Responds to long-standing need

A $100-million venture capital fund targeting series ‘A' financing is the highlight of a new BC Tech Strategy that could see at least $500 million injected into the province's rapidly growing high-tech sector. The strategy was unveiled at last month's BC Tech Summit in Vancouver following months of consultations. It touches on all aspects of the innovation ecosystem under three overarching themes— capital, talent, markets — with short- medium- and long-term measures.

The release of the strategy was bolstered by two related announcements: $6 million to support Mitacs, bringing total provincial support for the national internship program to $29 million since 2004; and $34 million for Genome BC to leverage federal funds for genomics-based projects targeting priority sectors in the province.

The $100-million fund of funds will be private sector led with a fund manager expected to be in place this spring. The province's support for venture capital has been a long-standing priority for the BC Technology Industry Association (R$, February 26/15). BCTIA reaffirmed the need for a fresh infusion of early-stage financing prior to the 2015 Budget and during the strategy's consultation period.

"The government came out in spades with this announcement. The fund is far and away the strategy's largest incremental investment in the tech sector," says Bill Tam, BCTIA's president and CEO. "The early reaction to the fund has been very positive. There's an access-to-capital challenge across the spectrum."

The BC Tech Fund is the first major government support measure for VC in nearly a decade, following the fully committed $90-million BC Renaissance Capital Fund (R$, April 24/07 & April 30/08). The provincial government anticipates the new fund will have a leverage ratio of at least five and possibly as high as eight, pumping $500 million to $800 million into early-stage and series ‘A' tech financing

"The announcement (of the Tech Fund) went viral in the VC space. We received inquiries from all over the world," says Amrik Virk, minister of Technology, Innovation and Citizens' Services. "The tech sector says there could be a seven or eight multiplier effect and I'm hoping for a four-to-six multiplier … Companies are dying on the vine."

BC also offers generous tax credits for qualifying private sector R&D funding. According to BC Budget documents released February 16, the government provided $68 million in 2015-16 for Scientific Research and Experimental Development Tax Credits, including $33 million through the Small Business Venture Capital Act.

Virk says that while the strategy is sector agnostic, he expects it will be particularly useful in boosting the province's two fastest growing tech sectors — gaming and clean tech — as well as verticals in the life sciences sector such as genomics.

Talent

Complementing the government's latest support for Mitacs, the strategy contains a series of measures to address the serious skills shortage facing many tech firms, including a greater alignment of the province's post-secondary institutions with tech sector requirements.

Initiatives include:

• re-engineering 25% of provincial operating grants (approximately $500 million) to support occupations in "high-demand occupations";

• mandatory co-op education or work requirements for new technology-related degree programs;

• aligning of student financial aid via BC Completion Grants to include students completing tech sector-related programs; and,

• continued promotion of BC Tech Co-op grants as part of the BC Innovation Council Tech Works program.

"The postsecondary alignment with the tech sector is a positive change. The stronger commitment to co-op education is also something industry has been calling for for some time," says Tam.

Grades K to 12 are also the focus of new measures designed to stimulate interest in tech careers at an early age. New measures include:

• a new curriculum to be phased in over three years with new learning standards in math and sciences;

• experiential learning in applied design, skills and technology education including coding; and,

• opportunities for high school students to specialize in information technology (IT), technology education and emerging disciplines, and to participate in work experience electives in the tech sector.

"We want to introduce students to the language required to work in the tech sector including coding," says Virk.

The strategy also includes revisions to the BC Knowledge Development Fund, launched in 2001 as a mechanism to match provincial awards from the Canada Foundation for Innovation.

Virk says those changes have already been completed "It will accentuate wealth and health and will always look for the commercial aspect," he says.

Markets

The strategy takes a broad view of markets to encompass both international sales and government procurement. On the international front, the government will develop sector development and export plans for life sciences, clean tech, IT and digital media and aim for a 10% increase in the number of BC firms connecting to buyers outside the province.

Within the province, clean tech will benefit from new legislation requiring the entire BC public sector to be carbon neutral by reducing greenhouse gas emissions to net zero, as well as increased adoption of clean tech through the LNG technology fund.

Government procurement will also be enhanced by simplifying application forms for smaller firms, greater use of technology to automate and streamline the process, collaboration with the vendor community during the planning process and development of the BC Developer Exchange to encourage apps development.

Tam says the latter initiative represents a "new tact" in the government's approach to procurement.

"Applications developers and technology innovators can sell their products to government. Combined with other sources of data ... it's akin to a government apps store."

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