Alberta’s Tech Ecosystem: A Snapshot of Progress, Challenges, and Opportunities
Authored by Parker Easter
JD Candidate 2023 | UCalgary Law
Co-founder, ReNu Hygienics
In January of 2022, Calgary-based tech-oriented community builder, Zachary Novak, released a comprehensive letter on the state of Alberta’s technology ecosystem entitled “The Alberta Tech Ecosystem: The Good, the Improving and the Tough Realities.”[1] Subsequent to reviewing his thorough account, I felt significantly more informed on our province’s tech balance sheet. This article provides a snapshot of his snapshot: the high-points broken down into our province’s tech strengths, challenges, and opportunities.
Strengths:
Capital: Venture capital funding in Alberta has increased significantly, with $480 million raised in the first 9 months of 2021.[2] Large exits from companies such as Benevity, Shareworks, and Enervus demonstrate the potential for success in the Alberta tech ecosystem. Additionally, seed stage capital is becoming more abundant in the ecosystem; the space is benefiting from investors like Harvest Ventures, Thin Air Labs and a growing community of angel investors such as Startup TNT and Women at the Cap Table.
Talent: Educational institutions are increasingly focusing on retraining and reskilling programs to develop the necessary tech talent. The Alberta government has also introduced an "express" pathway for international talent to migrate to tech, aiming to fill experience gaps in the local talent pool.
Founders: The Alberta tech ecosystem is experiencing a surge in pre-seed and seed-stage founders. Startup activity is accelerating as digital technology and innovation increases in local familiarity.
Community Initiatives: Grassroots initiatives like Chic Geek, Product Calgary, and Rainforest movement support the talent, founders, and capital pillars in Alberta's tech ecosystem.
Challenges:
Later-stage funding: The growth in Alberta's tech ecosystem has been stalling due to a lack of scale-up capital (Series A, B, C) directly sourced from Alberta-based firms. Home-grown venture capital presence is limited compared to other regions in Canada.
Fiscal Policy: The cancellation of the Alberta Investor Tax Credit has negatively impacted start-up investments, making Alberta less competitive compared to neighboring provinces (30% in BC, 45% in Saskatchewan). Additionally, outdated accredited investor rules create barriers for novice investors to support local start-ups, despite having access to risky investments like penny and “meme” stocks, an issue prevalent across North America.
Talent gaps: There is a notable lack of experienced talent in sales, marketing, and customer success roles, which are critical for tech startups. Additionally, the mindset of newly displaced oil and gas workers needs to shift from a "solution" focus to a "problem" focus, which is more suited to tech startups.
Founder challenges: Alberta's tech founders face issues with over-engineering solutions, lack of early focus on distribution, and significant distractions from chasing grants and programming as a sign of validation. A cultural shift towards rapid iteration and embracing experimentation is needed for success.
Capital realities: Despite the growth in available capital (as described above), Alberta is far behind other Canadian provinces in venture funding. In comparison to British Columbia, Alberta's population is about 88% of BCs, but it has raised only 20% of the venture funding. Additionally, the average deal size for Alberta was only $8M whereas BC and Saskatchewan each realized an average of $29M and $15M, respectively – once again pointing to a lack of later stage financings.
Opportunities:
Address the scaling challenge: Alberta needs to attract and develop senior talent to scale technology enterprises in the province. This includes attracting international talent and promoting programs like the Alberta Product Leadership Program. One suggestion made was to make Alberta a more “attractive place to live, so talent is willing to relocate here.”
Improve investment conditions: Founders in Alberta need larger investment rounds and higher valuations to spend less time raising money and more time with customers. Local investors need to take more risks, move quickly, and streamline due diligence processes.
Embrace risk and creativity: Alberta's tech ecosystem needs to adopt a mindset that embraces failure and doesn't penalize founders for taking risks. Celebrating big swings, even if they strike out, will help create a culture of innovation and ambition.
Read Zachary Novak’s complete and comprehensive analysis of the Alberta tech ecosystem here: https://fmlstudios.substack.com/p/the-alberta-tech-ecosystem-the-good?r=2eqc9&utm_campaign=post&utm_medium=web.
[1] Zachary Novak, The Alberta Tech Ecosystem: The Good, the Improving and the Tough Realities, FML Studios, online: https://fmlstudios.substack.com/p/the-alberta-tech-ecosystem-the-good?r=2eqc9&utm_campaign=post&utm_medium=web.
[2] This figure rose to an approximate $571M raised by the end of 2021.
