To Canadian VCs who have long been timid about entering the Web 2.0 market, yesterday's announcement by Internet behemoth Google should provide the incentive to make some long-delayed investments in the Web 2.0 sector -it's not too late.

In case you haven't heard, Google bought upstart YouTube for $1.65 Billion dollars. Not bad for a company little more than a year old founded by two twenty-somethings.

Of course, many of us have seen this phenomenon coming for months now. It was clear that when a surplus of digital devices in the hands of people with high-speed Internet access crossed with social-networking massive new markets would result.

Maybe it is because of my experience in the academic world as Director of the Information Technology Design Centre at the University of Toronto, but it was obvious Canada offered start-ups with similar or even superior technologies to YouTube's two years ago and yet they wallowed for lack of seed funding. Too bad for them and for the Canadian investors who could have captured some of that wealth.

UPDATE: The last paragraph may sound optimistic but we have to remember, there is no technical reason why a YouTube cannot have been launched in Canada. Their success is due to access to capital willing to take risks. That is the difference.