Alberta tech companies blossom during pandemic's economic drought
Sector enjoyed unusual success during 2020, but warns drain to the U.S. threatens future prosperity
Alberta tech companies are finding ways to thrive in the middle of the economic desert caused by COVID-19.
At a time when many other businesses are suffering, this sector has found a way to harness the pandemic to grow the industry.
"It has been beneficial to us because a lot of companies recognize that they had either outdated systems or systems that didn't support remote working or [were] looking to streamline processes that normally take place in an office," said Vince O'Gorman, the CEO of Vog App Developers.
Calgary companies Vog and Helcim Inc. were each able to grow their workforce by about 40 per cent during the pandemic.
"There's a big shift ... and we benefit from that digitization," Nicolas Beique, Helcim's founder, said.
Calgary Economic Development has seen huge successes from the tech industry during the pandemic, including the $1.1 billion investment deal scored by Benevity.
"It feels like it's their day in the spotlight for sure," said Mary Moran, president of CED.
"We're still at what I would call the dawn of our development in our tech ecosystem. But we really have ambitious goals to grow it to 10 times the size it is today."
CED projects that Calgary businesses will spend $7.5 billion on digital transformations between 2019 and 2022 — and that tech sector hiring will double the pace of the rest of Alberta's economy.
Jobs, Economy and Innovation Minister, Doug Schweitzer's office said while a specific breakdown is difficult, tech companies in their analysis appeared to be weathering the pandemic better than other sectors.
The minister's office says Calgary and Edmonton both broke records for venture capital investments in 2020.
"The tech sector in Alberta has fortunately seen continued momentum and we expect that they will see even greater investment in 2021," Schweitzer's office said.
Federal, provincial aid critical during 2020
Visionstate Corp. saw their sanitation "internet of things" services skyrocket.
"I almost hate to say this, but the fact is, is that because our technology is focused on cleaning, the pandemic has made it more relevant than ever prior to the pandemic," CEO John Putters said.
The first months of the pandemic presented challenges as spending hit a standstill. All the companies CBC News spoke to said they used the federal emergency programs for at least one month.
"I think that we would have been seriously challenged to get through those periods without the financing and I would say it was probably critical to our existence moving forward," Putters said.
The federal department of finance says that as of December, $6.8 billion was provided to Alberta businesses through the Canada Emergency Wage Subsidy. While a further breakdown of aid by sector was unavailable, the department said 277 small and medium sized businesses in the province also received grants through the Industrial Research Assistance Program (IRAP), which supports technology innovation projects.
The provincial government had 726 applications from professional, scientific and technical services businesses for its Small and Medium Enterprise Relaunch Grant as of December, representing four per cent of total applications.
In addition, millions more are being deployed to tech companies through other Alberta government programs intended to support small business innovation.
Calgary's gaming community has also seen benefits from the pandemic.
"We're seeing a lot of interesting projects kind of pop up that may not have happened before," Mike Lohaus, president of the Calgary Game Developers Association, said.
The association is trying to find ways to showcase the new games to attract investments and attention to Calgary developers. However, the members have found funding hard to come by.
A fragile future for tech
The tech CEOs fear this newfound success is precarious.
"Alberta's got nothing but growth potential ahead of it. I think it's gone through so many difficult economic periods that with the tech sector being so new and growing, there isn't that much of a foundation to it. People are building foundations at this point," Beique said.
And as companies find success, U.S. firms are watching for talent and businesses to poach.
"There needs to be more tax incentive, more encouragement to employ people here, not lose the dream to other companies that are out of the U.S.," said O'Gorman.
"The market is still pretty fragile for tech."
Each agreed that while the current support from the province is helpful, a closer look needs to be taken at how those dollars could be more effective. And they said more competitive tax incentives or credits for companies and investors is needed.
"When they're making IT grants or investments ... make those investments directly into businesses," Beique said. "There's been a lot of push for different accelerators and incubators and things like that. But unfortunately, those middlemen don't always translate into giving the cash needed to small tech companies."
Putters is equally concerned about the U.S. having the capacity to offer better incentives.
"That sort of frightens me because we have a lot of very smart people and you certainly hate to see them go leave the province looking for opportunities elsewhere," he said.
"It requires investment into education and the right programs."
The companies are working to build on the momentum established during the pandemic, but is wary that without proper support Alberta's tech industry will fall short of its full potential.