Clean tech has made its mark in numerous cities and regions around the world. In fact, global clean-tech mergers and acquisitions activity increased in 2011's first quarter to reach $15.2 billion over 216 deals, up from $8.9 billion in 2010's fourth quarter.
At a local level, it's important to understand how Vancouver can effectively compete in the growing clean-tech market. This sector features stiff competition from clean-tech powerhouse regions such as Silicon Valley and the New York-Boston, Denver-Boulder and Austin-Houston corridors. With a focus on the environment, strong academic institutions and talented workforce, it seems that Vancouver, and even its neighbour city Seattle, would be considered viable competitors among this group of clean-tech regions. But as standalone competitors, Vancouver and Seattle are at the tail end of the race. There are several factors that must be examined to understand why.
Population: First, these cities do not have a critical mass of population as compared with others in the market. British Columbia has a population of 4.5 million people, with 2.5 million in the Greater Vancouver area; Washington state has a population of 6.6 million people, with 3.4 million in the Greater Seattle area. Compare this with the greater Bay Area region, which is home to almost eight million residents, and you have tough competition.
Academic institutions: Schools also play a critical role in determining the ability to effectively compete in the clean-tech market. The University of British Columbia, along with the University of Washington and Washington State University across the border, produce highly qualified potential employees. While these schools offer rigorous academic programs, they can't singularly compete with the sheer number of schools in other regions such as Boston (Boston College, Harvard, MIT, etc.) and New York (New York University, Columbia, etc.)
Availability of capital: The third factor leading to a competitive clean-tech region is the availability of capital. Vancouver has a handful of clean-tech funds such as Yaletown Venture Partners and Chrysalix; Seattle is home to Olympic Venture Partners, Arch Venture Partners and Pivotal. While these firms have made some high-profile investments, they can't separately compete with the combined capital from the hundreds of clean-tech funds in other regions such as that of the New York-Boston corridor.
Anchor companies and industries: Last, a leading clean-tech region must have the presence of critical anchor companies and industries. Vancouver and Seattle both benefit from the transportation industry (i.e., Westport Innovations Inc. and Boeing, respectively). In contrast, Houston and Austin gain advantages from the oil and gas and hardware industries, while San Francisco is home to the IT and biotech sectors.
Independently, it's clear that other regions dwarf Seattle and Vancouver as standalone clean-tech competitors. Look at these cities as one region, however, and a new competitor quickly emerges. These markets provide a critical mass in population with 10 million people, renowned academic institutions within a 200-mile radius and several high-profile anchor companies.
In what is quickly becoming a global market, perhaps the only way for Vancouver and Seattle to survive, and ultimately thrive, is through a committed partnership. We are already starting to see cross-border activity between these cities with B.C. investors investing in Seattle companies and vice versa. For example, Kirk Washington, a Yaletown clean-tech partner, has moved to Seattle to more closely evaluate investments in the area. On the flip side, Seattle-based Arch Venture Partners invested in CoolEdge Lighting, which is based in Vancouver.
While there has been a history of outreach from the B.C. government and non-government organizations to Seattle, the two regions have not yet fully joined forces to work together in mutually beneficial ways. As standalone regions, Vancouver and Seattle lack the scale to compete both nationally and internationally and must develop strategic alliances to effectively compete in the clean-tech industry.
