors. This approach can be justified for at least four reasons. First, extending tax incentives may be considered too expensive con- sidering the extreme financial pres- sure that federal and provincial gov- ernments are under on account of their spending on COVID-19 relief measures. Second, some academ- ic evidence suggests, in other juris- dictions, equity tax credits alone do not necessarily promote high-qual- ity entrepreneurship 23 . However, in the Canadian context, well-estab- lished incubator, accelerator and angel-readiness training programs in tandem with angel investor train-
22 The metaphor of The Upas tree of Java that has the power to destroy all other growth within a radius of fifteen miles was applied to an explanation for the failure of Glasgow to diversify from shipbuilding and heavy engineering which brought it great prosperity in the 19th century (In that era Glasgow was described as “The second city of Empire) which went into terminal decline in the 20th century. (S. G. Checkland: The Upas Tree, Glasgow, 1875-1975: A Study in Growth and Contraction. Glasgow: University of Glasgow Press, 1976.) This metaphor can be applied to many other once prosperous in North America and European industrial cities of the 19th and 20th centuries. —
23 Harrison, R T, Bock, A J and Gregson, G (2020) Stairway to heaven? Rethinking angel investment policy and practice, Journal of Business Venturing Insights, 14, e00180. https://www-sciencedirect-com.ezproxy.lib.gla.ac.uk/science/article/pii/S2352673420300366
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