Canadian Manufacturing

Canada’s tech sector mulls impact of expected $900M Trudeau cash infusion

With only so much to go around, a clash of interests could be on the horizon



TORONTO—Leaders in Canada’s burgeoning technology sector could see a wave of new federal support from the incoming Liberal government, but that doesn’t mean they all agree on how the money would be best spent.

About $900 million has been earmarked by Justin Trudeau for the country’s tech community, and over the coming weeks some of the most prominent figures in the sector will begin to make a case for where those funds should be invested.

With only so much to go around, a clash of interests could be on the horizon.

“It’s a rocking sector, and one we can lose quickly if we’re not careful,” said Bruce Lazenby, the president and chief executive of Invest Ottawa.

Lazenby heads one of many regional organizations throughout the country that function as a support system for technological growth. Like most of those organizations, Invest Ottawa could get a share of the new federal backing.

Over three years, Trudeau has committed to an investment of $200 million annually for local incubator and accelerator programs, which foster the growth of small tech startups in various regions of the country.

Another $100 million a year will go to the Industrial Research Assistance Program, which encourages innovation and small- and medium-sized businesses.

It’s a welcome wad of cash for an industry that grew from the failure of former heavyweight Nortel Networks and a severely downsized BlackBerry, two companies that faltered via their own missteps. This time around, some of the country’s most prominent tech names want to ensure more than just a handful of giants rise above the rest.

Whether all of the money is going into the right places is up for debate for some.

Jim Balsillie, the former co-CEO of BlackBerry, has called for major changes in Canada’s tech industry that reconsider some of the ways the sector invests capital.

“Let’s acknowledge that what we have done over the past 30 years hasn’t worked,” he said. “We need to take a laser focus to having a complete infrastructure.”

Balsillie wants to see Ottawa create an office dedicated to turning profits on Canadian technology, a move that would mimic the commercialization project launched by U.S. President Barack Obama.

“We have nothing like that in Canada,” Balsillie said.

He also wants stricter guidelines on the incubators some have suggested are ushering in the new wave of startup success stories, only rewarding them with financial support when they’ve met clearly established performance metrics.

“If you’re going to give more to incubation, create an accountability framework that’s based on real business output,” Balsillie said.

“We’ve never had any performance metrics _ there’s a lot of spin and hype. Which part of it is real outcome and which part is pixie dust?”

Balsillie is overseeing the foundation of a new lobby group for Canadian technology interests alongside John Ruffolo of OMERS Ventures, a technology investment firm.

The two men will likely meet with Trudeau over the next few weeks to discuss priorities for the industry and the foundation of their new lobbyist organization, which will represent a membership of nearly 40 domestic tech companies that meet certain revenue criteria.

Among the flurry of other priorities being championed by members of the technology industry is an extension of British Columbia’s small business tax credit to the entire country. The credit gives a 30-per cent refund to investors who put their money into a new company.

Those incentives can encourage Canadians, who are notoriously risk-averse investors, to enter the volatile world of technology.

“(It’s) a great model and one we think the feds could adopt across the country to really move the needle without costing taxpayers very much money,” Lazenby said.

Iain Klugman, head of incubator Communitech in Waterloo, Ont., said companies would benefit from an easing of barriers for immigration.

“Certainly we know that it’s often painful and difficult for (companies) to even bring people into this country,” he said.

“Talent and capital are always the two things that seem to be the biggest challenges.”

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