Insider Only Techopia

PM meets Kanata tech workers, touts new federal organization aimed at scaling startups

David Sali

March 21, 2023
4:46 PM
ET

Organizations: BluWave-ai, Calian Group, Canadian Innovation Corporation, Government of Canada, Kinaxis, Ross Video, Shopify, Technation

People: David Ross, Devashish Paul, Justin Trudeau, Michele Lajeunesse, Sacha Gera

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Prime Minister Justin Trudeau says he hopes a new Crown corporation that aims to help Canadian startups commercialize their products can ratchet up efforts to incubate the next generation of Shopifys. Speaking to a crowd of tech workers during a “town hall” gathering Monday night at software giant Kinaxis’s headquarters in Kanata, Trudeau admitted federal policy-makers have struggled for years to help homegrown tech firms become global leaders. When Sacha Gera, the president of IT and cyber solutions at Kanata-based Calian Group, asked Trudeau what the government is doing to give fledgling tech firms a boost, the PM answered that he hopes a new federal organization called the Canada Innovation Corp. will “help with” scaling up innovative Canadian companies. “That’s a question that successive governments in Canada have struggled with for many, many, many years,” Trudeau told the audience. “There have been a lot of different attempts over the years to try and figure out that scaleup program.” Originally announced in last year’s federal budget, when it was called the Canadian Innovation and Investment Agency, the redubbed Canada Innovation Corp. will operate independently and report to the minister of innovation, science and industry. The Crown corporation will receive $2.6 billion in federal funding over four years, with additional funds promised, the government announced in February. The feds pledged to have the organization up and running by the end of 2023. Modelled after similar initiatives in Finland and Israel, the CIC says its goal is helping Canadian businesses across various sectors and industries “become more innovative and productive.” The Industrial Research Assistance Program, which has long been under the umbrella of the National Research Council, will be shifted to the new organization as part of its plan to help support R&D efforts at Canadian businesses. The federal government has acknowledged that Canadian companies don’t invest in research and development at the same level as firms in many other countries. On Monday night, Trudeau said it’s traditionally been harder for Canadian tech firms to raise capital than their counterparts in California and other parts of the United States, but he added the recent failure of the Silicon Valley Bank could trigger a “bounceback” effect that will see more money flow north of the border. “We do want to create a place where entrepreneurs can be extraordinarily successful as they take big risks and they pay off,” Trudeau told the crowd. “We don’t want to be seen as a branch economy to the United States, where we do a little innovation and they manage to commercialize it. There are no easy answers on it.” Local business leaders say initiatives like the CIC could help the next generation of Canadian tech enterprises protect their intellectual property and flourish as standalone enterprises. “I think it is a real challenge that there is money outside of Canada that is coming in, and it’s hard to say no” to being acquired by a foreign entity, Ross Video CEO David Ross said after Monday’s event. “I thought it was good that (Trudeau) actually said it is a challenge and a problem and that he needs more advice on that topic and his government is still looking for solutions. Because it is a hard problem.” Ross said the country’s tech ecosystem needs to develop a “conveyor belt of great Canadian companies” like Calian, Kinaxis and Shopify that can provide a blueprint for future homegrown enterprises to succeed. “We keep growing them and we keep attracting highly skilled immigrants into Canada so that more companies want to be here and have the ability to scale,” he said. “If a few leave, that’s OK. We have a dozen more behind them.” The federal government still has not announced a timeline for appointing the CIC’s chief executive and board of directors. Council of Canadian Innovators president Benjamin Bergen said that while the CIC “could be an important part” of the government’s efforts to help tech firms scale, the organization will require the right leadership team with “sophisticated knowledge” of the innovation economy. “To be successful, CIC’s team will need to be strategic about intellectual property, and freedom to operate for Canadian firms within global value chains,” Bergen said in an email to OBJ on Tuesday. Michele Lajeunesse, senior vice-president of government relations and policy for Technation, which represents companies across Canada’s tech sector, said she’s not convinced the new organization is the best vehicle to drive innovation. “Technation questions whether allocating over a billion dollars over four years to yet another new agency/program will yield the desired outcome it is mandated to deliver,” Lajeunesse said in a statement, suggesting that some of the funds could be better spent expanding broadband internet service to businesses in rural areas. BluWave-ai founder and CEO Devashish Paul, whose Ottawa-based firm uses artificial intelligence to track power usage and help owners of electric vehicle fleets manage the operation and charging of EVs, said the CIC might benefit growing startups like his. But he said the best way for governments at all levels to help startups scale would be to sign partnerships and book contracts as a show of faith in Canadian-made technology. Paul, who also attended Monday night’s town hall meeting, noted that BluWave recently signed an agreement in principle to provide its software to Indian utility giant Tata Power Delhi Distribution, yet is struggling to land customers in its own backyard. “I literally can’t get a meeting with OC Transpo,” he said. “We need to get more conservative Canadian utilities and fleet operators and governments working with Canadian entrepreneurs.” Bergen agreed the federal government needs to prioritize investing in homegrown companies rather than subsidizing foreign enterprises such as German automaker Volkswagen, which recently announced plans to build an electric vehicle battery plant in St. Thomas with financial backing from the feds. “The CIC may be able to support Canadian companies, but the government needs to embrace the strategic imperative of prioritizing homegrown innovators which deliver maximum economic benefit,” he said.