CITY GIVES NEW TECH COMPANY $1.5M
MobSquad aims to create 150 engineering jobs
A new company that hopes to create 150 engineering jobs in Calgary has been awarded $1.5 million from a city fund created to help boost the local economy.
MobSquad — which officially opened its new downtown office on Thursday — is the first company to qualify for a grant through the Opportunity Calgary Investment Fund, the $100 million municipal fund established by city council this spring in an attempt to tackle the dual problems of unemployment and empty downtown office towers. The fund is intended to offer opportunities for companies and non-profits that want to make “transformative investments” in the local economy by proposing projects that will create jobs, spur diversification and expand the property tax assessment base.
MobSquad — which matches Silicon Valley startups with software engineers and data scientists in Canada — is the brainchild of Relay Ventures, a venture capital firm with offices in Toronto and Silicon Valley. Irfhan Rawji, MobSquad CEO and one of Relay’s venture partners, said Relay invests in a number of Silicon Valley-based startups and knows the struggles they face to find talent.
“We were trying to help our own portfolio companies solve that challenge,” Rawji said. “So one of our ideas was could we help solve that challenge using Canadian talent … Then it grew to be, if this is an opportunity for Relay companies, why wouldn’t other companies be interested?”
MobSquad currently employs 14 people and expects that to ramp up to a team of 150 full-time engineers within 18 to 24 months. The engineers will work in Calgary and be paired with U.S.-based clients on an exclusive, long-term basis — effectively making MobSquad a “virtual Canadian office” for their clients.
“They get all the benefits of longterm employees without the hassle of having to create a Canadian subsidiary, find the talent, find a workplace for them to work in, get a health benefits plan, etc.,” Rawji said.
In addition to creating jobs and taking up office space in the downtown (MobSquad has leased 16,500 square feet of the Edison building, the 9th Avenue S.W. tower formerly known as Encana Place) Rawji said he believes the business model will help to build Calgary’s technology talent pool. He hopes to lure Canadian-raised software engineers back from Silicon Valley, as well as attract highly skilled foreign immigrants to fill some of the positions.
“If we can repatriate Canadians, if we can bring the smartest people in technology and software engineering around the world to Calgary and Canada … they’re going to come out with new ideas, new technologies and new companies. They’re going to build the technology ecosystem in Calgary,” he said.
Barry Munro, board chair of the Opportunity Calgary Investment Fund, said MobSquad was approved for funding because it was deemed to have a “very solid business plan.” The company has raised a total of $11 million in funding from private investors, including Relay Ventures and the provincial and federal government (which contributed $1 million and $500,000 respectively.)
“We’re looking for those opportunities that have the greatest chances of being successful, and of being successful quickly,” Munro said.
The $1.5 million will be paid in instalments, Munro added, and is dependent on MobSquad meeting its job creation targets. In fact, every successful applicant to the Opportunity Calgary Investment Fund will be required to meet individual performance-based targets, and will have to repay the money if they miss those targets.
“We are really determined that people have to perform to get this money,” Munro said. “It’s resultsdriven.”
The Opportunity Calgary Investment Fund has received 150 applications since its launch, and expects to announce several more successful grant recipients before the end of the year. Munro would not provide details about other recipients, but said applications have come from local and out-of-market companies. About half are in industries identified in the city ’s new economic strategy as areas of focus — energy, agribusiness, transportation and logistics, creative industries, and life sciences. The remainder are concentrated in the technology sector.
Proposals must meet very strict criteria to qualify, including having solid financial backing from other partners in addition to offering economic benefits to Calgarians. Munro said he expects the entire $100 million to be awarded within the next two to three years, as the goal of the fund is to create jobs for Calgarians now, not to sit on the money for several years until the economy improves.
“Our board would generally believe the economic need is now. So we should get on this and act again with urgency, but not imprudence,” he said.
Mayor Naheed Nenshi, who also sits on the fund’s board in an ex officio capacity, said the $100 million fund is a venture fund — which, by definition, involves a level of risk.
“But, I can tell you, this is not a blank cheque. The vast majority of people who come to us get rejected, and there are very, very vigorous discussions and safeguards in place about those that we do fund,” he said.
He added he believes the risk is necessary, because Calgary is not going to return to the economy it had before the downturn and cannot afford to be complacent.
“You have to let us take risks … because the potential for reward is great,” Nenshi said. “But I think our community, being so entrepreneurial and being so innovative, understands that viscerally.”