BCTIA Digital Economy Submission (July 2010)
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Transcript of BCTIA Digital Economy Submission (July 2010)
Submission
from the
BC Technology
Industry
Association
GOVERNMENT OF
CANADA
DIGITAL ECONOMY CONSULTATIONS
July 8, 2010
2
This document is intended for submission to the Government of Canada
digital economy consultations.
BCTIA Consultation Process
At the 2010 Canada 2.0 Conference, the Government of Canada launched a national consultation
process on creating a Digital Economy Strategy for Canada. As the Voice of BC’s technology
industry, the BCTIA has developed the following submission on behalf of its members.
While each of the five chapters in the consultation paper provided by the Government of Canada is
worthy of its own consultation, the BCTIA has focused its submission on the two areas that we
believe are most pertinent to our members and industry – growing the information and
communications technology industry and building digital skills for tomorrow.
The input that makes up this submission has been provided by member organizations through a
number of mediums in recent years, including the co-development of the Business Council of
British Columbia’s Outlook 2020 Paper on building an Advanced Technology sector in BC, and the
BCTIA’s 2010 TechTalentBC Labour Demand Study.
For more information or elaboration on the content provided, please contact Pascal Spothelfer,
President and CEO of the BCTIA at 604-602-5230 or [email protected].
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Table of Contents
Summary 5
Canada has a Commercialization Issue, not an Innovation Issue ......................... 5
Scaling for Export .................................................................................................. 6
Access to Foreign Capital ...................................................................................... 7
Competing in a Global Talent Market .................................................................. 7
Building Digital Skills ............................................................................................. 8
Consultation Questions 9
Q. Do our current investments in R&D effectively lead to innovation, and the creation of new businesses, products and services? Would changes to existing programs and services better expand our innovation capacity? ......................... 9
Q. What is needed to innovate and grow the size of the ICT industry including the number of large ICT firms headquartered in Canada? ................................. 13
Q. What would best position Canada as a destination of choice for venture capital and investments in Global R&D and product mandates? ....................... 16
Q. What efforts are needed to address the talent needs in the coming years? 18
Q. What do you see as the most critical challenges in skills development for a digital economy? ................................................................................................ 19
BC Technology Industry 22
About BCTIA 23
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Summary Federal Digital Economy Consultation
To build the ICT industry in Canada, there are two consistent inter-related issues that
confront technology innovators – talent and capital.
Simplistically, the two issues can resolve each other as good teams of technology
innovators, with good ideas and good market access, can attract the significant patient
capital that they require, while well-funded companies can often attract talent; albeit
with varying degrees of difficulty depending on the business climate.
At this time, Canada has neither the depth of talent nor capital required to grow the ICT
sector to a significant self-sustaining level.
This inter-reliance on talent and capital can be seen in the three major findings and
recommendations of this submission:
1. Canada needs to improve its commercialization outcomes
2. Canadian ICT companies’ access to foreign capital pools is critical
3. Canada needs to compete in a global talent market
Canada has a Commercialization Issue, not an Innovation Issue The top sentiment that arose from input by the BC Technology Industry is that the ability
of Canadians to innovate – to engineer unique, world-class technology solutions to
problems – is not an issue. Canada continues to produce some of the best R&D in the
world.
Where assistance is required is in improving Canadians ability to get our technologies to
market. In market, Canadian technologies can improve productivity in all Canadian
industrial sectors while also creating real wealth, particularly export wealth, for the
technology sector.
“I believe that investment will always flow to good people and
promising ideas”
6
Canada’s inability to capitalize on its R&D capacity arises from both a lack of capital and
talent. With respect to capital, there is often insufficient funding for companies in the
earliest stages of going-to-market. At the same time, government incentives encourage
R&D over commercialization activities. This situation encourages Canadian companies to
stay in the lab and iterate their technology rather than encouraging them to take
solutions to market.
At the program level, the Government of Canada’s SR&ED program is very well received
and is recognized internationally as a useful program for creating innovation. However,
no equivalent program exists to foster commercialization in Canada.
While Canadian companies are improving their commercialization capability, a significant
talent shortage still exists, particularly for business talent with significant expertise in
developing global companies. Canada needs more seasoned technology executives who
are willing to lead Canadian technology firms to take on the world.
Scaling for Export One strategic area for a digital economy is in helping Canadian technology companies
achieve export success. Although many Canadian companies see North America as their
domestic market – and choosing the US as their primary market – many companies lack
the scale and expertise required to effectively sell in the US and even more so to reach
Asian and European markets.
