By: Brian Jackson

The way Simon Vallee and Arash Shiva describe it, it was almost a relief when Groupon Inc. bought the online appointment booking business they’d spent three years bootstrapping into a viable business located in Vancouver.

The co-founders of OpenCal were in a unique position where they’d put together a growing online business without the help of any investors or debt. That left them with a simple organizational chart under the corporate structure file. The entrepreneurial duo also pulled on years of experience designing user interfaces and had executed on an elegantly simple product that allowed customers to book an appointment slot over the Web for any business that needed it – hair salons like frisør frogner, auto garages, or tax consultants. Anyone who can use Google Calendar could use OpenCal.

“We’d become the experts in the online booking field,” says Vallee, now a senior product manager at Groupon. “We had a solid product to offer, we think the best product on the market, actually.”

It was the principals of OpenCal who first approached Groupon about a potential partnership. They saw the opportunity to help the daily deals site set itself apart from the rampant competition in the market they’d pioneered. Before long, Groupon made a buyout offer and the acquisition was completed in September 2011. The deal, made for an undisclosed amount, has since caused Vallee, Shiva, and the remainder of OpenCal’s five-person team to relocate to Palo Alto, Calif. The Vancouver office is closed.

OpenCal’s exit is not unusual on the Canadian tech startup scene. Businesses that have built a solid product and attracted a healthy user base are acquired by a larger corporation from south of the border. Well-known examples include Halifax-based Radian6’s acquisition by Salesforce.com in March 2011, or Bump Technologies’ sale to Google Inc. in May 2010.

While often celebrated as an entrepreneurial coup, these transactions impact Canada’s economic landscape in different ways. While some of the acquired firms continue to operate where they were built, others like OpenCal are uprooted and moved to Silicon Valley. The companies that leave are often capital-starved, and see an opportunity to build their product up with the backing of a big corporate bank account.

Acquisitions are never an easy decision to make for a startup, and OpenCal did what was best for them, says Bill Tam, the president and CEO of B.C. Technology Industry Association (BCTIA). Tam acted as a mentor for Vallee and Shiva, and helms an association with a mandate to develop Vancouver’s 9,000-plus early-stage tech companies into job-creating firms.

“We have a pretty vibrant startup eco-system,” he says. “Probably the area we lack in is the middle class of tech companies.”

BCTIA wants to build out that middle class to benefit the wider economy. Larger companies can create more jobs, and spend more on research and development. But a big barrier is the limited access to capital in Canada, Tam says. It’s a situation that’s been getting worse over the past decade.

“The effect is that it has them making strategic decisions to pursue M&A considerations prematurely,” Tam says.

To read the full story, click here.