Vancouver’s Future as Canada’s Tech Hub
Stephen Gable, CPA, CA | Thursday, October 13th, 2016
Rather than plunging into the nitty-gritty of taxation and accounting advice, I want to kick-off my blog contribution from a wider angle. More specifically, I want to muse on Vancouver’s future as a tech haven and share some of the collective wisdom I’ve gathered over the years from some of the city’s best and brightest.
Just before the first decade of the 21st century wrapped up, history was being made. The Black Eyed Peas and Lady Gaga were topping the music charts, Tiger Woods’ philandery threatened to eclipse his massive athletic achievements, and Canada’s 3rd largest city faced the reality that the accomplished natural resource sector was, in fact, cyclical.
Amidst a struggling economy Vancouver gave birth to a number of technology-based startups that would grow up to not only compete on, but absolutely dominate, the world stage. Among these are likely some familiar names, such as Slack, Hootsuite, and Indochino. While the Great Recession chugged along, the valuations of Vancouver tech companies seemingly knew no limits, with Hootsuite eyeing $1 billion by 2012.
Without delay, our city was flooded with a wave of tech-hopefuls. The necessary infrastructure soon followed and support mechanisms like Wavefront, Launch Academy, and numerous tech-specific tax credits solidified Vancouver as Tech Capital of Canada.
Fast-forward to present day 2016 – not only is that title at stake, but in my opinion also the city’s future as a tech leader.
On a recent trip to Toronto I couldn’t help but be impressed and excited by the presence of the tech scene compared to Vancouver, where it’s very easy to miss if you don’t know where to look. Toronto’s downtown core is sprouting incubators in buildings normally reserved for chic apparel merchandisers with enormous budgets. The MaRS Discovery District has become the undisputed champion of Canadian startup support. The future is looking bright!
Without this turning into a pro-Toronto post that could put our West Coast Strong mantra at risk, I’d rather focus on a few points where Vancouver could stand to take note. Of the seven or so criteria that any tech hub needs to excel, Vancouver’s biggest threat lies in the following: rent prices, funding, and salary expectations.
While an inflated rental/real-estate market in Vancouver is hardly anything new, the major concern manifests when combined with the average startup salary. Good developers can make a respectable portion of what they could make in the Valley or Toronto, but junior-level developers and those occupying non-technical roles are another story. As a result, attracting out-of-town talent is extremely difficult, and perhaps even more serious is the risk of losing what high-quality talent we do have to greener pastures to the South or East.
In tandem with difficulties enticing talent, attracting funding in Vancouver is a beast of its own. The city, not-surprisingly, has a strong roster of investors with a solid track history, but many are only beginning to open their chequebooks to startup tech companies. Those that tend to subscribe to a highly risk-adverse model of investing, where strong teams and revolutionary ideas are a distant second thought next to proven traction and perpetually increasing revenues. As a result, most well-funded Vancouver companies will have secured funding from the South or in some cases Toronto. Without this crucial funding support, Vancouver companies will continue to have difficulty against global competitors and solidifying the city’s status as a tech powerhouse.
There is no easy solution to these issues as they’re made up of many moving parts, some incredibly difficult to manipulate directly. I will commend the BC government’s action to-date, as EBC tax credits have provided a strong incentive for local investors, and I’m truly excited to see what Christy Clark’s $100 million VC fund will enable. Until then, continuing to promote and support Vancouver’s tech ecosystem and next generation of entrepreneurs is where we’ll focus here at PCA.