Scale is an issue for many technology companies, and it’s a key catch-22 for the industry.
On the one hand, the technology industry is very supportive of small businesses; in BC we
have over 8,000 technology companies with employees and at least another 13,000 sole
entrepreneurs. On the other hand, true productivity efficiencies in the industry come
with scale.
Digital technologies are unique in that the marginal cost to produce one more copy of
software, or one more hosted Software-as-a-Service (SaaS) session or process one more
e-commerce transaction is effectively zero. However, reaching the markets required to
sell those additional units requires more business skill and capacity, an area where many
technology companies still fall short for a number of reasons.
While supporting small businesses is a commendable goal for government, with respect
to the digital economy, government and industry need to be encouraging the growth of
larger companies – companies with the business skill and market reach necessary to scale
and create true economic wealth.
“(The problem) is that we don’t have enough people ‘shooting
for the moon’ and building really interesting businesses (not just
technologies alone).”
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Accessing Foreign Capital for Growth The BCTIA and its member organizations applaud the federal government for recently
taking action on the issues surrounding Section 116 of the Federal Income Tax Act. For
years these issues have hampered foreign investment, particularly US investment, in
Canada’s ICT sector.
However, access to foreign investment continues to be a key issue for Canadian
companies, particularly those companies looking for larger, later stage investments to
fund growth and expansion. For a number of reasons, Canada’s venture capital pool
remains small, resulting in the need to access larger rounds of funds abroad. Canada
needs to do more to help companies get ‘investment ready’ such that they can better
attract foreign investors (either VC’s or Strategic Investors) as they expand.
Canada also needs to ensure that it doesn’t penalize companies for accepting foreign
investment. One example where this occurs currently is with the government’s
successful SR&ED tax credit program. Companies successful in attracting foreign
investment can be penalized by losing their CCPC status which in turn changes the benefit
structure that they receive from SR&ED.
Canada also needs to continue addressing unnecessary barriers to foreign investment
including barriers to foreign investment in Canadian Venture Funds. Aside from Section
116, there are still a number of obstacles faced by foreign investors investing in Canadian
Limited Partnerships. Specifically, Canada needs to simplify and clarify the tax situation
to allow foreign investors, particularly US venture funds and pension funds, to invest in
Canadian Limited Partnerships on a level playing field.
At the same time, it is recommended that federal government encourage foreign venture
capital to Canada through co-investment programs similar to the BC Renaissance Fund
created by the Province of BC.
Competing in a Global Talent Market Lastly, in its digital economy strategy, the Government of Canada needs to recognize that
the digital economy is a global economy. Not only are Canadian companies competing
with global companies for market share, but they are competing with global firms for
talent as well.
The world recognizes Canada`s capacity for growing talent. Canada needs to do more to
keep that talent here, to leverage it when it moves abroad, and to use our environment
to attract the world’s best and brightest here.
According to the C100 group of Canadian Silicon Valley executives, there are over
300,000 Canadians in the Silicon Valley alone – over 3 times the number of technology
professionals that we have working in the province of BC. Anecdotally, it has also been
stated that Microsoft has more graduates from the University of Waterloo, than from any
other university.
While active repatriation programs have had limited success to date, the Government of
Canada does need to ensure that when and if these Canadians are willing to come home,
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that there aren’t any barriers (such as significant duties) that discourage them from doing
so.
Canada isn’t the only country that is producing great technology talent. According to the
Kauffman Foundation, recognized leaders in entrepreneurship research and advocacy,
over 50% of Silicon Valley start-ups have at least one foreign-born founder. Canada needs
to ensure that it can also attract these foreign nationals with programs that expedite
entry to Canada, and that encourage international students, particularly graduate
students, to remain in Canada after they complete their studies here.
Lastly, the Government of Canada needs to ensure that Canadian technology start-ups
have the ability to attract and retain top business talent. Typically, to attract top talent
means a total compensation package that includes equity-based compensation including
stock options. However, for SME’s to effectively provide equity-based compensation, the
Government of Canada needs to reconsider the recent changes to stock compensation.
The new rules on employee stock option taxation and other equity-based compensation
is detrimental to talent attraction and needs to be revised.
