Alberta takes aim at province's high-tech sectors with aggressive action plan

Alberta has unveiled an integrated action plan to stimulate technology company creation and commercialization, highlighted by a $100-million contribution to seed a fund of funds through the recently created Alberta Enterprise Corp. The $178-million, three-year plan includes a provincial top-up to the scientific research and experimental development (SR&ED) federal tax credit and an interconnected package of funds, infrastructure and services that will be completely implemented by the end of 2008.

The nine-point plan was announced by premier Ed Stelmach just days before he headed to California to attend Bio 2008 and meet with representatives of pharmaceutical companies and other high-tech firms.

Entitled Bringing Technology to Market, strategy behind the action plan was clearly influenced by the Value-Added and Technology Commercialization Task Force report (R$, September 19/07) and Dr Bob Fessenden, former DM of the Alberta ministry of Advanced Education and Technology (AET). (Fessenden was recently appointed to head up the Premier's Economic Strategy Council).

It was the Task Force — chaired by David Martin, executive chairman of Smart Technologies Inc — that recommended a systems approach to accelerate commercialization and development of Alberta's tech-based sectors.

Fessenden was instrumental in taking the Task Force recommendations and urging an alternative approach to innovation that focuses on fostering the creation and growth of technology supply companies that are both R&D-intensive and knowledge-based (R$, November 12/07).

"The action plan has a long history behind it. The programs have been talked about for some time and the Task Force led by David Martin was the catalyst for it ... The Task Force looked at the package and the pieces of the recipe that are needed. The key is the package," says AET minister Doug Horner. "It focuses on our areas of strength in alternative energy and energy efficiency, life sciences and agriculture, ICT (information and communications technology), which is enabling, and nanotechnology."

Horner says the importance of the systems approach was reinforced in discussions he had with venture capitalists and "commercializers" during a trip to California 18 months ago.

Excluding the $100-million contribution to the fund of funds, the rest of the action plan has a budget of $78 million over three years — a modest sum that will build on previous contributions to establish a series of sectoral research institutes and $1.8 billion in new investments in post-secondary education.

"It's not in the document, but the action plan brings alignment to Alberta's research and innovation agenda. We did the same thing for post-secondary education last year," says Horner. It's for future entrepreneurs to take advantage of the money we have put into knowledge and create wealth here in the province (and) it's focused in areas where we have strength.

With the Alberta Enterprise Fund, Alberta joins Ontario (see page 4) and British Columbia in taking a fund of funds approach to stimulating investment in high-tech. But it also breaks a long tradition in the province of relying on macro-economic conditions to attract investment while steering clear of mechanisms that might be seen as business subsidies. Alberta's current wealth has not resulted in an increase in the supply of VC, however, with the province attracting just 2% of the Canadian total. The fund of funds is expected to roll out in 2009 once a board of directors and CEO have been hired and other funding partners come on board.

"No other jurisdiction has been able to launch a successful venture capital sector without some kind of government involvement," states a background document to the action plan. "That includes jurisdictions like California and Boston."

Yet another break from the province's previous hands-off approach is the decision to introduce a provincial SR&ED tax credit. The new credit comes into force January 1/09 providing a 10% credit eligible up to $4 million in expenses, for a maximum credit of $400,000. The credit is refundable for all companies regardless of size.

"The tax credit is a recognition of the competitive environment in Canada and globally," says Horner. "It's one more tool in the toolbox."

Fleshing out the action plan are seven other measures that include:

* a network of technology development advisors who will work with AET and host organizations,

* projects for young entrepreneurs;

* product development centres modelled on the existing Food Processing Development Centre in Leduc AB;

* a product demonstration fund delivered through established organizations in which projects can receive up to $500,000 that must be matched from other sources;

* innovation vouchers — $10,000 to cover fee-based services and $50,000 to assist technology development activity;

* an expansion of the IVAC Capacity Builder program

The IVAC Capacity Builder program will provide $30 million to allow AVAC Ltd to expand its support for company development in the pre-commercial and seed-stage stages. Sectors targeted include ICT, life sciences and other industrial technology sectors with assistance provided either through grants or advice. The program is seen as an important element in generating new companies which can then go on to access other seed capital or graduate to VC support.

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