State of the Nation: three key takeaways from the BC Tech report
The organization talked to 12 scale and anchor CEOs to provide a snapshot of where the local tech industry is now.
The next few months – or possibly years – will be challenging for local businesses. Economic headwinds are changing the tech landscape, and while some of the city’s largest organizations have already laid off employees, smaller firms might soon be following suit.
However, not all industries – or companies – will be affected equally. To get a snapshot of the state of the province’s tech ecosystem today before a potential recession looms, BC Tech conducted focus group interviews with 12 scale and anchor CEOs across different sectors. AbCellera, Absolute, Allocadia, Clio, Cymax Group, Global Relay, Ideon, LMI, Oxygen8, Redlen, SAP, and Thrive Health all participated. The result was the State of the BC Tech Nation report: a short study that shares insights about where the local tech industry is at right now, and what it can expect moving forward.
Talent remains a challenge – but also an opportunity
Between 2018 and 2021, a resounding majority of the companies shared that recruiting employees was their greatest pain point. For those firms, 78 percent had to hire outside of B.C. to solve the problem: a signal that the province is not graduating post-secondary students or approving the visas of foreign-born workers fast enough to keep up with demand. Instead, local companies primarily hired employees elsewhere in Canada, in the U.S., and in Europe.
There are positives, however, in that long-standing issue. The need for talent is tied to rapid scaling in the region. Of the 12 companies polled, over half experienced revenue growth of between 10 and 50 percent between 2020 and 2021, and just over a third saw an increase of more than 50 percent. Growth, of course, requires more personnel.
Things might play out differently in the next few months as markets soften. Despite that, one CEO sees the resulting fallout through a positive lens. "Layoffs are the natural forces of the economy at play,” says the unattributed quote. “I hope it’s going to free some capacity up for the broader, non-unicorn tech companies to acquire talent."
Selling domestically is slow and frustrating
Of the 12 companies polled, 80 percent were primarily selling outside of Canada. More surprisingly, some had no domestic customers at all.
That doesn’t necessarily mean that Canadians don’t buy locally across all business sizes – the companies in BC Tech’s focus group have the resources to chase deals abroad, while SMEs might be looking to establish themselves in the domestic market first. But it does reinforce that Canada is a comparatively tiny market compared to, say, the European Union or America, and that startups and scaleups should be strategizing from early on to sell overseas as well as at home.
"There's a high degree of risk aversion from Canadian companies,” one quote suggests. “They’re less willing to try new things and invest in something – it's more of a fast follower mentality than a leader mentality." Another quote agrees. "Selling in our own backyard has always been a challenge – we've been chasing the various levels of government for the better part of 10 years now, and never had a breakthrough. Canadians are not very good at buying from other Canadians."
Macrotrends are working in B.C.’s favour
The current economic headwinds are not blowing equally. At the same moment that industries like Web3 are collapsing, areas like cleantech, climatetech, and agritech are booming. In short: investment may have stalled for SaaS dashboard-builders, but funding for green solutions continues to pour in across the world.
Luckily for B.C., the region has a particular expertise in areas such as carbon capture, hydrogen fuels, energy efficiency, and more. As well as the provincial and federal governments offering money for these focus areas, more VC funds are recognizing the demand for greentech and bankrolling those solutions. Working for a climate-related company can (and, most likely, will) help protect employees and execs from the downturn.
“We're one of the companies that’s lucky to have benefited from COVID,” said one quote. “There’s a lot more awareness around indoor air quality, and cities throughout North America are pushing for higher building energy efficiency standards and building codes. There's a whole kind of electrification movement of buildings that really kind of aligns with our strategy."
"There's a huge macro trend in terms of electrification in the world, [for] solar, and other renewables,” another quote reads. “So we're somewhat insulated from the near-term impacts of the economic downturn.”
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