Building Digital Skills to Create a Digital Economy To create a digital economy requires a talent base of employees (and consumers) who are
digitally literate and who understand and appreciate the productivity and connectedness
that a truly digital economy can create. Digital skills are not simply ‘left-brain’ skills like
programming and engineering, but increasingly include `right-brain’ skills like graphic
design and multimedia creation and manipulation.
A digital economy also needs to support information literacy. Through the Internet,
Canadians now have fingertip access to all of the world`s information. However, accessing
that information, and processing it efficiently and effectively are crucial skills for all
Canadians.
The necessity of digital skills is not limited to the technology industry, but permeates all
sectors of our economy. Canada needs ‘Power Users’ in all industries – those people who
have the technology literacy and the fortitude to bring new digital technologies into their
workplace and set new standards for productivity and collaboration. A workforce with
better digital skills is essential for the improvements in productivity Canada sorely needs.
Companies will only invest in productivity enhancing tools, including IT and other digital
applications, if their workforce is able to use these tools effectively.
While Canada`s technology industry continually needs new programmers and
technologists to grow, we also need a lot of business skills such as sales, marketing, and
management talent. These business people are required to take our technology to
market and deploy it such that consumers and companies can reap its benefits.
A digital economy is a knowledge economy, and a strong education system needs to be
its backbone. With a focus on digital and information literacy, our education system
needs to be strong from Kindergarten to graduate school and into lifelong learning.
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In the K-12 education system, digital literacy is being hampered by a general lack of digital
technology and more importantly, technology mentorship. Canada needs to do more to
put software and hardware in our schools, but more importantly, we need to teach our
teachers how to use the technology effectively and how to teach others to do so.
While it is recognized that many of the students have access to better equipment at
home than they have at school, this is not an excuse to minimize investment in
technology in the classroom. On the contrary, Canada’s education system cannot afford
to create a new ‘digital divide’ between those students who have access to leading-edge
technology at home and those who do not.
To encourage children to learn and explore technology, it is recommended that Canada’s
education system do more to help students get hands-on with technology. Students of all
ages need to learn how to use digital technologies, and how to apply their digital skills to
solving everyday problems. For younger students, this means more camps and
competitions to encourage children to explore technology while for older students it
means more practical opportunities to learn the application of technology in the
workplace through apprenticeships, co-operative education and industry projects.
Consultation Questions
Q. Do our current investments in R&D effectively lead to innovation, and
the creation of new businesses, products and services? Would changes
to existing programs and services better expand our innovation capacity?
R&D and Innovation Support While Canada can still do more, BC Technology companies believe that R&D and
Innovation is generally well supported in Canada by programs like SR&ED, NRC-IRAP,
NSERC and the National Centres of Excellence. Specifically, the SR&ED tax credit program
provides a strong level of support for ICT compared, particularly in provinces like BC
where it is combined with a provincial SR&ED program.
“Emphasis is heavy on R, light on D (or innovation /
commercialization)”
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What Canada lacks is not the ability to innovate, but the ability to get our companies and
their innovations to market, particularly to export markets. Canada needs to find ways to
better support the commercialization process and help Canadian companies leverage
their R&D investment for wealth creation.
For much of the ICT sector, innovation is not about true technology innovation, but
instead about deploying advanced technologies into new markets, particularly sectors of
the economy (like government, health and education) that are regarded as technology
laggards. The R&D effort behind these market transfer innovations is often view by
Canada’s technology programs as traditional software development. As such, traditional
incentives do not apply – even though the market risks can be high, and the economic
benefits of the innovation can be substantial for Canada.
With respect to incentives, Canada should find new ways to incent the adoption of
innovative technologies that rewards the business risk of business model innovation
through ICT’s as well as incenting companies to take technology risks.
The advantage of Internet and mobile technologies is that they allow for the creation of
new business model innovations within traditional sectors of the economy.
Unfortunately, while much of this innovation can create productivity advances in those
markets, the existing incentives for this type of innovation are minimal.
With respect to specific R&D programs, programs like the NRC-IRAP program are well
received although BC technologies do cite that budgets are small and that the program is
often over-subscribed. This oversubscription makes the program unreliable for those
companies considering or requiring its support. Of course, a continual effort to streamline
processing to make funding proposals and reporting easier is always recommended.
“The budgets (especially NRC-IRAP) are too small to make a
meaningful difference. Even when there are projects that would
meet their criterion for funding, the lack of budget makes
funding unlikely.”
