Federal government provides $250M to help tech firms through pandemic
A $250-million federal funding injection aimed at helping Canada’s tech sector weather COVID-19 is being praised by those who believe Alberta startups will play a key role in driving the province’s eventual economic recovery.
The funding, announced Friday by Prime Minister Justin Trudeau, will be made available to tech entrepreneurs through the existing Industrial Research Assistance Program, which helps innovative companies commercialize and is run by the National Research Council of Canada.
“Some of these early-stage firms do not qualify for the wage subsidy or business liquidity measures we’ve announced,” federal Innovation Minister Navdeep Bains told reporters in Ottawa. “We’ve heard the call for help from this part of the Canadian economy and today we’re answering it.”
Bains encouraged small and mid-sized tech companies who have been affected by the pandemic and are experiencing supply chain issues, a collapse in customer demand, or liquidity problems to apply on the National Research Council’s website. He said companies do not need to be an existing IRAP client to apply, adding the new funding should benefit 1,000 companies nationwide and help to preserve 10,000 jobs.
Tech companies and business groups have been calling on the federal government for weeks to deliver some kind of aid package specifically for startups and scaleups. Many early-stage companies aren’t eligible for the broad-based relief programs that have already been rolled out for Canadian businesses.
The Canada Emergency Wage Subsidy, for example, is only available to businesses that can demonstrate a 30-per-cent year-over-year decline in revenue, something that makes the program inaccessible to startups that aren’t yet making a profit.
“They (tech companies) have been falling through the cracks,” said Adam Legge, president of the Business Council of Alberta. “They just didn’t qualify for a host of different reasons. So to see something that is actually responsive to the realities of an early-stage technology company … is very positive news.”
Terry Rock, president and CEO of Platform Calgary and co-chair of the Alberta Innovation Corridor, an Edmonton-calgary partnership that aims to grow the province’s tech sector, said Alberta currently has about 1,300 tech companies, including 300 startups in Calgary alone.
He said while he is unaware of any “major implosions” in the sector, many of the province’s startups are experiencing serious challenges due to the twin crises of the COVID-19 pandemic and the global oil price crash.
“There have definitely been layoffs and a lot (of ) furloughing,” Rock said. “And in Alberta, our innovation ecosystem, a big part of it is tied to oil and gas. So those (tech) companies that have been serving that sector have a kind of double-whammy scenario.”
Rock said he is also encouraged by last week’s news that the Business Development Bank of Canada (BDC) will make matching investments into Canadian companies that are being backed by a qualified venture capital firm and have been impacted by COVID-19.
However, Rock added Alberta’s tech sector is heavily reliant on private angel investors for early-stage financing, so the industry would like to see government do something to encourage the flow of that kind of capital as well.
“It could be done federally through BDC or other channels, but it’s also something we think could be done at the provincial level, and we continue to propose those kinds of programs,” he said.
Both Rock and Legge said now more than ever Alberta must pay attention to its tech sector as innovation is expected to play a key role in driving Canada’s POST-COVID economic recovery.
“Technology is not necessarily a sector on its own, it’s an enabler of all other sectors,” Legge said. “Jurisdictions that are able to grow and develop their technology and innovation capacity are going to be the ones that are high-growth jurisdictions.”
The Calgary Chamber of Commerce also praised the federal government Friday for supporting technology and innovation on the same day it offered a hand to the oil and gas sector by providing $1.7 billion for orphan well cleanup.
“For Calgary and for Alberta, we cannot go back to the way things were,” said Chamber president Sandip Lalli in a tweet. “These are welcome investments that weave innovation into core industry activities. We will need nothing short of reinvention to emerge from #COVID-19 on our front foot.”