The Way I See It… by Michael C. Volker
B.C.’s the place for wireless innovation
are some 120 young companies in
The survey found that the critical success factors identified by the responding companies, in priority order were: the ability to execute sales, the ability to access funding, access to markets and customers, and finally, R&D capacity.
interesting that attracting management and technical talent was not identified
as a major concern. Although employment in the wireless industry is expected to
grow from approximately 2,000 in 2002 to over 3,300 in 2004, some of this
demand may come from the traditional info-tech talent pool. It may also not
have been cited as a concern because of the B.C. government’s DTO (Double-the
What I found particularly interesting is the high level of research and development expenditures relative to sales. Over the past two years, more than $118 million was spent on R&D as compared to aggregate sales over the same period of $482 million. It should be noted that these numbers pertain only to some 42 companies in total that reported revenues. Many are still at the development stage.
B.C. may well be the best jurisdiction in the world for building a technology venture, especially for those heavily committed to R&D as is the case in the wireless sector. As an example, for every dollar that a privately held company located in B.C. spends on research salaries, it can get 68 cents back in cash in the form of a refundable tax credit. That number comes as a surprise to many. That’s because the Canada Customs and Revenue Agency’s own publicity generally refers to the 35% maximum that it provides under its Scientific Research and Experimental Development tax credit program. However, B.C. provides another 10% on top of that and companies can gross up their direct costs with an overhead allowance. Do the math and it works out to 68%.
Unfortunately, some of the top R&D performers such as Sierra Wireless, the revenue leader in the B.C. wireless sector gets a lesser incentive (topping out at 46%) for having grown beyond the privately owned stage of business development. And, for companies not yet reporting a profit, the tax credit is, regrettably, non-refundable.
innovative capacity, as measured by patents, is impressive. Given that more than three-quarters of the
respondents have been in the wireless business for less than five years, more
than 375 patents have been filed. This reflects the brain trust being developed
at B.C. universities, notably the
Commercializing these inventions requires capital. Another B.C. incentive benefits start-ups seeking private equity capital. Investors receive a 30% refundable tax credit on funding provided to qualifying ventures under the recently revamped B.C. Equity Capital program. This helps companies to attract angel investors and mentors.
In B.C., another big plus is the recent overhaul of the B.C. Securities Act. It is now possible for B.C. companies to access the equity market without the traditional – and costly – rules associated with the raising of equity capital, especially from private investors.
The Wireless Innovation Network of B.C. (WINBC), an industry organization catering to the business needs of this sector and the New Media Innovation Centre (NewMIC), a collaborative research initiative have been formed specifically to further fuel and support this promising technology cluster. These complement other organizations such as the Advanced Systems Institute of B.C.
way I see it, the wireless industry as defined by wireless devices,
infrastructure, enabling software, wireless content and portals, and enterprise
class solutions holds a lot of promise as being one of the hot technology
sectors of the next decade. What better place to benefit from this than in
Michael Volker is a high technology entrepreneur and