“IRAP is a fine program but it seems to be a bit of a hit or miss
proposition to get funding as often the program managers don’t
know when or if they will have money to distribute”
“Simplify the paperwork around IRAP. I just recently went
through IRAP submission. The amount of paperwork was
daunting.”
“Without these (commercialization) capabilities, all of the
investment in SR&ED and other programs does the heavy lifting
of enabling innovation, but fails to capture the windfall that
follows successful commercialization.”
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In total, to create a digital economy, Canada needs to increase its current expenditure on
R&D as well as commercialization activities. BC technology companies express varying
levels of opinion with respect to whether university research should be expanded or not,
however most support initiatives to streamline the technology transfer process in order
to help Canada capitalize on the intellectual property being created in university research
labs by commercializing it.
Scaling for success is a common concern of many BC technology companies. In a digital
economy, the marginal cost of creating one more piece of software, of hosting one more
internet session or of processing one more e-commerce transaction is effectively zero.
However, to take advantage of this situation requires the business skill and talent to
reach new customers, or encourage existing customers to buy more. Such scenarios often
require larger and more sophisticated companies, albeit companies that are by definition
still medium-sized (50 to 500 employees).
Most programs, like SR&ED and NRC-IRAP tend to favour small companies. For example
the SR&ED tax credit, while an important program, provides refundable tax credits for
lower revenue companies while only providing non-refundable credits for larger
companies. In the middle is a gap where medium-sized companies, particularly emerging
high-growth companies, are often too large for many programs, and too small for others.
To maximize the commercial benefits of our innovation, Canada needs to review its
programs to ensure that we are providing the right incentives to scale – and not providing
disincentives. Canada needs to ensure that we have the right environment to create
larger companies (albeit still medium-sized companies on the world scale) that have
better global market reach while still being small enough to stay innovative and
adaptable.
The Importance of Export Markets Exports are critical for the growth of Canadian ICT companies and BC technology
companies have a very strong export focus with many considering North America as a
single market.
“While it is desirable to remove barriers to success, we have
to be careful not to provide crutches that encourage over-
reliance on government funding sources.”
“Increase funding and support for commercializing university
research; attempt to bring universities and industry closer
together.”
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Despite the strong export focus, many companies do cite the need for a strong domestic
market in order to help prepare their companies for marketing abroad. A strong domestic
market is also needed from the perspective that many sectors of Canada’s economy can
be using ICT’s more effectively to increase their productivity.
Scaling for export is a key issue that the Government of Canada needs to review.
Specifically, Canada needs to ensure that we have the programs and services available to
help Canadian companies scale their operations and take advantage of global market
opportunities.
One program that the Federal government should review and consider emulating is the
Province of BC’s new Global Business Accelerator Centres. These new centres, the first of
which is in Bangalore India, provide Canadian companies with market intelligence and
strategic market advice, office facilities to help establish an on-the-ground presence, and
connections to pre-qualified local service providers to expedite the logistical issues of
establishing a presence in the market.
As an expansion of the traditional trade commissioner service in key global markets,
export accelerators can help Canadian companies establish their presence on the ground
– learning the market, finding relevant partners, developing distribution channels and
signing first deals. With the US being a key market for many Canadian technology
companies, accelerator centres in key cities like Washington DC, Silicon Valley, Seattle,
San Diego, Chicago, Boston and Dallas would be extremely helpful for easing market
entry.
Role of Government as a Model User The Government of Canada can also play a role in building a digital economy by further
investing in ICT’s to increase its own productivity while improving access to services for all
“Those of us in the ICT sector understand that the market is
global, and I seldom hear from ICT companies that don’t
consider North America to be their domestic market. Going
beyond NA is where we need to do more work.”
“Encourage more Canadian firms to become early adopter
customers; investing in technology and more importantly on
the continuous process change needed to take advantage of
technology.”
“It may be more expensive to develop a foreign market, but
sometimes the early adopter market for a given product may
be found outside of Canada”
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Canadians. With respect to productivity expenditures, the federal government can both
increase investment directly, by investing its own infrastructure, and indirectly by
encouraging recipients of transfer funds to invest in their productivity.
It should be noted that the BC Technology Industry is not looking for a specific ‘Buy
Canadian’ program as our companies recognize that this policy can have protectionist
ramifications by blocking Canadian companies from selling to other countries.
However, wherever Canada can improve communication of internal opportunities to
Canadian companies, and wherever Canada can increase its internal risk thresholds to
give Canadian startups a better opportunity to bid, those improvements should be made.
