As a geoscientist feeling the squeeze from the oil crash, I decided to retool and left Canada for the more startup-friendly UK at the beginning of 2016.
Joining a fellow Calgarian, we brought our idea to life in the online fundraising space, building a platform that provides generous prize draws for significant brands and sports clubs like Chelsea FC. Two years in our venture continues to grow, undoubtedly buoyed by London’s favorable business ecosystem.
While following Calgary’s recent bid to land Amazon’s HQ2 from abroad, I noticed a varied response from the local community. Supporters touted the obvious economic benefits that come with the arrival of such a sizeable employer, while detractors feared local businesses would lose their top talent to the e-commerce giant. Others stated that Calgary just wasn’t ready yet to take on firms of that scale. Nevertheless, most commenters seemed to agree that the city holds the potential to one day achieve such lofty ambitions.
While Calgary has most of the ingredients that make for a burgeoning tech hub: an educated workforce, access to various forms of institutional capital, and enough office space to support both operators and ancillary businesses alike, there is a continued reliance on a sluggish grant system for a significant portion of startup funding. Contrast this with places like the UK, which take a blended approach to government funding subsidies. These mixed systems offer not only grant support but an array of robust tax incentives for investors. While it’s true that there are tax incentive programmes available in Canada, they pale in comparison to the scale of those on offer across the Atlantic.
As an example, through the UK’s SEIS (Seed Enterprise Investment Scheme) investors automatically receive 50% of their initial investment back in tax relief. Should the company fail, the investor is entitled to an additional 22.5% of further tax relief. The total tax relief amounts to having roughly 27.5% of at-risk capital for an investor. Programs like SEIS create a much-needed bridge between investors and nascent entrepreneurs. Government grants certainly have their place, but the selection process relies on centralized decision makers and their disbursement can take much longer than private funding depending on factors like application windows and selection periods. Concurrently, there should be the additional funding option for startups of a highly incentivized private sector with the freedom to develop and iterate at a rapid pace.
Intangibles like Calgary’s entrepreneurial spirit have never been in question, and the imminent arrival of Silicon Valley-based accelerators like RocketSpace is a step in the right direction. The current provincial budget continues, not surprisingly, to indicate an economy that is still mostly dependent on oil and gas. A blended approach to subsidized venture funding which includes robust tax incentives will not only help to foster a vibrant tech ecosystem in cities like Calgary but will hopefully one day contribute to a more diversified economy nationwide.