Matt Toner: Why Vancouver’s tech sector is stuck in the middle of the pack

As an entrepreneur in the tech sector, I followed the recent report by Startup Genome that compared Vancouver to other innovation centres from around the world with considerable interest.

Perhaps not surprisingly, I came to rather different conclusions than B.C. Liberal minister for advanced education, innovation and technology John Yap [B.C. government is investing in technology sector, December 5]. I would suggest to Yap at the outset that you actually have to read such studies thoroughly, not just cherry pick the sound bites that best suit your argument.

So what does this study actually tell us?

Of the 20 cities surveyed, Vancouver’s ranking as an innovation center (#9) is certainly interesting—but only if you take the time to examine the details instead of simply trumpeting how we beat Chicago (#10).

Incidentally, we still come in below Toronto (#8)—something that Yap omits. Perhaps, for some reason, that is a less interesting cherry.

Vancouver ranks extremely well in two of the most important ways to foster innovation: talent (#4) and mindset (#2). The first category ranks the competence of the founding team members of a startup and the second measures how well these leaders overcome seemingly insurmountable challenges to create success.

Both are essential pre-conditions for successful innovation—and Vancouver has these in spades! We have deeper talent than New York or Boston, and our compass for success is better tuned than those in Tel Aviv or London. By all means, break out the champagne!

But if that’s the case, why are we then stuck in the middle of the pack?

Two of the biggest reasons are access to funding (#12) and support (#14). The former measures the availability of risk capital (a must-have ingredient for innovation) while the latter assesses the quality of the support network for innovation. Government policy—or lack thereof—fits rather neatly in here.

The study further points out that as a result of the above, financing for innovation-based startups is highly uncompetitive in Vancouver: a staggering 80 percent lower than our counterparts in Silicon Valley.

So here’s the worry: this overhang creates conditions that are perfect for a flight of talent to better supported innovation centres.
We see this when amazing Vancouver-based startups like Flickr, Zite, and Summify are whisked away to the south. Or when game studios shut down local operations in favour of expansions in Toronto or Montreal.

Brain drain is real and we are starting to feel it. And if we continue to export our best ideas and brightest people, we lose.

The findings of the Startup Genome report tie in well with the anecdotal evidence of those actually working in the industry—people like me. Vancouver is—relatively speaking—a smaller and less mature innovation centre. We have unquestionable upside potential, but that promise is tempered by a series of institutionalized challenges that must be overcome.

This is where understanding the details becomes important, especially if—like Yap—you are in the business of making policy.

So here is a final detail, but hopefully it is a cherry that Yap might decide to pick: many of my C-level colleagues in the Vancouver innovation industry have indicated that they need to make a hard decision about keeping their businesses in our city. Their horizon is about 12 to 18 months.

And their real need isn’t the mentorship being proffered by Yap as a kind of panacea (the Startup Genome indicates that Vancouver already has 25 percent more mentorship available than in Silicon Valley).

What my colleagues want to see is an engaged and imaginative government, one that is capable of working with them to solve the very real problems of scarce financing and soft support. Only once those solutions are in place will we see Vancouver realize its full potential—and start moving up in that ranking.