Simply ensuring the government maximizes technology for a streamlined and transparent
procurement processes would be extremely well regarded. While the MERX service is
well received, more widespread deployment by departments, agencies and those
organizations funded by the government would be beneficial, as would encouraging the
use of electronic submissions.
Similarly, a system similar to the GSA in the US that allows vendor products to be pre-
approved for procurement at preset prices would also be seen favourably as a means to
ensuring that all Canadian companies have access to the government procurement
process.
Another area where the government can use its procurement policies to create a digital
economy is through expansion and promotion of the Industrial and Regional Benefits
(IRB) program, better known as offsets. As Canada makes important and significant
improvements to its defense capacities, the offset benefits should be better directed to
sectors of the economy that encourage the use and production of digital technologies.
These offsets could be direct investments in Canadian ICT companies or indirect
investments through Venture Capital firms. Where the offsets are invested through
intermediaries like VC funds, it is recommended that a multiplier be applied to the offset
requirements for even greater leverage and building of Canada`s venture sector.
Q. What is needed to innovate and grow the size of the ICT industry
including the number of large ICT firms headquartered in Canada? To innovate and grow the size of the ICT industry in Canada, we need to grow a healthy
structure of small, medium-sized and large companies. Currently, Canada has an
imbalance of small companies which results in lower productivity in our industry due to
scalability.
” There should be a more defined communication channel for
entrepreneurs like myself with innovations that will greatly
assist the government in their duties.”
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The Importance of Anchor Companies To grow the ICT industry in Canada requires the attraction, creation and retention of
larger ICT firms, specifically companies large enough to act as anchor companies in the
various burgeoning ICT clusters across Canada (Vancouver, Waterloo, Toronto, Ottawa,
and Montreal). Anchor companies provide the training ground for management talent,
act as a focal point for global promotion, and serve as spawning ground for new spin-out
companies.
While Canada is unlikely to attract large ICT firms to move their headquarters here, more
can be done to encourage the development of more medium-sized organizations, such
that those organizations can either merge and acquire other firms, or provide an impetus
for further investment in Canada should they be acquired for foreign companies.
Acquisitions by foreign interests are a likely scenario for many technology start-ups due
to the preponderance of ICT firms to consolidate, and the significant gravitational pull of
places like the Silicon Valley. Where acquired companies have a sizable presence in
Canada, that presence is less likely to be reduced post acquisition and there are several
examples here in BC where the acquired firms have actually grown substantially.
Attraction and Retention of Qualified Talent Growing large firms requires a significant pool of qualified management. The best option
for Canada is to grow our own talent pool, and industry initiatives like the ACETECH
Academy for CEOs here in BC have helped to build this pool.
However, growing experienced talent is a lengthy proposition while that talent gap exists
now. Therefore, Canada needs to improve mechanisms to attract new talent, particularly
experienced managerial talent, to help grow our ICT industry. Aside from growing our
own talent, Canada needs to create the right incentives (and remove the right
disincentives) to retain the great talent that we do build here.
Compensation in the technology industry is unique compared to many industries as
equity-based compensation is often a key component of total compensation –
particularly for founders and senior managers, but also for many less senior staff.
The new rules on employee stock option taxation and other equity-based compensation
is detrimental to talent attraction and retention and needs to be revised. The Employee
Stock Option Plan (ESOP) rules create a large potential liability for companies wanting to
go public. This is an unintended consequence of the program changes and one that
“Fundamentally, Canada’s problem is not one of research or technical
capabilities – the problem is one of commercialization talent. Canada is a
‘branch town’ and lacks large companies where the requisite
commercialization talents (sales, marketing, product management) are
traditionally incubated and honed.”
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affects company’s ability to raise the capital that they require to grow and become
anchor companies.
In general, Canada should examine its rule sets from the taxation point-of-view and
specifically check for rules that create the unintended consequences of discouraging
growth.
Attraction of Foreign Investment While the BCTIA and its membership laud the Canadian government for making progress
on issues regarding Section 116 of the federal Income Tax Act, such that it is removing
barriers to foreign investment, more work needs to be done to attract investment to
Canada.
Foreign investment is available, and it often brings with it access to markets and talent.
In the United States, the Venture industry is currently undergoing a ‘right-sizing’ as it is
believed that there is actually too much capital relative to the current number and size of
opportunities. Therefore, many investors are seeking to put their money elsewhere.
