I've noticed a newfound swagger amongst B.C.'s tech professionals recently. The word is out on the economic impact that the industry has on the B.C. economy (generating $23 billion in annual revenues and $15 billion in GDP), and there is palpable and boundless optimism for the future.
And it seems like governments are also starting to take notice.
The Vancouver Economic Commission (VEC) has produced this slick video to promote the city to the global tech community, while the provincial government introduced a $100 million venture capital fund in support of growth and innovation late last year.
But while the VEC trumpets Bloomberg Businessweek's designation of Vancouver being a "new tech hub" that offers "world-class talent and few immigration headaches" as well as "great views in a convenient time zone," I believe that the tech community has a duty to be far more discerning with labels and premature designations.
Don't get me wrong - I am very aware of Vancouver's status as one of the top 20 global cities in which to launch a startup. Digging deeper into this 2015 Compass Global Startup Ecosystem Rankings report, however, provides some concerning facts when it comes to considering the city's current and future competitiveness.
Here are four steps that Vancouver must take in order to truly be considered a global tech hub:
1) Improve Access to Venture Capital
Overall, growth in venture capital in Canada as compared to the rest of the world has slowed dramatically. As an example, the US has ten times the population of Canada, yet invests between 25 to 30 times more money in venture capital.
More specifically, Compass found that the average seed and Series A funding available in Vancouver is 50 per cent lower than the North American average. Research shows that in 2014, venture capital investments in the city were around $382 million, which is far below many of the others listed in the top 20 start up ecosystem list.
This is where the government really needs to step up to the plate. Sure, Ottawa's $1.5 billion commitment to a science and technology strategy, or the BC government's $100 million venture capital fund, are steps in the right direction. Yet in contrast to a country like China, for example, where government-backed venture funds comprised an astonishing $231 billion USD in 2015, they are drops in the bucket.
If left unaddressed, these challenges will prevent Vancouver's tech market from reaching its full potential as a tech hub.
2) Support the Scalability of Start Ups
I will address the importance of educational links below, but in my opinion, true scalability goes beyond a steady access to qualified talent. It should refer to a path for companies to grow into organizations that can eventually serve as consolidators for the entire local industry.
In other words, there is nothing wrong with having structures in place that can better pick the winners with true potential for worldwide appeal. For instance, can Vancouver grow as a hotspot for green technologies that helps other markets transition towards new opportunities?
In its Outlook 2020 Initiative report on BC's Advanced Technology Sector, the BC Technology Industry Association ("BCTIA") identifies some of the reasons why Vancouver's tech community is populated with so many medium sized companies. As it stands, there are too many service oriented companies, many examples where founders who have achieved financial success are content with no longer growing, and most starkly, a real shortage of senior management expertise.
Instead of watching emerging companies with potential become the prey of global vulture capitalists, it is time for our community, with the help of policy makers, to take the steps necessary to better shepherd them into becoming into anchors for Vancouver's and BC's tech sectors.
3) Build a Global Education Centre of Excellence
As is evidenced by the letter sent by Vancouver tech leaders to Premier Christy Clark last month, or my Huffington Post piece detailing the difficulty of attracting recruits to meet the rapid growth of Canada Drives, tech talent in Vancouver is truly at a premium these days.
Every major global tech hub city relies on partnership that usually involves the private sector, educational institutions and government. What I want to emphasize, however, is that an effective strategy of this kind must go beyond having UBC, SFU, BCIT or any other school produce graduates that the local tech industry can swoop in and hire.
Instead, there must be political will, investment and long-term planning that will not only build a world-class facility in support of cutting edge innovation, but will have the ability to serve as a centre for excellence that attracts enrollment from around the world. This once again requires a choice to move away from equal support for subjects like the humanities or arts, to a more focussed effort to build a self-fulfilling economic driver that cyclically attracts leading research, teachers, students and external funding into the mix.
4) Develop a Regional Strategy for Clustering
It took four years for the BCTIA's Centre4Growth to find a physical location, which now hosts about 30 early-stage companies in 26,000 square feet. The City of Vancouver's Technology and Social Innovation Centre has gone through extensive renovations over the past two years to transform the 100,000 square foot former cop shop on Vancouver's downtown eastside into a tech hub scheduled to officially open in October.
But these initiatives are taking far too long, and aren't nearly enough to meet Vancouver's global tech aspirations. Vancouver doesn't have an institution that compares to the size of MaRS in Toronto, where educators, researchers, social scientists, entrepreneurs and business experts are housed under one roof.
Downtown Vancouver represents the epicentre of tech companies in the province, but there is no cohesive geographic or collaborative strategy that fosters synergy. Meanwhile, venues like Surrey's Innovation Boulevard are acting as competitors by attempting to attract tech companies away from Vancouver who are seeking out cheaper options for space and in the cost of living for their employees.
It is time that Metro Vancouver bands together to form a regional strategy that collectively concentrates tech into a defined area that can serve as the catalyst for greater overall success for the industry. Toronto's tech community understands its value in being close to the financial centre of the country, and clustering will similarly allow Vancouver to better develop our brand and competitive advantage for the future.
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