Adam Froman is CEO of Delvinia, a Toronto-based data collection scale-up, and a member of the board of directors for the Council of Canadian Innovators.
By most measures, Canada’s technology industry is a success story. It’s hard to argue otherwise when viewed against the struggles faced by the energy or manufacturing sectors.
Looks can be deceiving, however. As a founder of a technology company passionate about positioning Canada as a global innovator, it’s clear to me that the industry – despite some impressive accomplishments – is not living up to its full potential.
We must give credit where credit is due. Industry Minister Navdeep Bains has proven to be a tireless champion of STEM. Ottawa has also been commendable in its support for research and startups. In fact, each year seems to bring with it more high-profile and sophisticated ways to foster innovation and encourage start-ups across the country. No one can accuse the government of skimping. But are these “big ticket” initiatives the solutions we need?
The University of Toronto’s Innovation Policy Lab recently interviewed Canadian scale-up technology CEOs to gauge their feelings about Ottawa’s support. Early findings shared by the researchers involved indicate that the feds may be ignoring a very simple – and very effective – way to foster growth in the sector.
Most CEOs who participated in the study, and whose firms target the public sector, said simply having the federal government as a potential customer would support the continued scaling of their company. As a backer of this study and a tech company founder, I couldn’t agree more.
Despite the best intentions and encouraging words from federal leaders, at times our system appears to penalize companies that find success. For example, organizations fortunate enough to hire their 501st employee do so knowing that it also ends their eligibility for the Industrial Research Assistance Program, which funds research and development projects. The laudable Scientific Research and Experimental Development tax-incentive program also changes drastically, and not for the better, once a company exceeds $1-million in profits.
Worse, companies that scale to these heights would naturally expect to have access to bigger and more lucrative government contracts. Instead, they find themselves facing request for proposals full of conditions heavily weighted to foreign companies. Even if they manage to overcome this hurdle, they are still faced with a procurement process that is cumbersome and difficult to navigate.
At a critical time in the growth cycle, sitting in that grey zone between local success and international player, scaling, innovative organizations with big ideas and global ambitions are left stuck in middle gear, cut off from incentives and with no easy way forward.
It is time for government to follow in the footsteps of other G7 countries and put a stake in the ground by committing to actually buying from homegrown technology companies.
Direct collaboration is an excellent place to start. Our industry is awash in incubators, accelerators and other intermediaries. Let’s find ways for government and scale-up CEOs to work side-by-side on strategies that will give preference to Canadian tech wherever possible and level the playing field for those companies that are in fact already scaling globally. Exploring industry-led opportunities to better work with colleges and universities so that they are encouraged to work with local companies would also reap benefits.
Current obstacles aside, Canada carries a great deal of credibility on the global stage. Government should be far less shy when it comes to promoting Canadian technology scale-ups. Certainly, Ottawa has made great progress in recognizing and meeting with our companies. But it doesn’t change the fact that there is still significantly more attention and government promotion of start-ups and foreign branch plants in Canada. Getting more vocal and supportive of local innovators is a great place to start because they are already demonstrating value.
Canadians should be proud of what our tech industry has achieved so far and know that the government has been instrumental in that success. But we’re leaving much on the table. A simple commitment to work in closer partnership and create a more Canada-friendly procurement process will have a powerful impact on our sector. It will also ensure that our track record of creating jobs and stimulating local economies continues for decades to come.