I love reading Fred Wilson’s blog avc.com. I love it because Fred is a brilliant investor (twitter, etsy to name two) and because he is generous with his insights. Moreover, Fred is not afraid to express doubt, concern or skepticism about an industry that has, most likely, made him a very wealthy man. Recently, Fred blogged about the proliferation of web startups and his concern about who exactly is funding these companies. To summarize, early-stage companies are like children that need instruction and nurturing, and like children, you have to set money aside for school, clothes and other incidentals. The challenge is that the investors backing some of these companies either don’t have deep pockets or they have spent their fund too quickly and have not reserved enough for the inevitable growing pains of their portfolio investments.

This got me thinking about some of the challenges we see at Ubequity. I plan on blogging about this in more detail later, but to start, let me say that I believe there are profound flaws in the Canadian venture funding space. We have many companies in this country that are exciting and innovative and have been able to raise seed rounds from friends and families and angels but that are going to run into serious trouble when they need that next injection of capital. Why? Well, while there are VCs in Canada, to be sure, there are not enough, and certainly not enough to provide the kind of creative and flexible financing early stage companies require as they are nurtured to maturity. One of the things we are focused on at Ubequity is filling the gap between an angel round and a private equity round (or simply sufficient cash flow to grow organically). We did that with Adenyo, and are doing it with other companies in our portfolio. As Fred says, we need a way to fund the entire creation, not just the first part of it. I couldn’t agree more.