Canada can and should be a logical choice for that investment.
Currently, the capital pool in Canada is very small relative to the potential of our firms.
Larger capital pools, necessary for medium-sized technology companies to fund market
expansion, are almost non-existent in Canada.
It is noted that while Venture Capital has been a significant investment vehicle for
funding start-up technology companies, digital technologies reduce the costs of start-up
organizations to amounts below the levels in which VC funds are interested in investing.
To help with access to capital in creating a digital economy, the Government of Canada
should help with programs in the earlier stages of growth for digital technology
companies such that they can get started and grow to a sufficient size where Venture
Capital is available for further growth. In other words, Canada can take a greater role in
getting technology companies ‘investment-ready’.
“It helps to have early adopters close to home because logistics are
simpler/cheaper for chronically underfunded startups”
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Q. What would best position Canada as a destination of choice for
venture capital and investments in Global R&D and product mandates? Venture Capital is attracted to great companies, to favourable tax environments, and to
jurisdictions with free flows of capital. While creating great companies is the role of
entrepreneurs, creating a great environment for capital is the role of government.
With the recent economic downturn, and 10 years of poor returns for many funds, the
Venture Capital industry is currently in a process of right-sizing itself and potentially
finding new business models that better reflect the realities of creating digital economy
companies in today’s environment.
“Access a deeper pool of angel/seed financing to develop to a
stage of true VC readiness.”
“The current VC model makes it tough for them to invest in some
digital media because the opportunity is too small.”
“The role of VC’s is diminishing (for certain sectors) as Angel
funding and Angel syndication becomes more and more
important.”
“Canada should permit immigrant investors who invest in ICT even
if they cannot play an active role in managing those investments.”
“The best way (to attract larger Venture Capital pools) is to create a
large pool of good prospects – which may mean increasing support
for early-stage companies.”
“We need to recognize that VC is an international business, so
funds need to be able to syndicate cross-border in both directions
– it is unrealistic to expect US VC’s to co-invest with Canadian VC’s
in Canada if Canadian VC’s can’t invest in US companies introduced
to them by US VC partners – this inhibits development of the VC
ecosystem.”
“The problem in Canada is that the VC industry isn’t yet
sustainable because a group of fund managers with reliable and
repeatable track records hasn’t emerged, and it will take at least
another decade… until then, government involvement will be
required in various forms.”
17
One role for the federal government would be to emulate programs like the successful
Venture Capital programs that have been created in BC, specifically the Small Business
Venture Capital Act, which provides retail and angel investors with refundable tax credits
for investments made into Venture Capital Corporations(VCC) or directly into SME’s
registered with the Province of BC as Eligible Business Corporations (EBC).
Another consideration proposed by BCTIA members is to allow Investors to keep more of
their capital gains from technology investing, thereby improving potential for long term
returns. Similarly, another BCTIA member recommended tax-free rollover of capital gains
that allows investors who have had a windfall from one company to reinvest those profits
into another (and ideally several other) technology start-ups.
Here in BC, there are several notable examples of successful technology entrepreneurs
who have gone on to become angel investors in the community, investing in and
mentoring new legions of entrepreneurs. Canada needs more of this type of investment
activity and should do whatever it can to encourage it.
Canada also needs to continue addressing unnecessary barriers to foreign investment
including barriers to foreign investment in Canadian Venture Funds. Aside from Section
116, there are still a number of obstacles faced by foreign investors investing in Canadian
Limited Partnerships. For one, investing in a Canadian venture fund as a limited partner
may be considered “carrying on business in Canada”, subjecting the investor to a
Canadian tax liability and having to file Canadian tax returns.
Furthermore, there still remains uncertainty under the Income Tax Act as to whether LP
investment gains will be classified as business income or capital gains by the Canadian
Revenue Agency. Uncertainty on how gains may be taxed can be a barrier to foreign
investment. Foreign investors can also not receive LP assets on a tax-free rollover basis as
is often done when venture funds distribute shares of an investee company to their
limited partners without winding-up the partnership.
“Allow Canadian investors to keep more of their returns”.
“Tax-free rollover of capital gains made on tech, back into tech,
would be a way to keep money in the game.”
“Government should encourage/facilitate private investors. It
should not become an investor.”
