More than 230 CEOs of leading tech enterprises and innovation hubs from Ontario have issued an open letter to Ontario Premier Doug Ford and other government departments, calling for targetted measures to be taken in support of the local tech sector during COVID-19.
“The Ontario government has already responded with swift action and the deployment of some critical resources. But more is needed.”
The letter argued that without further intervention, many promising new ventures may be forced to close their doors over the next 12 to 18 months. “The pinch is already happening,” the letter states. “Supply chains are being disrupted and consumer spending is slowing, creating economic risk for our province.”
The letter highlighted the rapid growth of Ontario and specifically Toronto’s tech sector, noting that the city has been dubbed the fastest-growing tech market in North America. Waterloo, Hamilton, and Ottawa, were also highlighted as large tech hubs within the province.
“This didn’t just happen. The growth of Ontario’s tech sector is a success story shared by successive governments stretching back to the creation of MaRS and Communitech under the Harris government and continuing to the present day,” the letter reads. “Now, all this hard work and economic impact is threatened by the COVID-19 pandemic. The Ontario government has already responded with swift action and the deployment of some critical resources. But more is needed.”
Spearheaded by innovation hubs Communitech, Invest Ottawa, and MaRS, the letter was addressed to Ford, as well as Minister of Finance Rod Phillips and Minister of Economic Development, Job Creation, and Trade Vic Fedeli. It offered suggestions on how the province can strengthen Ontario’s tech sector during the COVID-19 pandemic.
Signatories to the letter include leaders from innovation hubs like Communitech, Invest Ottawa, and MaRS, as well as Claudia Krywiak, CEO and president of Ontario Centres of Excellence. It also garnered support from tech company CEOs like Michael Litt of Vidyard and venture capitalists such as Janet Banister of Real Ventures.
Canadian tech companies, like many businesses across the country, have already been feeling the crunch of the economic impacts of COVID-19. With the majority of small businesses seeing severe cuts to revenue, many have already made the decision to layoff employees. A database of out-of-work Canadian startup employees has seen more than 1,600 people join, and the numbers of growing daily as more tech companies make layoffs.
While the federal and provincial governments have been implementing measures meant to support businesses during this economic downturn, many in the community have argued that these measures do not extend to the tech sector. CEOs like #MoveTheDial’s Jodi Kovitz have told BetaKit that they would not have had to make layoffs if the federal government had implemented stronger wage subsidies, like those that have been seen in the United Kingdon and Denmark. Federal emergency business loans from BDC and EDC are also often not an option for early-stage tech companies, which do not, even under normal circumstances, qualify for such loans or lines of credit.
“Ontario’s tech leaders believe the ecosystem needs our provincial government to continue to show leadership by taking immediate and longer-term measures to weather this storm and drive innovation, economic growth, and job creation through the recovery,” the CEOs wrote in the letter.
The letter outlines measures that the CEOs would like to see Ontario take, including:
- Supporting the immediate cash-flow needs of companies to reduce expenditures, preserve cash, and maintain top talent and jobs;
- Increasing and rapidly deploying additional funding through established programs and investment vehicles and;
- Providing greater flexibility for companies with an existing funding relationship and track record, to enable the tech ecosystem to continue innovating.
The suggestions are similar to ones in another open letter signed by tech CEOs from across Canada, that was sent to the federal government last week.
To support cash flow, the letter calls for “generous payroll subsidies of at least 70 percent,” with the letter explicitly pointing to subsidies offering in England and Denmark. It also calls for deferring payroll taxes and deferring remittance of corporate and payroll taxes together with no-interest, deferred payment loan vehicles for businesses. Ontario has implemented a number of tax deferrals for both businesses and individuals, amounting to $10 billion. The letter also calls for deferral of Workplace Safety and Insurance Board (WSIB) premiums. Ontario is currently allowing employers to defer WSIB payments for up to six months. Similar to the open letter ask to the federal government, the Ontario open letter pushed to prioritize and increase procurement of goods and services from Ontario ventures.
The letter also called for more flexible funding terms conditions and schedules for companies that currently benefit from government funding as well as the network of Regional Innovation Centres that support them. The CEOs are also asking the Government of Ontario to retain the Ontario Innovation Tax Credit (OITC) and the Ontario Research and Development Tax Credit (ORDTC), as well as work with the federal government to accelerate reimbursement through SR&ED, OITC, and ORDTC.
“Ontario’s tech sector was created with the help of the provincial government, but maintaining momentum requires this government to sustain its support during this time of crisis,” states the letter. “We are calling for swift, targeted measures that will help companies improve cash flow and keep tens of thousands of Ontarians employed. ”