A group from Alberta’s technology ecosystem has penned an open letter to the Government of Alberta calling for urgent action for a sector that it says is at risk due to both the pandemic and current oil crises.
“This crisis puts tech companies and the ecosystem that supports them at risk.”
“This is a crisis like none we’ve faced before,” the letter reads. “If all levels of government do not take immediate action, our ecosystem could be severely damaged and negate the progress we have made towards creating the Alberta economy of the future.”
The initiative was led by Alberta Innovation Corridor (AIC), a joint effort between Calgary Economic Development, Platform Calgary, and Innovate Edmonton. Over the past couple of weeks, the group, which is focused on fostering the province’s innovation sector, gathered responses from 175 Alberta-based tech entrepreneurs who shared the immediate challenges they are facing given the current global health crisis.
The letter has been sent and is addressed to the Premier of Alberta Jason Kenney, President of Treasury Board and Minister of Finance Travis Toews, Minister of Economic Development, Trade and Tourism Tanya Fir, and Minister of Service Alberta Nate Glubish.
The group emphasizes the important role the tech sector plays in the province’s economy, noting that prior to the recent crisis, Alberta tech generated $15.6 billion in gross domestic product (GDP) and employed approximately 68,500 people.
“Before the current global crisis, the technology startup ecosystem was a leading source of global economic growth,” the letter says. “Canada — and Alberta – were part of this. We cannot afford to neglect one of the most promising means of ensuring future prosperity for our province and country. This crisis puts tech companies and the ecosystem that supports them at risk. These federal measures will help immensely.”
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The letter urges the provincial government to consider and act upon recommendations put forward by the Innovation Capital Working Group. The group, a panel made up of experts from Alberta’s business, tech, academic, and financial associations, was tasked with providing the Alberta government recommendations on how to draw capital to the province’s tech sector.
The panel was originally expected to deliver a report late February, but Minister Fir extended the deadline.
“The reality of what’s happening here on the ground is our entrepreneurs are on their own.”
James Lochrie, managing partner of Calgary-based Thin Air Labs and co-founder of Wave, was one of the people who provided feedback to the working group. The panel has reportedly submitted its recommendations to the government but has yet to make them public. Lochrie said he is aware of some of the working group’s recommendations and told BetaKit they include bringing back the provincial Scientific Research and Experimental Development Tax Credit (SR&ED) program and the Alberta Investor Tax Credit (AITC), which were eliminated by Kenney’s United Conservative Party in October.
Many in the province’s tech ecosystem have lauded those programs as essential to fostering startups and have called for their return.
Lochrie said he also recommended tax-free zones as a way to attract bigger corporations to the province, such as Microsoft, that he said might help seed the ecosystem and fill real estate. He also recommended the government provide matching investments for funds.
Matching investment is also something that the AIC is asking that the Alberta government implement. The letter “requests” specific policy interventions including incentivizing the flow of capital through matching funds “that de-risk early-stage investment in an uncertain environment.”
“We desperately need some type of matching program,” said Lochrie. “It is critically important for Alberta to have that matching program in place. We’ve got good companies that are trying to raise capital here, and in different climates would probably be very successful at doing that.”
Lochrie noted that the matching program for venture-backed companies recently introduced by the Business Development Bank of Canada (BDC) “missed” Alberta because of the province’s heavy reliance on early-stage angel investing; something that was echoed recently by Sandi Gilbert, managing partner of InterGen and board chair at the National Angel Capital Organization.
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The AIC letter states the Alberta tech community applauds recent measures by the federal government, including the increased capital to the National Research Council and Western Canada’s Regional Development Agency (RDA), Western Economic Diversification.
“These investments will pay off,” the group states.
Lochrie seconded that, stating that the new IRAP COVID-19 Innovation Assistance Program helps cover some of the gaps for Alberta startups.
The AIC letter’s second request to the Alberta government is to utilize its purchasing power, as well as that of municipalities, to buy “Alberta-made” tech. The letter pointed to “firms that have already established themselves as global players that are now facing slowing growth or decline due to the crisis,” though did not highlight specific companies.
“If there was ever a time to think about different opportunities in Alberta, now is it.”
“More than 175 Alberta-based technology entrepreneurs came forward with the immediate challenges they face, the greatest of which are the devastating loss of customers and cash flow, as well as access to supply chains. Their survival is in jeopardy,” the AIC said.
“These are the companies that will help drive Alberta’s pivot towards diversifying its economy,” the letter reads. “Unfortunately, the momentum we’ve gained is at risk as companies see customers and revenue evaporate as result of the current economic crisis.”
Lochrie, however, lamented that the letter is likely “a waste of time.”
“All of these letters have been written before,” he told BetaKit. “The reality of what’s happening here on the ground is our entrepreneurs are on their own. They know it, and they are taking steps into their own hands to ensure their own survivability because they know the government doesn’t give a rat’s ass about them.”
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“The government believes that the tech sector is just fine, is doing great,” Lochrie added. “And it is okay, it is doing fine, it’s managing itself. But what we’re doing is we’re throwing away the opportunity of the future by not investing in it. We’re not paying attention to it and putting all of our resources into the oil and gas sector.”
The AIC letter highlights the duel struggle that Alberta companies are facing. Along with the economic impacts of COVID-19, the collapse of oil prices due to overproduction flooding the market from Saudi Arabia and Russia has also had a big impact, the group said.
“This is a crisis like none we’ve faced before,” said the AIC. “Alberta’s technology ecosystem is deeply linked to Alberta’s energy sector, as we create clean technology and digital solutions that drive our province’s core industry to improve productivity, decrease both costs and its environmental footprint.”
The AIC stated that entrepreneurs and innovators will be a crucial component of this kind of movement, “making technology an essential part of Alberta’s economic growth and diversification story.”
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“If there was ever a time to think about different opportunities in Alberta, now is it,” added Lochrie. “We just got a wake-up call this week around where energy is in the world and the lack of control that Alberta has over its own future.”
This is the right time to support the tech sector, he added. “I’m Looking forward to the government stepping up like I know they can. It’s time to do it and they need to do it, otherwise, they’re just wasting this amazing opportunity to advance something they should have continued to advance when they got into power.”
The AIC echoed a similar statement in its letter. “This isn’t just about surviving a crisis,” it said. “This is about working together to ensure Alberta leads the way on the national stage during recovery. Now, more than ever is the time to support our innovators and entrepreneurs.”
