How The Canadian Government Can Continue to Support Scale Ups

The global marketplace is as competitive as it ever has been. In Canada, we have the benefit of being in close proximity to our largest trading partner, the United States, as well as strong relationships with the UK and the European Union.  

Our government has been supportive of entrepreneurs for as long as I can remember. For years the emphasis has been put on starting new businesses. In fact, The Ontario Chamber of Commerce reports that Canadians create new firms at a higher per capita rate than Americans. While Canada needs to continue to encourage entrepreneurship, we also need to address growing those start-ups into scale-ups.

Scale-ups, are businesses growing at 20% or faster per year that have also exceeded $1,000,000 in revenue.  

Different from other small businesses who typically have fewer than 10 employees, scale-ups are constantly recruiting, training and retaining top performers. Scale-ups create a competitive advantage by disproportionately investing in research and development.

It’s for these reasons that I’m advocating for the Canadian Government to continue to invest in specific areas to mitigate these challenges and grow the next generation of technology companies, made right here in Canada.

Creating an Engaging Company Culture

A business is just a group of people working towards a common goal. The culture is just a reflection of the type of people that you have in an organization.  

Scale ups benefit from a diverse workforce who are academically skilled – the MBAs, engineers, and technologists, which of course are all very important. But if your focus is only on hiring for “book smarts,” you will miss out on something truly additive and meaningful. Balancing book smarts and heart smarts helps create an emotionally healthy workplace and culture.  

The combination of ambitious and emotionally intelligent people in a welcoming office environment where people feel comfortable and able to do their best work is where magic happens in scale-ups.

Up-Skilling Current Employees

As scale-ups grow their teams, re-training employees on the latest technologies and tools is critical. Training, like Pragmatic Marketing, or in the area of User Experience Research by the Neilson Norman Group, is how scale-ups are creating technology-based products that people not only use, but love.

Highly-skilled talent is like jet fuel for fast-growing companies so any measure the government makes to increase the skilled talent pool is welcomed.

For the Canadian Training Benefit to be successful, the government will need to work closely with domestic industry leaders to develop a strategy that closes the talent gap and helps ensure businesses have access to the talent they need to grow and expand. It’s for this reason that leadership at Voices.com continues to engage our government representatives by hosting round tables to provide direct feedback on what’s working and where the areas of improvement are.

Retaining Top Talent with Stock Options

Benjamin Bergen, Executive Director of the Council of Canadian Innovators (CCI, Conseil Canadien des Innovateurs), a national business council that represents over 100 of Canada’s fastest growing technology companies and advocates for strategies that help 21st century Canadian companies to scale-up globally shares how high-growth companies use Employee Stock Options to attract the best and brightest talent to work at their rapidly-scaling firms, especially when they can’t afford the salaries Silicon Valley giants can offer. “Our members are concerned by the government’s intent to change the way Employee Stock Options are taxed but are hopeful the government will work with Canadian innovators to mitigate any unintended consequences these changes could have on a company’s ability to access and retain highly skilled talent,” Bergen says.

Since raising $18M from Morgan Stanley, we rolled out an employee stock option plan, more commonly known as an ESOP. This plan gives each employee a stake in the company and aligns the long-term interests of our investors, employees and our founders.

Supporting Research and Development Through Tax Credits

One of the longest-running programs supporting research and development in Canada is the Scientific Research and Experimental Developmental (SR&ED). Admittedly, while we haven’t leveraged this program as much as we likely should have, others have been very successful and it’s been a reason they remain competitive.

Ben Bergen continues, “changes to the SR&ED tax credit that recognize the challenges scaling innovators face as they commercialize their inventions, we remain concerned that less than 1% of Canadian companies grow beyond 500 employees, and when they do, their continued support and success is not a priority of the government’s business innovation programs, like the Industrial Research and Assistance Program (IRAP).”

If Canada is to be home to large anchor companies in the digital sector, more work on the part of the government is needed and the tech sector is ready to work collaboratively.