18
Q. What efforts are needed to address the talent needs in the coming
years? To address the talent shortage in the coming years (starting again in 2011 in BC), there
are a mix of efforts that need to be undertaken with respect to both building talent
within Canada and attracting talent from abroad.
With respect to building talent within Canada, efforts need to be undertaken from K-12
through to post-secondary programs and into lifelong learning programs for technology
workers.
In the BCTIA’s 2010 Labour Demand Study released in February 2010, one of the key
findings was that the industry in BC would add back the approximately 6% of employees
that were lost during the recent recession taking BC back to a new peak for technology
employment levels at just under 79,000 employees.
While software engineers have the greatest plurality of jobs required this year, there is
also significant growth in business-related positions expected as seen by the impending
demand for Executive Management and Senior Sales and Marketing positions. This high
demand for growth in non-technical managerial positions, particularly sales and
marketing, is a consistent trend from the previous 2008 and 2007 studies.
To build the talent pool, the BC technology industry needs to provide larger numbers of
highly-qualified, technically skilled workers over the next few years. Meanwhile, the
technology industry needs to continue to provide more co-operatve education
opportunities to help provide important work experience for these new graduates.
To help the Canadian ICT industry to attract global talent, the federal government can
help with immigration programs that expedite the entry of skilled workers into Canada
including immigration programs that encourage international students to remain in
Canada after they complete their education here.
To help with the attraction of global talent, the Government of Canada also needs to
augment the recent changes that they made to stock option compensation to make it
easier for SME’s to use equity as compensation. This will help to attract and retain the
required top business talent.
“I would like to see more encouragement (maybe even a
requirement) for foreign university graduates to stay on in Canada”
“Our employees have taken smaller compensation packages in order to
participate in the company’s future success by way of stock option.”
“Most startup employees recognize the value of stock options although
some have been burned in the past.”
“While employees do not consider options as part of their cash
compensation, they do value the potential upside that options provide.”
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Q. What do you see as the most critical challenges in skills development
for a digital economy?
To create a digital economy requires a talent base of employees (and consumers) who are
digitally literate and who understand and appreciate the productivity and connectedness
that a truly digital economy can create. Digital skills don`t just include ‘left-brain’ skills
like programming and engineering, but increasingly include ‘right-brain’ skills like graphic
design and multimedia creation and manipulation.
A digital economy also needs to support information literacy. Through the Internet,
Canadians now have fingertip access to all of the world`s information. However, accessing
that information, and processing it efficiently and effectively are crucial skills for all
Canadians.
The necessity of digital skills is not limited to the technology industry, but permeates all
sectors of our economy. Canada needs ‘Power Users’ in all industries – those people who
have the technology literacy and the fortitude to bring new digital technologies into their
workplace and set new standards for productivity and collaboration. A workforce with
better digital skills is essential for the improvements in productivity Canada sorely needs.
Companies will only invest in productivity enhancing tools, including IT and other digital
applications, if their workforce is able to use these tools effectively.
While Canada`s technology industry continually needs programmers and technologists to
grow, we also need a lot of business skills such as sales, marketing, and management
talent to market and deploy our technology and to help consumers and companies reap
its benefits.
A digital economy is a knowledge economy, and a strong education system needs to be
its backbone. With a focus on digital and information literacy, our education system
needs to be strong from Kindergarten to graduate school and into lifelong learning.
Strong Research-Oriented Universities Although immigration is important for attracting some of the best and brightest minds to
Canada to lead technology development and deployment, a digital economy needs to be
home-grown as all Canadians need to digitally literate.
At the core of the technology leadership behind a digital economy is the need for strong
research-oriented universities. World-class universities are important for attracting the
best and brightest to Canada, and to train and retain those born here.
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Industry-Focused Education Programs As strong as our universities may be in research, we also need our schools to work closely
with industry to provide the appropriate level of knowledge transfer (in both directions)
to ensure that our graduates are job-ready and that our students are studying real-world
problems.
With respect to lifelong education, more needs to be done to help technologists evolve
from being practitioners to leading the next generation.
Technology skills tend to have a limited lifespan. Workers either need to continually
upgrade their technology skills or they need to find new career paths, often in the
business and management aspects of companies, that allow them to leverage their
expertise.
Digital Literacy in K-12
In the K-12 education system, digital literacy is being hampered by a general lack of digital
technology and more importantly, technology mentorship. Students need to have access
to the hardware and software required to communicate and collaborate in a digital
economy, but more importantly, they need teachers who understand and appreciate
digital literacy and who can teach and coach kids to use and explore the technology.
