In the constant quest to unlock the mysteries of innovation, it is inevitable  that some eyes fall on Canada’s venture capital industry as a potential key to  cracking the code. Canada’s venture capital industry has struggled for the last decade, delivering underwhelming returns to investors and failing to develop the kinds of new industries and world-beating companies that regularly come roaring out of Silicon Valley. So Ottawa’s decision earlier this year to inject $400 million of taxpayers’ money into the industry has been welcomed by some innovation observers. They see it as a good first step toward reversing that woeful record, a steroid shot to help Canadian start-ups join what new economy writer Chris Anderson calls the ”œindustrializing of the do-it-yourself spirit.”

But Ottawa must take into account the evolving nature of the global venture capital industry. Its cash will be chasing Canadian entrepreneurs who have options. There are also new players and models for financing start-ups. Google has entered the venture capital game with Google Ventures, and in 2009 super-angel investors Marc Andreessen and Ben Horowitz built on their record of spotting leviathans like Facebook, Skype and Twitter to form Andreessen Horowitz, raising $2.7 billion in three years. Both these firms offer a deeper expertise in design, engineering, political connections and, in Google’s case, access to big data analytics, than the industry has been able to muster in the past.

Other investors are tapping the potential of ”œcrowd-funding,” a Web-based fundraising practice that allows start-ups to raise up to $1 million collectively from hundreds or thousands of small-investor donations. Crowd-funding was part of the Obama administration’s American Jobs Act earlier this year, turning”œdonors” into legal investors, though the regulatory details remain to be worked out. (A popular movement is afoot to bring crowd-funding to Canada, but for the moment provincial regulations restrict it.) And despite a track record of carnage in some places, other countries continue to throw money at the start-up game, trying to replicate Silicon Valley.

Ottawa’s money is part of its response to the federal Expert Panel on Support to R&D, chaired by Tom Jenkins, but the Conservative government has yet to fill in details of how it will operate. The articles here tackle some of the issues that must be addressed. What should be the mix of public and private funds? Is $400 million enough to make a difference? Is public money doomed to pursue political goals, pumping up particular regions or industries the market ignores? And above all, will more and better venture capital funding truly be that ticket to innovation.

A collection

Venture capital’s innovation shortfall
Josh Lerner

Cultivate entrepreneurs and venture capital will follow
Marcel Côté

Quebec gets ahead of the game
Gilles Duruflé

What Ottawa can do
James A. Brander, Thomas F. Hellmann, Tyler Meredith

The view from Silicon Valley: Winning big
Chris Albinson