“Venture capital is dead. It’s gone.”

Sir Terry Matthews didn’t mince words Thursday morning as the keynote speaker at OCRI’s Technology Executive Breakfast. Not that he ever does. And while some might argue that statement about the status of Canada’s venture capital industry, or at least its level of activity in the nation’s capital, may be a bit premature, that’s not the point.

The point is, who cares?

Matthews and partner Michael Cowpland began the first incarnation of Mitel in 1972 with persistence, sweat and a $4,000 bank loan. That was enough to get their first product to market in nine months. This was followed by Mitel’s breakthrough product: a PBX phone system with a software switch. Mitel beat out about 40 larger competitors to win a watershed contract with AT&T, the first time, Matthews said, that the telecommunications giant contracted out. That deal, and a $250,000 grant through Canada’s IRAP program, took Mitel from zero to a 20-per-cent global market share in five years and made millionaires out of penny investors.

And while sheer persistence and hard work were part of the secret sauce for Mitel’s success, and for every success Matthews has had since then as the man behind the creation of more than 80 high-tech ventures, he cited an even more important ingredient: the core competency of partnerships.

Partnerships build technology clusters. Partnerships allow a company to capitalize on another’s strengths without having to carry the overhead of developing a  particular area of expertise in house. Partnerships take advantage of another’s time and money invested in R&D to compliment your own.

Matthews holds Nortel’s utter aversion to partnerships to blame in no small degree for the company’s misfortunes.

And while there undoubtedly are challenges in the marketplace at present, Matthews insisted there is a resurgence at hand as ambitious and nimble entrepreneurs of the next generation make their mark. They just need a commitment of time and mentorship from those with experience and money to invest. Venture capital is irrelevant. Time is what’s important.

Matthews’ approach is to find the key contact in a post-secondary institution passionate about commercializing ideas into start-up companies to help him cherry pick the cream of the crop from among new grads. He wants to work with the handful who have the drive, ambition and adaptability critical to surviving and thriving in tough times. He puts these teams together, puts his resources behind them, and sets out to identify and develop a viable product and market niche. By engaging with the market, he will guide this team through the process of honing, refining and focusing the idea until there is a viable business ready to be formally launched.

In return for this intensive mentoring and a high-pressure work schedule that pays little attention to weekends and holidays, each team member is paid the lofty salary of $25,000. However, what they should be paid but are not is parlayed into ownership stakes in the new company.

Matthews believes there is no more effective way to quickly bring a product to market. And being first to market is the only way for North America and Europe to compete in a global economy that is now flat with few if any true trade barriers. With Asia pumping out engineering talent that works for a 10th of what ours does, trying to compete on cost is a death sentence.

So the next time you hear someone pining for the return of the good ol’ days of the telecom boom, or whining about the demise of the venture-capital industry, do as Matthews does and take a chapter from Darwin: it is not the strongest or the most intelligent that survive, but the ones most capable of adapting.

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