Newbie tech firms get a helping hand south of the border By: Maria Cootauco, Info Executive
July 14, 2010

Canadian tech startups help fuel the country’s economy, but what fuels them? A new partnership between a Canadian high tech association and a Silicon Valley non-profit is hoping to ignite the sector by pushing out an agenda for growth in the technology industry.

Already, the partnership has yielded tangible gains for the tech sector by championing for an amendment to Section 116 of the income tax act of Canada, making it easier for non-Canadian venture capitalists to invest in up and coming Canadian technology companies.

The program is spearheaded by CATAAlliance and C100, a San Francisco-based non-profit Canadian technology entrepreneurship and investment organization. With the cross-border connection, CATA CEO John Reid boasted of new relationships being forged between high tech companies in Canada and established investors in the U.S.

“It’s like a direct connection to a very large and prosperous market as well as a significant venture capital pool—so it really meets two of those prime requirements of a Canadian company that’s looking to grow,” Reid said. “The U.S. is usually the first choice. There’s a continual appetite for capital and to work with Canadians that share their values is very critical.”

Headed up by Chris Albinson, a native of Newbridge, Ont., C100 has been working with CATA over the last year on advocacy issues surrounding the ease of trade across the Canada-U.S. border. “In the global economy, knowledge, research and innovation drive economic growth and enhance social well-being,” Albinson said in a statement. “The Canadian innovation sector has been greatly stressed in the most recent economic downturn and needs a supportive eco-system. The creation of a positive public policy environment for industry growth is one of our common goals with CATA.”

According to Albinson, there are some 300,000 Canadians working in Silicon Valley, who can act as conduits and “mentors and plug-ins for investment needs,” he said. It’s that kind of endorsement south of the border that has helped to move the agenda forward in Canada, Reid said.

“You’ve got a California-based organization working with a Canadian-based organization on a similar agenda to fuel entrepreneurship and enterprise growth in Canada,” Reid explained. “You really boost your credibility quotient by making those types of partnerships.”

Presently, Reid said he’s working with two organizations – one is in the biotechnology field, the other is in the telecom sector – on developing venture capital pitches that will become “a push-point for companies to have their value proposition seen by some of the key players in Silicon Valley.”

Besides removing Section 116, Reid said Canadian technology companies are seeing other tangible benefits from the partnership. “There’s been a cross section of companies that … are advancing their pitches, turning their negotiations to contracts they previously would not have had,” Reid explained. Easing the conversation between companies in startup or growth mode and investors is vital for organizations looking to turn ideas into money. And the CATA-C100 program is helping to close the gap, Reid added.

While the program is still in its infancy, Reid stressed the importance of continued support for the technology sector in Canada. “When you look at wealth creation now compared to ten years ago, 20 years ago, 50 years ago, the gross domestic product, the gross national product is more and more comprised of high tech goods and services,” he said. “So if you’re a trading nation, yes, we have to continue to benefit from our natural resources, but we have to turn ourselves into a nation that transforms commodities into industries and services and that’s really what high-tech does.”

“Any time you’re moving from different stages, whether you’re a startup going to early stage or early stage going to mid-stream, you have a significant capital requirement and it’s very hard to be heard, appreciated and actually funded through the venture channels,” Reid said. “So if you can reduce the time it takes for the key people to talk to one another, then you’re addressing a primary business requirement.”