Silicon Valley North #15 Jan'00

The Way I See Itů by Michael Volker

B.C. High Tech is on a roll -  how to keep it moving

Let's reflect for a moment on B.C.'s climate for innovation and take a look at what's happened on the B.C. high Technology scene and what it's going to take to assure a bright future.

This past year has seen the launch of numerous new high technology ventures, especially in the dot.com and new media space. Many companies went public (e.g. Anormed, Creo, Pivotal, and Sierra Wireless). Some were acquired (e.g. HotHaus Technologies). Larger companies spun-off off new startups. The market value of B.C.'s top 20 public companies (excluding U.S. subsidiaries like Electronic Arts and MacDonald Dettwiler) at year end reached $22 billion, compared to only $6 billion two years ago. PMC-Sierra was the first to break $10 billion! More people became millionaires. In short: B.C.'s humming!

We've got excellent universities, colleges and research institutes. New R&D organizations relating to fuel cell and new media technologies are being initiated (e.g. Fuel Cells Canada and NewMIC). B.C. has now matched other provinces by offering a corporate R&D tax credit (the Provincial SRED). B.C.'s Employment Standards Act was modernized to accommodate knowledge workers. A new stock national stock exchange (the CDNX) catering to emerging ventures started operating in November. Its progenitor, the Vancouver Stock Exchange, introduced the concept of Venture Capital Pools (now called Capital Pool Corporations on the CDNX) and rallied for investment tax credits (e.g. to extend the Venture Capital Corporation grant to individual investors). Venture capital funds expanded and moved into earlier stage investments (seed funds). Angel networks (Vantec) and startup incubators (IdeaPark) are now up and running. New technology parks are being planned. And, although not often mentioned, securities legislation in B.C. as compared to Ontario for example, is more favorable for the financing of smaller, early stage, investments (e.g. the $25K exemption and the $1M small financing exemption).

Furthermore, we have a wonderful spirit of collaboration among industry, academia, the financial community and government. These groups are forging new links and are strengthening their ties. You can see this when you attend industry events offered by the Vancouver Enterprise Forum and our many industry organizations (BCBA, BC-TIA, NewMediaBC, etc). Interest is growing and a groundswell is forming. We've achieved a critical mass.

So how can we sustain and continue to build our technology community? What's on our list for the next decade?

Topping the list is the main impediment to growth: personal taxation. This is a federal problem and we need to work with national advocacy groups like CATA to be heard in Ottawa. We're not getting our proportionate share in B.C.  Although taxes are slowly being reduced, we could score some points in specific areas such as fixing the punitive tax treatment on employee stock options. And, we might even be able to convince Paul Martin that investment fuels growth and that risk takers need to be encouraged by rewarding patient investors with favorable capital gains taxes. Why not allow investors to take up-front write-offs?

At the provincial level, here are a few things we need to do: keep the small financing exemptions intact; increase the caps on the provincial SRED and the VCC (Venture Capital Corp) tax credits; introduce investment incentives for Angel investors; increase funding for the highly successful early financing programs offered through such organizations as the B.C. Science Council and the B.C. Advanced Systems Institute; support new initiatives in education and training; and finally - an action item for all of us - continue to promote the knowledge-based science and technology culture.

The way I see it, we may be on a bit of a roll but we're not in high gear yet. Progress has been pretty good, but we've still got lots of ground to cover.



Michael Volker is a high technology entrepreneur and director of Simon Fraser U's University/Industry Liaison Office. He is a former executive director of the BC Advanced Systems Institute and is chair of the Vancouver Enterprise Forum. He may be reached at mike@risktaker.com.

Copyright, 2000.