Despite a global slowdown and layoffs in the sector, Alberta technology companies continue to attract the interest of investors
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When Vincent Ircandia returned to his hometown of Calgary six years ago and co-founded StellarAlgo, he wondered about the ease of growing a technology firm that offers services to big-league sports teams and the entertainment industry from Alberta.
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After inking a major deal earlier this month that will see him partner with the National Basketball Association, Ircandia says it’s clear he made the right decision.
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In fact, the NBA has taken a “meaningful” equity stake in his company, which provides a platform that helps teams improve fan engagement by using data.
“The NBA, which obviously knows the sports business as well or better than anybody, is stepping forward and saying, ‘This is an Alberta-based company that is changing the future of sports fandom,’ ” he said Wednesday.
“Honestly, in the early days of our company, it was something that I was worried about . . . Is it going to hurt our growth that we’re not based in New York or based in Silicon Valley?
“But fast forward to today, companies like ours can make it. And our location in Calgary, honestly, it’s helping us.”
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Despite a global slowdown and layoffs in the sector, Alberta technology companies continue to attract the interest of investors.
A report issued Wednesday by the Canadian Venture Capital & Private Equity Association shows Alberta tech firms attracted $729 million in venture capital funding in 2022 — a 20 per cent jump from the previous year — through 85 deals, breaking records for the fifth consecutive year.
It highlighted the continued trajectory of a key sector on the ascent, although it also shows just how much ground the province has to make up to reach the lofty levels seen in British Columbia, Quebec and Ontario.
The top three provinces accounted for 88 per cent of all venture capital dollars invested in Canadian tech companies last year, with Ontario firms attracting $4.7 billion, followed by $2.5 billion in Quebec and $1.6 billion in B.C.
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However, investment in all three provinces dipped from 2021 levels, as did the national levels.
“At a time when Alberta is seeing record increases, the rest of the country is seeing significant decreases,” Technology and Innovation Minister Nate Glubish said at a news conference Wednesday.
“Alberta is bucking the trend.”
The report noted that Calgary ranked fourth among Canadian cities last year with 64 deals that attracted $647 million in investment. Edmonton, in seventh spot nationally, notched 18 deals and $58 million.
Kristina Williams, CEO of Alberta Enterprise Corp., which was created by the province and invests in venture capital funds, said there’s been more than a 200 per cent increase in startups across the province since 2012, expanding the “funnel” of domestic firms.
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She noted about 12 per cent of all venture capital deals done in Canada last year took place in Alberta — on par for the province’s population — although on a dollars-invested basis, it’s sitting around seven per cent of the national total.
“We’re seeing more and more of what we call mega-rounds of funding over $50 million,” Williams said. “Alberta is just kind of coming into its stride now.”
Neo Financial CEO Andrew Chau said Alberta is starting to benefit as companies that were created several years ago are gaining traction, attracting outside interest from venture capital funds — and aided by technology that makes it easier to meet with investors from around the world.
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“I don’t see being in a city like Calgary or province like Alberta as a constraint, I see it more as an opportunity. With that you get creative and figure out ways to build and compete on a global level,” said Chau, whose company now employs more than 700 people.
“If you’re building a company that is adding value to your customers or your clients, that’s all that really matters, and that’s what investors look at. These days, they’re not really looking at where your office is or where your people are — they’re looking at how successful of a business have you built?”
Layoffs are rippling through the global tech sector — and hitting companies in Canada, such as at Calgary-based Benevity recently — while raising money has become more difficult across the industry.
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The provincial growth doesn’t appear to be slowing down, however.
Earlier this month, Edmonton-based Jobber, which provides operations software for small home-service businesses, announced it raised US$100 million in a Series D round.
Ircandia cites the overall affordability in the province, access to world-class talent and other factors weighing in Alberta’s favour, including the presence of a collaborative tech ecosystem.
The sector in Alberta is starting to mature and quality companies with a good plan are still able to garner investment, added James Lochrie, managing partner and co-founder of Calgary-based Thin Air Labs, which invests in startup firms.
“The downturn in investing is a flight to quality and a move away from speculation,” Lochrie said.
“I just expect Alberta (businesses) to continue to drive forward, maybe not setting records but still keeping the momentum behind them — despite the global financial pressures that we’re seeing in venture capital today.”
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