For the fourth consecutive year, the BC Tech Report Card has given top marks to the province’s tech sector when comparing its performance to other industrial sectors in BC. When compared to tech sectors in other provinces, the grade remained unchanged at a B.
Blending sector data and insights gathered by KPMG and the BC Tech Association, the BC Tech Report Card reviews the tech sector’s performance in relation to other provincial industries, Canadian counterparts, and international jurisdictions. It also examines progress since the 2018 Report Card, and highlights themes for collective action going forward.
“While the provincial tech ecosystem continues to thrive overall, the persistent B grade serves as both a reality check and a call to action,” said BC Tech President and CEO Jill Tipping. “Because our companies have long tended to stay small or sell too early, they haven’t grown into the large companies that anchor a tech ecosystem. This has created a scaleup gap that is preventing the sector from achieving its full potential.”
The 2020 report reveals that the sector is underperforming in terms of the number of medium-sized to large firms. While British Columbia has a growing number of mid-sized companies, it continues to trail more mature tech sectors in Ontario and Quebec.
The number of small and medium-sized enterprises comprising the vast majority of the ecosystem, and the overall distribution of enterprises of all sizes, has remained relatively consistent over the last two years.
According to KPMG, there are only 22 companies in BC’s tech sector that employ at least 500 people (of the nearly 11,000 total companies in the sector). Put another way, the threshold to be among the largest 10 percent of tech companies in BC is a shocking low employee count of 50. The comparable threshold for Canada is 100, with Germany at 150, Israel at 200, and California at 500.
Not surprisingly, the 2020 Tech Report Card calls for more sustained multi-year public investment in the kind of programs that help companies grow from small to medium-sized, and from medium-sized to large.
Earlier this year the BC Tech Association made a policy recommendation that they “partner with the federal government to invest a total of $50 million over 5 years into ScaleUp BC, a partnership to drive economic growth and competitiveness across BC,” and in October Tipping told BetaKit that she hoped the capital for a BC Scale-Up initiative would be included in the federal 2021 budget.
“We know that scaleup companies are more likely to create jobs, attract investment capital, invest in R&D, remain in the community, and create economic prosperity,” Tipping said. “We know the potential of BC’s tech sector is even greater than the success we see today. And we know that with the economic challenges ahead, a thriving sector will be essential to pull us out of this pandemic and build a resilient future economy.”
While the BC tech sector has much to celebrate, “there are speed bumps along its path,” George Kondopulos, Industry Leader for KPMG’s Tech practice in Vancouver said. “Talent sourcing and retention remain critical priorities, as does providing small to medium-sized companies with the domestic capital, R&D resources, and go-to-market support to reach their full potential. The BC tech sector has done much to lead its provincial peers and close the gaps between national competitors, and now is no time to take its foot off the pedal.”