Calgary’s technology sector is going strong – but falls short when securing venture capital and gaining support from government and banks, a new report suggests.
A survey of senior executives from 60 advanced technology companies in the Calgary area reveals a positive outlook on the technology industry and the city’s role in the nation’s efforts to improve innovation.
However, the poll released last week by the Canadian Advanced Technology Alliance and KPMG also indicates technology leaders see several key areas needing improvement.
Access to venture capital is the big issue facing Calgary technology firms, the study found. Only 39 per cent of executives think their bank is on their side; just 17 per cent believe that a new company can get the capital it needs. Thirty-three per cent of respondents said they believe venture capital companies are willing to invest in local business.
However, 45 per cent indicated that non-traditional funding is available to technology firms.
Many of the executives surveyed felt the three levels of government are not doing enough to provide them with financial incentives. Just 20 per cent indicated they use the federal government’s research and development (R&D) tax credits, while 30 per cent believe the process is too cumbersome or difficult. Thirteen per cent of companies have discontinued the R&D tax credit process and 12 per cent didn’t even know the tax credits are available.
“Clearly, a number of organizations aren’t taking advantage of the tax credit available for their R&D investments as they appear to be frustrated with the process,” notes Greg Brennan, KPMG’s technology and tax partner in Calgary.
“However, many may be unaware of the fact that these credits could mean substantial savings to their organization.”
Of the companies surveyed, only 43 per cent of organizations indicated that they plan to increase their R&D expenditure over the next five years. “Without increased support from the government and traditional lenders, and greater access to venture capital, new businesses hoping to set up shop in Calgary face some challenges in terms of start-up capital,” notes Peter Doyle, national industry leader for KPMG’s software and electronics practice.
While one-quarter of the respondents cited financing as most important to their organization’s growth, 42 per cent believe that human capital is the most significant resource needed to sustain and ensure future growth.
The survey also found:
* Calgary firms believe they have strong relationships with market suppliers, but only half feel they have access to market leaders.
* 53 per cent of executives rated the city’s infrastructure as good to excellent.
* 70 per cent think Calgary has a good environment for social networking.
* 73 per cent believe Calgary has entrepreneurial managers.
* 70 per cent say their community has a shared sense of identity.
* 83 per cent say Calgary’s schools can meet their company’s future needs and 80 per cent say Calgary’s grads have the skills that are needed today. But only 55 per cent say graduates have enough competency in teamwork and managing relations.
* In five years, there will be a much bigger demand for ‘independent self-starters’ (from 15 per cent today to 28 per cent) and ‘collaborative team players’ (35 per cent now to 65 per cent in 2007).
Ipsos-NPD Canada conducted 60 telephone interviews in late July and early August. Similar studies are being conducted in major cities across Canada.
