Canada’s technology sector is going through interesting times. The country’s best-known telecommunication company, Research in Motion (RIM), responsible for BlackBerry, recently reported numerous job cuts and a less-than-satisfactory financial performance.
But there is a silver lining.
“While the demise of Nortel and the struggles of RIM have captured headlines, the good news story is the emergence of a vibrant and fast-growing start-up sector,” says Mark Evans, a principal with ME Consulting, a Canadian-based organisation that offers marketing services to start-ups.
“From what I have seen lately, the technology and IT sector in Canada is thriving, driven by government investment, first-class universities and innovation,” Fadi Honein, Director Middle East, OpenText, tells GN Focus. OpenText is a publicly traded Enterprise Information Management company headquartered in Waterloo, Ontario, with $1.2 billion (about Dh4.4 billion) in revenues.
Honein explains that the number of US acquisitions of Canadian start-ups can be an indication of the sector’s success. OpenText has also acquired some key emerging technology companies in Canada with focus on semantic web navigation and knowledge management. In 2011 OpenText’s sales increased by 13.3 per cent to $1.05 billion. This year the company officially opened its newest Innovation Centre at its headquarters.
James Maynard, CEO, Wavefront, an organisation dedicated to accelerating the growth and success of wireless companies in Canada, agrees that the country’s tech start-up community is beginning to attract the international attention it deserves. “According to a recent survey conducted by the IESE Business School in Barcelona, Canada now ranks as the second-most attractive country in the world for venture capital. Mobile, social and e-commerce are all particularly hot right now, with companies such as HootSuite, Polar Mobile, Shopify and FreshBooks quickly rising to the top of Canada’s tech start-up food chain,” says Maynard.
Techvibes, an online news portal dedicated to covering social, mobile and start-up news in Canada, recently reported that Waterloo-based Kik Interactive landed $8 million in Series A funding from RRE Ventures, Spark Capital and Union Square Ventures. Ted Livingston, CEO of Kik Interactive which develops smartphone applications, then proceeded to donate $1 million to the University of Waterloo, his alma mater, to support its students’ business start-up ambitions.
“Over the past couple of years, there has been an entrepreneurial renaissance that is gradually being supported by the venture capital industry,” says Evans. “While it’s always good to have large hi-tech players as part of the ecosystem, there are a lot of good things happening in the weeds.”
If RIM continues down the path it is on, a company that might be able to take the podium is Shopify, founded by Tobias Lutke, an Ottawa-based entrepreneur. He developed an e-commerce software that now boasts clients such as General Electric, Encyclopedia Britannica, Tata Group and electropop duo LMFAO. His creation, along with co-founders Daniel Weinand and Scott Lake, allows customers to set up an online storefront with ease. As of 2010, Shopify hosted more than 11,323 stores (currently more than 30,000) with over 2.7 million customers generating $124 million in sales. Shopify’s sales figures stood at $275 million in 2011 and is estimated to rise to $500 million this year.
On the right track
Canada’s information and communication technologies (ICT) sector comprises 31,500 companies, of which 79 per cent provide software and computer services. >
As of last year, Canada’s ICT sector employed an estimated 556,000 people. These figures justify Google’s decision to expand its presence in Canada as well as IBM’s recently launched research and development lab through a $175-million investment in a consortium with seven Ontario universities. Besides the big names, several others such as Adobe Systems, Microsoft Oracle Corporation, SAP AG, Agfa HealthCare and SAS Institute have also followed suit.
The country is also making a name for itself within the interactive media sector. Canada employs more than 52,000 people in this sector and generates annual revenues of $3.8 billion. Information from Invest in Canada, a part of Department of Foreign Affairs and International Trade, shows that in the past two years the country’s video-gaming industry has grown by 11 per cent annually and generated $1.7 billion in revenues last year. With annual growth rates of 17 per cent expected for the next two years, the virtual sky is the limit.
Along with the gaming industry, the country’s ICT sector has also seen growth. Figures from Invest in Canada show that as of last year, Canada’s top 250 ICT companies recorded sales of more than $82.6 billion. The Canadian market for telecom services is expected to generate revenues of $43.5 billion in 2012, with wireless data becoming the fastest-growing segment. With the future of technology set in the air, Invest in Canada reports that the country’s wireless and telecommunications firms spend more than $6.2 billion annually on research and development.
Interest in the region
These positive figures are also mirrored by Canadian technology and ICT companies in the Middle East. “Our business is growing and we are hiring,” says Honein. “We will increase our headcount by 50 per cent this year. We do have the right technologies. Canadian companies are well regarded in the region and we have the support of our local representatives: embassy, consulate and the Canadian trade commissioners.”
Veena Desa, Executive Director, Canadian Business Council, says, “We have co-hosted with the Consulate General of Canada a special event around Gulf Information Technology Exhibition (Gitex) for the past couple of years. It facilitates networking and knowledge-sharing between UAE-based and Canadian companies interested to set up here. There does seem to be an increasing number of Canadian IT companies participating in Gitex looking to explore business opportunities in the Middle East and Africa. Dubai tends to be the primary contender as the base of operations.”