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.
Copyright, 2000.