B.C.’s tech ecosystem can officially boast of playing host to nearly 11,000 companies, according to a report card prepared by KPMG on behalf of the B.C. Tech Association.
While the new report, released late Thursday (November 19), highlights significant growth within the sector, the head of B.C. Tech believes challenges remain.
Jill Tipping said she was surprised to discover that of the 10,941 tech firms based in B.C., only 220 employ more than 100 employees.
“I'm really hoping that this is a bit of a call to action for the whole community — certainly for governments at all levels — but for the community as a whole,” she told BIV.
With more than 8,000 tech startups employing fewer than 10 people, Tipping said the numbers show that smaller tech companies aren’t reaching their full potential just yet.
“If we could try and put targeted effort into helping more companies grow into medium-sized and large companies, there's going to be a fantastic return on investment because we know we've got a really healthy startup scene to start with,” she added.
Of those larger firms, 92% are based either in the Lower Mainland/Southwest B.C. or Vancouver Island/Coast regions.
A total of 68% of the 11,000 firms are in the province’s Southwest region, 15% are on Vancouver Island and 8% in the Thompson/Okanagan region.
The report card is based on data from BC Stats and other sources, as well as from interviews with executives from 13 West Coast tech companies, and focuses on 2018 — the last time such a report card was issued.
The West Coast tech sector received an A grade from KPMG when stacked against other sectors in B.C., and a B+ when compared with other province’s tech sectors.
The province scored straight A’s two years ago.
“I am so impressed with what Ontario has done, in particular, in the last four or five years to take what was a healthy tech sector but really turbocharge it,” Tipping said, adding Ontario’s tech community has been performed well by partnering up industry, non-profit and government entities.
“It's a proven, successful approach in Ontario that we can now deploy in B.C. So I'm determined and impatient to deploy that solution in B.C., partly because I'm so excited by what the results will be and the necessity of having that kind of economic impact at this time.”
KPMG’s report card also found revenue growth has been robust in the B.C. tech sector, up 14.6% over two years to $34.7 billion as of 2018.
But total revenue generated by the tech sector is still outpaced by larger provinces such as Ontario ($113 billion) and Quebec ($68 billion).
“Although revenues show strong growth in recent years, the tech sector companies consulted for this study noted that they have had difficulty finding Canadian customers to buy their products,” the report states.
“An easy target of additional sales could be to local customers who need a service or product that is manufactured or provided locally. Additionally, companies suggested that an incentive to get Canadian business customers to keep as much of their supply chain in Canada as possible will help to increase demand for tech sector products.”
Tipping said the good news is that there is a lot more dialogue about this ongoing issue than there was just 10 years ago.
“It's absolutely essential and especially in the COVID context. We're moving in a direction with the world where there's going to be much more technology deployed and we want to make sure that Canadian solutions and B.C. solutions get the best possible market penetration. We don't want to be importing all of our technology,” she said.
“We want to be supporting our homegrown players, especially when those homegrown players are already successfully selling to people outside of B.C. So there's tremendous room for improvement but it's not out of a charitable giveback motive. We're actually asking B.C. customers to buy best-in-class products [and] to not discount homegrown companies.”
The report card determined the tech sector accounts for 123,170 jobs, amounting to annualized growth of 4.6% from 2003-18.
And those within the sector are taking home average weekly earnings of $1,740
Altogether research and development investment in the province amounted to $4.2 billion.
“B.C.’s R&D expenditure remained stagnant for years around $3 billion, but has now started to increase,” the report card states.
Top R&D spenders in B.C. as of 2018 include Telus Corp. (TXS:T) at $307 million, Sierra Wireless Inc. at $122 million, Arbutus Biopharma Corp. at $75 million and Zymeworks Inc. (NYSE:ZYME) at $73 million.
The sector contributed $17.9 billion to province’s GDP, growing 10% over two years and accounting for 6.5% of the province’s economy.
In Washington state, the tech sector accounts for 19.1% of that jurisdiction’s GDP.
In terms of talent, the report card noted an increasing number of tech degrees being granted but raised the issue of B.C. lagging behind Ontario on a per capita basis.
In 2017, post-secondary institutions churned out 2,289 physical and life sciences students with undergrad degrees and 528 with graduate degrees; 1,773 architecture and engineering students with undergrad degrees and 822 with graduate degrees; and 1,131 math, computer and information science students with undergrad degrees and 390 with graduate degrees.
But there has also been a steady stream of talent coming from other sources.
“Tech sector companies overwhelming note that Canadian immigration policies have allowed unique and skilled talent to immigrate to the country within a few weeks (as opposed to several months when compared with the US),” the report card states.
“This gives Canada the unique advantage of being able to win-over top international tech talent. This diverse tech workforce can then foster innovation and unique collaborative thinking.”