Calgary will pump public money into a $40-million venture capital fund, in a move that Prime Minister Justin Trudeau says is a win for the entire country.
The program — Innovation Outlay Calgary — will allow the Calgary Economic Development Corp. to use financial assistance to “do much more” to build a thriving high-tech sector in the city, Trudeau said in a speech Tuesday at a Calgary Chamber of Commerce luncheon.
To achieve this, the CEIC will team up with the Alberta Investment Management Corp. to provide seed money to startups in technology and life sciences that are recruiting new talent from outside of Calgary.
Calgary, where Trudeau delivered the address, was recently named Canada’s top city for attracting tech talent by Deloitte.
“The Technology Talent Home in Calgary is a promising and promising venture that offers an opportunity to further support the development of a tech sector that has been at the forefront of global innovation,” said Alberta’s chief economic officer Bob Hawkesworth.
“If we are to be an innovation nation, it means we have to strengthen our tech sector.”
The Innovation Outlay program has existed in various forms for many years. It was first introduced in Ontario in 1998, with Ottawa earmarking $1.6 billion in startup dollars under federal investments.
But the program has faced criticism in recent years for diverting money from government efforts to support economic growth.
As the economic malaise that engulfed Canada during the Great Recession deepened, Ottawa in 2013 restructured its program to add a $3-billion investment from the federal government, with equal funding also coming from the province.
The $3-billion program allowed governments to be more flexible, with the federal government slashing money for portfolio expansion, enterprise development and the growth of emerging companies. It also had a provision for competitive grants.
Calgary was able to recruit a Liberal cabinet minister to take part in a meeting in the city in December 2014 that produced the “sectoral growth strategy” that also attempted to help match the city’s strengths in renewable energy, tourism and oil and gas with opportunities in the burgeoning tech sector.
This time, the Government of Alberta, led by Economic Development Minister Deron Bilous, devised the strategy with the CEIC and Alberta Investment Management Corp.
The National Roundtable on the Economy’s 2018 Canadian report says investment in the natural resources sector has been declining since 2013, while the overall size of Canada’s economy has only increased.
“So, the thinking was … let’s find a way to focus on actually bringing more of those talents from abroad to here,” said Bilous.
“We also know … that there is a reason people leave us and go to Silicon Valley, and that is because we don’t know how to keep them and we don’t understand how to build them here and recruit them here, and that’s an aspect of this program that we think is important.”
Calgary Economic Development CEO David Brown said Tuesday that government and investment levels in the city will likely not return to 2012 levels.
But while he expects investment levels to gradually return to historical norms over the next few years, there will be growing pains, he said.
“We may see a few early stage investments happening for the first time, where maybe … that first $500,000 investment is put in by a government and then the angels step in,” he said.
“As we start to see more and more startups going through that cycle, it is a good thing for our city, and it’s a good thing for the country.”
Trudeau’s speech on Tuesday highlighted several new investments the government is making in Alberta as part of an economic strategy to support the province’s new progressive government.