Over the last few years, Canada’s technology sector has been experiencing a renaissance. Increased venture funding has been helping to develop a robust tech ecosystem with major hubs in Vancouver, Ottawa, Montreal, and Toronto. Here’s how public venture funding can help build Canada’s tech talent.
Despite this noticeable growth, however, Canadian tech companies still face significant challenges when it comes to attracting and retaining top-quality talent — but that’s starting to change.
Public venture funding has become a valuable avenue for growth for early-stage businesses in the sector, helping to put Canada’s tech industry on the map for professionals both locally and abroad.
Where Canada’s Tech Talent Landscape is Today
Canada’s capabilities for developing tech talent are evident across a number of its post-secondary institutions, and technical education is also seeing investment from industry players.
Shopify is working with Carleton and York universities to recruit grade 12 students for a co-op computer science degree. Despite such efforts, up to 25% of STEM graduates from the country’s top universities leave Canada to work abroad, taking the investment into their education — and their potential to generate tax dollars — with them.
Canada is working hard to make it easier for skilled professionals from abroad to make their way into our growing tech ecosystem.
Government-led programs like the Startup Visa Program and the Global Talent Stream are proving successful in attracting quality talent.
With the Global Talent Stream, for instance, the country has reduced visa-processing times from 10 months to two weeks for those with a background in IT or STEM-related fields. To date, some 1,000 technology companies have hired 4,000 workers through the program.
Imported talent — along with the STEM graduates that stay in-country, are often recruited by major international companies.
These workers are recruited to work in international development offices.
Most of the time, employees in these satellite locations are paid at a discount of what their peers make at HQ. The code developed in these offices is then monetized by international firms. The monetization reduces the effective share of corporate taxes funneled into the Canadian government.
Besides, these companies will often work to move their top talent to their international headquarters, further contributing to Canada’s tech talent gap.
All of these factors add up to a tenuous talent landscape that begs to be addressed by both industry and government alike — especially if we want to see Canada’s tech ecosystem participate alongside other global leaders.
Incentivizing Tech Talent to Stay
If we want to keep existing tech talent in Canada, then we have to ensure that our tech industry is something worth staying for. On their part, tech companies are taking their fates into their own hands.
To combat the lack of private venture funding in Canada, growth-stage businesses are leveraging public venture capital.
Public venture capital has been vital in establishing Canada’s leadership in the resource space. Canada’s average deal size across all deals in 2018 was C$12 million. That figure is compared to US$14.5 million for early-stage companies and the US $42.2 million for late-stage companies in the United States.
Junior mining and energy companies capitalized on public markets like TSX Venture Exchange to attract retail investors. The capitalization also builds success early on. We’re now seeing our technology community leverage these same mechanisms to foster growth.
An added bonus? By being public, companies can better attract qualified employees with stock options, helping them buy into the long-term success of the business.
Both federal and regional governments are working to develop innovation incentives that could develop more appealing job opportunities for local and international professionals.
The job opportunities include the Scientific Research and Experimental Development (SR&ED) tax credit. Federal tax breaks are offered of up to 35% to private Canadian companies that have an R&D cycle at the core of their business model.
As a result, organizations can now afford to seek out highly skilled developers and engineers to help them develop new, disruptive products.
Changes are also being made at the provincial level.
British Columbia, for instance, has established tax credits of up to 30% for individuals and corporations that invest in eligible business corporations (EBCs).
Tax credits have also helped increase investor interest in many BC-based technology companies, allowing them to better fund their product development and talent pool.
As other provinces and territories opt to implement such practices, there is a greater opportunity for tech companies to access available funding and become more appealing to both home-grown and imported professionals.
There’s Still More to Be Done
These public and corporate initiatives are starting to make a difference in the development of Canada’s tech space, making it more appealing to potential employees both within and beyond its borders. However, there’s still more to be done.
To further incentivize growth in this market, Canada’s federal government needs to take measures that help level the playing field between private and public companies.
With the growing move toward public venture capital, the government needs to recognize the value of public markets. The government must make it easier for growth-stage companies to list on an exchange while still having access to publicly funded incentives like the SR and ED tax credit.
As well, the government should also reward investors for putting their hard-earned dollars toward local businesses, expanding the EBC program across the country. These credits should be made available to public companies as well.
With these measures in place, there will be added opportunities for growth-stage tech companies to make their mark in the space and provide attractive jobs to both local and international talent.
Given all of the initiatives designed to boost tech innovation and funding in Canada, it’s a great place for recent tech grads to build their careers.
By continuing to develop the innovation ecosystem with support from government programs and private investment — Canada can further create a space that attracts and retains local talent and benefits the economy.
Image credit: annie spratt, unsplash