Canada needs to do more to put software and hardware in our schools, but more
importantly, we need to teach our teachers how to use it effectively and how to teach
others to do so.
“One noticeable ingredient of all of the world’s leading technology
centres is the presence of leading universities which create
concentrations of excellent people”.
“I would prefer it if there were more vocational courses with closer
coupling with industry.”
“Create more programs to train technical people on how to run
companies, seek financing and grow companies.”
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While it is recognized that many of the students have access to better equipment at
home than they have at school, this is not an excuse to minimize investment in
technology in the classroom. On the contrary, the education system cannot afford to
create a new ‘digital divide’ between those students who have access to leading-edge
technology at home and those who do not.
To encourage kids to learn and explore technology, it is recommended that the education
system do more to help students get hands-on with technology and to learn how to use
it, and how to apply their skills to everyday problems.
For younger students, this means more camps and competitions to encourage children to
explore technology while for older students it means more practical opportunities to
learn the application of technology in the workplace through apprenticeships, co-
operative education and industry projects.
“I have a friend who teaches elementary school and he has never used
MS Excel. And another one who doesn’t even use a computer. Not
good.”
“Schools need far more support for ‘digital tools’ than they currently
get”
“The teachers are the ones lacking the understanding of the new
technology”
“Kids are already learning these skills outside of school”
“Summer programs for youth; competitions”
“Provide kids (K-12 and Post-Secondary) with more opportunity to
apprentice and work on projects with industry”
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BC Technology Industry The following is an outline of the major industry sectors in BC and their relative strengths
with respect to number of companies, number of employees and annual revenues.
TECHNOLOGY SECTOR STATISTICS
INFORMATION & COMMUNICATIONS Hardware, Software, Telecommunications and IP over Everything
6,000 companies
46,000 employees
$9 billion in revenue
WIRELESS Hardware, Software and Broadband Internet
500 companies
6,000 employees
$2 billion in revenue
LIFE SCIENCES Pharmaceuticals and Medical Devices
100 companies 2,600 employees
$900 million in revenue
NEW MEDIA Interactive Multimedia, Gaming and E-Learning
1100 companies
15,000 employees
$2 billion in revenue
AEROSPACE Engineering, Manufacturing and Training
190 companies
1,550 employees
$450 million in revenue
CLEAN TECH Hydrogen; Fuel Cells; Power Electronics; Energy Storage;
Wind, Ocean and Solar Power; Environmental Technologies
1,390 companies
21,000 employees
$2.8 billion in revenue Data compiled from Profile of the British Columbia High Technology Sector (2008), Wireless in BC (2007), New
Media BC, Aerospace Industry Association of BC. Sectors contain overlapping data due to companies being listed
in more than one sector.
* Headquartered in BC
GLOBAL COMPANIES WITH A PRESENCE IN BC 3M Touch Systems
Alliant Techsystems
Ballard Power Systems Inc.*
Boeing
Broadcom Corporation
CDC Software
Dolby Canada
Eastman Kodak
Electronic Arts
Harman International
Industries
Honeywell Video Systems
HSBC Group
IBM
Intel
Kensington
MacDonald, Dettwiler and
Associates Ltd. (MDA)*
Microsoft Corporation
McKesson Corporation
Netapp
Nokia
Open Solutions
Pixar
Plug Power
Phillips Lighting
Robert Bosch GmbH
Sage Group
Salesforce.com
Schneider Electric
Scientific Atlanta – a Cisco
Company
Sierra Wireless*
Seiko Epson Corporation
SAP
Sophos
TELUS*
UTStarcom
Vivendi Universal
Walt Disney
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About BCTIA
British Columbia Technology Industry Association www.bctia.org
Growing BC’s technology industry…one company at a
time.
The BC Technology Industry Association is an industry-
funded organization supporting the growth of British
Columbia’s strong knowledge economy. Our network of
2700+ member companies are all sizes and from all
technology sectors and collectively employ over 60,000
workers in BC.
We deliver programs and services that directly influence
the growth and success of our companies, such as
PODIUM, our industry promotion program, Xcelerate, our
executive education program, and PEER2PEER groups,
where our members connect to share and learn.
As the voice of the technology industry, the BCTIA is
committed to the ongoing growth, sustainability and
prosperity of the technology industry and the
transformation of British Columbia to a knowledge-based
economy.