More jobs than Ottawa can fill?
Region needs more eager risk-taking and more mid-career talent to help stabilize and scale up tech startups, but grants and angels help make up for a relative lack of capital
In Ottawa’s tech sector, there are more jobs than people to fill them.
In the Kanata North business park alone — once referred to as Silicon Valley North, at the height of the dot-com boom — there are today 3,000 unfilled positions. “Unemployment in tech right now is almost zero,” says Jenna Sudds, the outgoing executive director of the Kanata North Business Association.
Mayor Jim Watson, who frequently boasts this region is home to the most highly educated workforce in Canada, sees it as a positive indicator for Ottawa.
“We’ve seen the number of tech jobs go up to almost 80,000 in the past year. And when I’m out speaking to tech workers and leaders, they’re very optimistic about the future,” Watson says.
That optimism is a major force behind Ottawa’s long-shot bid to host Amazon’s second North American headquarters — but is it misplaced?
According to figures from e-Talent Canada, a website that compiles Canadian tech-labour stats, there are 64,800 information and communications technology (ICT) workers in the capital region. (The same source notes there are 314,700 ICT professionals in Toronto and 192,900 in Montreal.) There has been a discrepancy in tech-worker numbers for years. According to Statistics Canada, there are only 48,000 ICT workers in the Ottawa–Gatineau CMA. In 2011, the Citizen dug into it, drawing the conclusion that what constitutes a tech job is interpreted differently, leading to the wide gap, depending on which source you consult. Some sources count only those employed by proper tech companies, other sources include those employed in the tech field in any industry. Meanwhile, Amazon says it expects its HQ2 to create “as many as 50,000 high-paying jobs.”
Imagine, for a moment, that Amazon were to pick Ottawa, despite the odds.
On the plus side, getting such a heavy hitter in the region could attract more out-of-province and foreign workers, as well as investors and tech companies, to Ottawa.
On the negative side, Amazon’s high profile and competitive salaries could starve local small- and medium-sized businesses of talent.
More holistically, Amazon’s presence would also likely lead to higher rents, greater strain on public transit and more traffic congestion. Ottawa and its residents would have to make an awful lot of sacrifices to attract Amazon.
The realities underscore an important question: Can Ottawa, as the city stands today, actually be a marquee name on the global tech stage?
The IT Factor, a special five-week Citizen series, seeks to cut through the veneer of abject positivity to objectively ask what this city can do to better prepare for a new era of the digital economy.
OTTAWA BY THE NUMBERS
Since Nortel’s early-2000s collapse, Ottawa’s tech sector has been able to rebuild itself to some degree. Kanata salvaged its profile as a telecom hub and is now also home to hundreds of smaller firms in other areas of tech, notably autonomous vehicles and software as a service (SaaS). According to the mayor’s office, there are now more than 2,000 tech-related companies in the capital region.
However, there are some figures that show Ottawa has not been able to fully rebuild its workforce since the dot-com bubble burst in 2000.
Census data shows the number of Ottawans in the 25-34 age range dropped by 16.8 per cent between 1996-2001 (from 136,609 to 115,450), while every other age range grew. Note that a 25-yearold worker in 2001 would be 41 today.
Today, there are 125,375 people aged 25–34 in Ottawa. That said, populations in the 35–49 age range have declined remarkably since 2011, according to Statistics Canada.
The figures support an observation made by several people interviewed for this series: That Ottawa needs more mid-career talent, which is a demographic crucial to scaling tech startups into profitable companies.
NO SHORTAGE OF STUDENTS
There are, of course, plenty of students and recent grads living and working in Ottawa.
A quick tour of Kanata at lunchtime reveals gaggles of young men heading out to nearby restaurants.
More empirically, census data shows there are more 20-24-yearolds now than in 2011.
For its part, CENGN — a telecom consortium working on next-generation networks — hires 40 to 50 students a year. The Ottawa-based CENGN has a national mandate to supply Canada with next-generation networks that will power our increasingly connected lives, from the internet of Things to autonomous vehicles. It’s an exciting opportunity for young people to hone their tech chops on such an integral part of Canada’s future.
Attracting workers is no problem for CENGN, considering it sits squarely in the wheelhouse of what Ottawa does best: telecom. “I think it’s not an accident that a lot of the multinationals have some presence here,” says CENGN president Ritch Dusome. Many ICT workers have lived in the area for years, he continues, because Ottawa is a great place to raise families and has a reasonable cost of living.
But what happens to people between the time they graduate university and when they’re ready to have a family? Like young workers anywhere, after a couple of years’ work experience they may want to start their own companies — which brings us to the next-biggest problem: Money.
LESS MONEY, MORE PROBLEMS
One unavoidable truth about Ottawa’s tech sector is that investment here just doesn’t reach the same heights as other markets. According to the Canadian Venture Capital & Private Equity Association’s 2016 market review report, 24 venture-capital deals in Ottawa totalled $109 million in investment. For comparison’s sake, Waterloo– Guelph had 30 deals worth $368 million, and Toronto had 139 deals valued at $946 million.
Further, a report by PricewaterhouseCoopers and CB Insights called Ottawa’s Q2 activity “flat,” noting just four deals were made between April 1 and June 30 of this year. The report noted the dollars invested in Ottawa companies have declined over the past few quarters.
What the capital region does have are government grants and angel investors.
“Grants get you to proof of concept, angel (investment) gets you to revenue,” says Jennifer Francis, chair of the Capital Angel Network. Fresh Founders is another notable angel group in the area.
It’s after that when companies can fall into the ditch.
“There are so many companies that can live off grants, and that’s considered success for them,” says Shaun MacLellan, the 20-yearold founder of YouTube creative matchmaker YouCollab. He says it was extremely difficult to raise money in Ottawa, prompting him to return home to Toronto.
The name of today’s fast-and-furious tech game is “scale.” Without significantly more capital being invested in Ottawa, companies here will always struggle to scale quickly and get onto the world stage.
It’s easy to say Ottawa needs more investors — but how does that actually happen?
There are things Ottawa could do to elevate its profile.
Investors follow the money — so that means Canadian angels, private-equity investors and venture capitalists need to step up their efforts in Ottawa. It’s happening slowly, with Mistral Venture Partners, the Business Development Bank of Canada, Wesley Clover and OMERS Ventures among the most active in the city. But more is better.
Startup founders also need to take bigger, smarter risks and develop an aggressive go-to-market strategy to gain traction early on. “Fail fast” is a startup mantra for a reason. Finding product-market fit and early customers are necessary steps toward validation, and in a competitive startup landscape investors like sure bets. And, getting a direct flight to San Francisco would help.
According to the Private Capital Journal, U.S. investors invested 35 per cent of the $3.02 billion raised by Canadian startups in 2016. Sure enough, the $40 million Assent Compliance raised in private equity over the summer was led by an American investor.
Yet, currently travel between here and Silicon Valley requires at least one transfer — and layovers are a significant deterrent to visiting a place in the fast-paced startup world. Quick access to the Valley is a major lifeline for startups.
To get it, though, Ottawa would have to make a solid business case for the flight.
Finally, Ottawa startup resources need to consolidate their efforts and the spaces where entrepreneurs congregate to give the city’s startup tech sector a beating heart.
In short, there’s work to be done to turn Ottawa into the tech town it could be.
Next week: Find out more about how space plays an integral role to Ottawa’s tech future.