Rick Segal of JL Albright MC'd a special Toronto Venture Group breakfast yesterday. Two of the "Victor" Award winners from this year's Canadian Venture Forum were on hand to talk about their experiences raising venture capital.

It is easy to see why Rob Imrie, CEO of Demand Cast and Kevin Leflar, CEO of Official Community Corporation won their respective categories. Both were articulate, focused, and, of course, convinced that their companies are the next big thing. How big? Segal segued into the formal business presentations by offering a context for their businesses: The Intention Economy.

To Segal, the intention economy is the true driver of successful online advertising. Since ads are the holy grail of the Internet's ROI, any solution that more effectively connects ads with people who actually want the related service or product will be a hands-down success. Demand Cast and Official Community Corp. might just be ways to achieve that end.

But here is the problem. These two companies passed the selection committee at the Canadian Venture Forum. They then jumped through the presentation hoops there and were selected as the most worthy companies for venture investment by a community of financial specialists. They have been vetted, turned inside out, inspected, and almost due-dilligenced to death. For what? They are looking for about a million dollars each. Neither has a term sheet yet.

Let's get this straight. Hundreds of companies apply. Some are weeded out. The rest go through an intense two day peer review. Check. Three are selected. RIght. What happens? Apparently, not much. That's not the fault of the CVF organizers who are doing what I think is a stellar job showcasing Canada's entrepreneurial community.

So, why do all this work and end up with a collective yawn from Canadian VCs? That is a hard question to answer. I found myself speculating on whether or not it is a systemic issues with the Canadian VC industry. The Labour Funds are disappearing soon. Apparently none have performed well (they've lost money according to the latest Globe story I read). It seems our home-grown -- read Toronto here -- VC economic cluster doesn't have the clout to take good companies and good ideas and make make them into success stories that become economic engines.

Why is that? We seem to do a pretty good job with hard technology plays. Think RIM here. But online, ultimately consumer focused prospects just don't gather the economies of scale investments needed to make them successful.

This trend is discouraging for local entrepreneurs who come up with products and services that are every bit as good as those produced south of the border. Is there an answer? Unfortunately, it seems like the answer is go south like many of this country's top innovators have done going back to Bell, through to the Avro Arrow engineers who went on to NASA, and, more recently, Flickr.

Does it have to work this way? No. In the so called information economy we live or die based on our ability to out-think and out-perform the competition. There has to be a way Canadians can compete without capitulating to our southern business partners. But young entrepreneurs like Imrie and Leflar with competitive products are unlikely to wait long for an answer.