Medium-sized technology companies are on the rise in B.C., a recent report by audit and tax advisory firm KPMG confirms.
Famed for its innovation, the province has traditionally been comprised of tech businesses with fewer than 10 employees. Unlike other Canadian markets like Ontario, which have more late-stage companies, B.C. startups are often bought out by competitors or larger organizations.
But between 2014 and 2016—the final year profiled in the report—B.C. saw a three percent growth in the number of companies with 10 to 19 employees, and a 19 percent rise in firms with 20 to 49 members. The increase indicates that a greater number of CEOs are choosing to develop their organizations rather than sell them, and is indicative of a more mature tech market.
The growth in medium-sized companies was reflected in the huge uptick in employment opportunities. Between 2001 and 2016, the number of jobs in the sector increased by 49 percent—a figure second only to B.C’s booming construction industry, which added 95 percent more jobs over the 15 year period.
The growth in talent demand spawned a huge rise in wages. Jobs in the tech sector paid 84 percent more than the provincial average of $46,000 by the end of 2016, with salaries increasing at more than double the rate of a typical B.C. job.
Despite graduating a number of businesses from small to medium enterprises, however, B.C. saw no new organizations grow to more than 50 employees. That figure has been stagnant for a number of years, leading to growing concerns over the province’s ability to build and retain heavyweight companies.
“Highlighted against B.C.’s many clear strengths, our principle weakness stands out: B.C.’s lack of anchor technologies that have achieved scale,” Jill Tipping, president and CEO of BC Tech says in the report. “Without a thriving, vibrant core of anchor tech companies at the heart of our ecosystem, enriching the talent pool, creating spinoffs with new ideas, and providing proven pathways to scale, we’ll be unable to make B.C. the best place to grow a tech company.”
B.C. is currently home to three tech “unicorns”, or companies worth over $1 billion: social media planner Hootsuite, communications software Slack, and video surveillance giant Avigilon. Tipping believes that the province has to nurture more large organizations to be able to compete with global tech markets.
“At BC Tech, we made it our number one priority to understand the complex, multi-stranded causes of this shortage of anchor companies, and take determined action to address it through our venture programs, our ecosystem collaboration, and our public policy recommendations,” she says. “This 2018 BC Tech report card reminds us how critical that mission is and how essential it is that we succeed.”
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