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Alberta now home to 3,000 tech companies; new report shows an industry hitting its stride

Williams said while it may appear that the local tech sector is suddenly booming, the reality is that the groundwork for the recent growth was laid years ago

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Alberta is now home to more than 3,000 technology companies, a 233 per cent increase since 2012, according to a new report.

The report — conducted by Alberta Enterprise Corp. in partnership with PwC — also shows that Alberta’s tech sector, once made up largely of early-stage startups, is showing signs of maturity. According to the report, almost 40 per cent of tech companies in the province now have annual revenues of more than $1 million, a 66 per cent increase since 2018. Over the past two years, the number of tech companies with 25 or more employees has increased by 12 percentage points to 25 per cent.

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Fundraising, another key indicator of growth for technology companies, is also on the rise, with almost a quarter of Alberta tech companies having raised Series A or later stage financing. And 40 per cent of tech companies in Alberta have now achieved profitability, the report says.

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The new statistics appear to confirm what sector advocates, as well as government and economic development officials, have been saying for months — the growth in Alberta’s tech industry over the past several years has been dramatic.

“For years we’ve been talking about an emerging tech sector but this report establishes that it’s really maturing at this point in time,” Jobs Minister Doug Schweitzer said in an interview. “I do believe we’re that maturing marketplace now where this is a big part of our strategy long-term for diversifying Alberta’s economy.”

According to the report, the majority (58 per cent) of tech firms in the province are in Calgary, with 30 per cent in Edmonton and almost 13 per cent in other regions of the province. In Calgary alone over the past two years, there has been a flurry of high-profile activity in the tech sector — from Benevity Inc. landing a $1.1-billion deal with international investors that vaulted the local company to coveted “unicorn” status, to startup fintech company NeoFinancial’s $50-million funding raise.

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Downtown office towers are seen in Calgary on Tuesday, April 13, 2021.
Downtown office towers are seen in Calgary on Tuesday, April 13, 2021. Photo by Gavin Young/Postmedia

Just this week, Calgary company Absorb Software received a valuation of more than US$500 million in a deal that will see it acquired by a major U.S. private equity firm.

Perhaps one of the most startling stories to come out of the city’s tech sector in the past two years has been the exponential growth of Symend. The Calgary-based software firm, which was founded in 2016, had just 50 employees in January 2020 and now has more than 260, with plans for additional expansion. The company has caught the eye of national and international investors, successfully raising more than $100 million so far.

“I think we (Alberta’s tech sector) are finally starting to build some momentum in gaining a bit of that scale,” Symend co-founder Tiffany Kaminsky said in an interview Thursday. “Being able to bring in institutional or VC funding from out of country really says a lot about how we are starting to build momentum and how people are starting to pay attention to Calgary and Alberta on a global scale.”

Kaminsky said she and co-founder Hanif Joshaghani chose to build Symend in Calgary because “it’s home.” But she said tech entrepreneurs are increasingly realizing that starting a company in Alberta makes sense from a business perspective, not just an emotional one.

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“In my opinion, there’s very much a competitive advantage to building a business here as opposed to Silicon Valley, if you just think about how far you can take that funding and how far you can go with it while still competing on a global scale,” she said.

Kristina Williams, president and CEO of Alberta Enterprise Corp. — a Crown corporation that invests in venture capital funds to help spur the growth of Alberta’s technology sector — said while it may appear that the local tech sector is suddenly booming, the reality is that the groundwork for the recent growth was laid years ago.

“People ask, why is this suddenly happening now? Well, this is a decade’s worth of growth. This is a 10-year overnight success,” Williams said.

The Calgary downtown skyline. Thursday, April 15, 2021.
The Calgary downtown skyline. Thursday, April 15, 2021. Photo by Brendan Miller/Postmedia

She added that a decade ago, venture capital for tech companies in this province was scarce. Today, AEC has 20 VC firms in its portfolio, and venture capitalists are “actively looking” for investments to make in Alberta.

“There’s been a very conscious effort by the government and by a lot of individuals on creating access to that capital,” Williams said. “Companies now have access to resources to be able to stay here and grow in the province.”

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As companies grow and mature, so do their hiring needs, and many local tech entrepreneurs have highlighted access to skilled talent as one of the biggest impediments to growth. Alberta still has a systemic shortage of software engineers and other high-tech professionals, and Williams said if the tech sector is going to continue to expand, the province will have to invest in education and retraining, as well as attract talent from outside its borders.

Last month, the province announced it will make up to $25 million available through Crown Corporation Alberta Innovates to at least three business accelerators to “vault Alberta’s promising startups and small and medium technology companies through scale-up” and foster growth. Efforts on the part of the City of Calgary to grow the local tech sector are also underway, not the least of which is the $100-million Opportunity Calgary Investment Fund, which was created by city council in 2018 and aims to support projects that promise to create jobs and grow the city’s tax base.

Schweitzer said Alberta is now unarguably a “player” on the Canadian tech scene, and the next challenge will be taking the sector one step further.

“We don’t want to just be a player, we want to become a dominant player in Canada and one of the leaders for the country,” he said. “I do think that with so many of these companies that are hitting their stride, I wouldn’t be shocked if we got the next Shopify right here in Alberta.”

astephenson@postmedia.com

Twitter: @AmandaMsteph

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