The third way that government can, and must, support Made-in-Canada tech

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By Leo Valiquette

“Canada is open for business.”

So said Jason Kenney, Canada’s Minister of Citizenship, Immigration and Multiculturalism, in a media release issued last week to promote Canada’s new Startup Visa.

In what the federal government is touting as a “first of its kind in the world,” the visa is intended to accelerate the immigration and citizenship process for entrepreneurs from abroad, particularly technology entrepreneurs, who are vetted by criteria that include investment, and endorsement, by Canadian VCs.

“The new Start-Up Visa will help Canada attract the world’s best and brightest entrepreneurs to build businesses, create jobs, and fuel economic growth,” Kenny said.

The announcement follows a series of new initiatives that the federal Conservatives have undertaken in recent months to bolster the Canadian labour force with skilled immigrants and remove many of the barriers that make it difficult for these immigrants to integrate and have their foreign credentials recognized. These initiatives include the Federal Skilled Workers Program and the Federal Skilled Trades Program.

And to ensure that immigrants are not being brought into the country to fill vacancies that should and can be filled by Canadian citizens, the feds have revamped of the Temporary Foreign Workers Program. When I spoke with Kenny several months ago, he expressed his frustration with the misuse he has seen of this program.

“It really frustrates me when I run across, like in parts of Atlantic Canada where there is double-digit unemployment, employers bringing people in from half-way around the world to work in fish-processing plants or in chocolate factories or what have you,” he said.

And while I do applaud all of these efforts by government, it is this same bureaucratic machine that often remains the single biggest stumbling block to Canada’s entrepreneurs and innovators thanks to a persistent aversion to risk and a hopeless tangle of red tape.

Nothing carries credibility like a paying customer

I often hear from entrepreneurs who have struggled for years to sell innovative new technology to government in this country, despite having piles of data to demonstrate its efficacy and cost efficiency.

Our Commercialization Ecosystem series in the past often quoted from Tom Brzustowski’s The Way Ahead: Meeting Canada’s Productivity Challenge, in which he stated that the role of government is twofold: First, it provides the “supportive and normative framework for wealth creation by the private sector” through laws, regulations, treaties, incentives and so forth. Second, it is a “concentrator of resources assembled through the tax system” to pay for things like education, healthcare and infrastructure.

But as I heard two weeks at the Canadian Digital Media Network’s Canada 3.0 conference, there is also a third role that government can play. Tom Jenkins, executive chairman of OpenText, talked about how all of the usual ways in which the government strives to support R&D and commercialization, such as with SR&ED tax credits, contribute a scant two per cent to innovation, while demand from customers in the marketplace drive 62 per cent of innovation.

Government, in other words, must become a better customer of made-in-Canada technology.

On many occasions we’ve referenced examples of Canadian technology that couldn’t get the time of day from a Canadian buyer, government or otherwise, until it had been validated by a U.S. customer win. Considering that most technology is by nature exportable and the addressable market in Canada is relatively small, just about any technology venture will find its most lucrative opportunities abroad. But if companies find themselves having to look outside of our borders for their initial customer traction, not to mention financing, what motivation do they have to start their new ventures in Canada in the first place?

Political will can make a difference

Government has already taken positive steps on the labour front. It must also take aggressive action on the capital front. To that end, the Ontario Securities Commission has launched a public consultation process on the regulatory changes it would have to make for crowdfunding to be legal in Ontario. This is good news. A move in this direction by the OSC would likely spur Canada’s other securities regulators to follow suit. But what is still lacking in Canada, said Andrea Johnson, partner at FMC Law and Invest Crowdfund Canada’s Vice President Legal, is the political will we’ve seen in the U.S. that saw crowdfunding for startups become a reality thanks to the Jumpstart Our Business Startups (JOBS) Act.

What we need now from government is greater effort to support, endorse and help commercialize more cutting edge technology by actually purchasing it.

Last week’s State of the Nation Report, from the Science, Technology and Innovation Council, “Canada’s Science, Technology and Innovation System: Aspiring to Global Leadership,” concluded that Canada continues to tread water, if not sink, in international rankings related to business innovation and its performance has grown worse under the current Conservative government. Surely government can do more and do better by doing something different.

As a parting thought, consider this call to action from the CATAAlliance, which urges the federal government to support Canada’s ICT suppliers by taking its cue from the U.K.’s G-Cloud First policy.

CATA quotes U.K., Minister for the Cabinet Office, Francis Maude, who states, “In just 12 months, G-Cloud has shown itself to be a model for efficient public sector IT procurement … We have simplified the procurement process through G-Cloud to make it more accessible to a wider range of companies, leading to more choice, better value for the taxpayer and growth for the economy. Suppliers are asked what they can offer government, rather than being issued with complicated specifications that stifle innovation.”

I think we can all agree that this would be a welcome breath of fresh air for Canadian tech companies of whatever stripe.

Image: Wallet Pop Canada

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