A BUDGET TECH SHOULD LOVE
It appears well-suited to spur more growth in Ottawa-Gatineau
Perhaps we should feel a little insulted. There’s a section in Wednesday’s federal budget that highlights how a multitude of measures aimed at accelerating innovation are supposed to work.
The government wants us to create innovation super clusters — “dense areas of business activity” capable of attracting the very best talent and companies. To give us an idea of what these look like, the budget lists four urban areas that have already achieved this distinction: California’s Silicon Valley, Berlin, Tel Aviv and the Toronto-Waterloo corridor.
A nod in the direction of the capital region would have been nice. While it’s true Ottawa and Gatineau long ago lost the distinction of being the planet’s most important supercluster in matters of telecommunications technology, the cities’ innovators are mounting an impressive comeback.
Ottawa remains the most techintensive in the country, meaning a higher percentage of its workers — eight per cent — are employed in the tech industry compared to less than six per cent in the Toronto-Waterloo corridor.
Yes, there are fewer here — 44,000 compared to 200,000. But in these matters, density counts. And Finance Minister Bill Morneau’s budget looks particularly well-suited for the capital region.
For starters, it includes measures to expedite the immigration of skilled workers along with a sharp rise in the provision of venture capital through the federal Business Development Bank. Morneau has also earmarked nearly $1 billion to be spent over the next five years to help cities develop superclusters.
The capital region has most of the necessary ingredients — universities, talent and infrastructure. But after the implosion of Nortel and JDSU, Ottawa’s tech cluster has been struggling without an anchor tenant — a large multinational with offices and customers around the globe.
Now, thanks to the improbable rise of Shopify, an e-commerce software firm that a decade ago employed just a handful of entrepreneurs, Ottawa is once again becoming a place where tech is cool. Shopify last week revealed it had signed a lease to triple the amount of space it will occupy in the downtown core — an expansion contingent upon its ability to continuing selling more e-commerce services and to hire thousands of skilled new employees. If there is a bottleneck in Shopify’s growth it will be caused by its inability to convince the right people to come here.
The budget has moved to accommodate situations such as this. The government is proposing to eliminate the need for foreign workers to obtain a work permit for stints of fewer than 30 days in a year — used chiefly to facilitate moves within companies for work on certain projects. The Liberals will also amend legislation to ensure the Express Entry system for permanent residents identifies candidates “most likely to succeed in Canada.”
These measures follow the government’s promise last fall to set a quick, two-week standard for processing work permits and visas.
Shopify is hardly the only firm locally that will benefit from greater access to foreign skills. A number of tech companies, including QNX and Halogen Software, have been hiring at a tremendous clip. Top global firms, such as Apple and Amazon, have recently opened offices and research facilities in the area.
At the same time, a new generation of software startups now occupies offices from Kanata to the downtown core, and many will be able to tap into the fresh $400-million allocation to the Business Development Bank, a federal Crown corporation that is already the biggest venture investor in the country. More to the point, BDC’s investment team is more than familiar with local entrepreneurs. Its venturecapital arm has plowed risk money into dozens of Ottawa startups over the years.
Resident billionaire and serial entrepreneur Terence Matthews will almost certainly be the first to knock on BDC’s door tomorrow. He has personally help to seed or promote a small army of startups that today form a ring around Mitel Networks, where Matthews currently serves as chairman.
Matthews understands better than most how difficult it is to create the necessary critical mass a supercluster requires. For every startup that fails, you need another that is gaining ground. To counter the industry’s considerable risks, a successful tech cluster demands multiple types of firms in different stages of growth. The money, drive and, yes, a lot of luck, all need to be there. And it doesn’t hurt to have a government willing to lubricate the machine with risk money and access to skills.
This is a budget tech should love. With any luck, the next one will feature the capital region in its list of successful superclusters.