Alberta tech firms look at relocating to B.C.

Source: Calgary Herald; Vancouver Sun
By Tamara Gignac and Gillian Shaw
Wed 29 Mar 2006

More and more of Alberta's technology and biotech firms are looking to British Columbia as a favourable place to do business as a new report says nearly half of the oil-rich province's tech firms are considering pulling up stakes.

"When companies threaten that they will leave the province, British Columbia is always the place they talk about going," said Terry Booth, executive director at Ernst & Young LLP and one of the authors of the report. "Absolutely, B.C. has an advantage."

Ernst & Young, in a survey of 128 firms, found that soaring energy prices are hurting the high-tech industry by encouraging investment in the oilpatch.

With already scarce funding opportunities evaporating, 49 per cent of tech companies say they are thinking of relocating to British Columbia or Ontario, both of which offer tax credits and other incentives to encourage upstart technology companies to set up shop.

Far from advantageous, many believe Alberta's energy boom is having a negative impact.
"Oil and gas is just too good right now," said Booth.
"People would rather spend money drilling a hole than investing in a tech company. It makes some sense -- if you look at where oil and gas prices are now, you've got a pretty safe return on any investment. Technology is a higher-risk play."

The last oil boom sparked hundreds of software and engineering firms, created jobs ranging from monitoring drilling, to sending information on wells back to the home office, to breaking down seismic data.

That "trickle-down" effect has yet to emerge this time around, Booth noted.
Booth said B.C. has a number of pluses that put it ahead of Alberta, including better access to venture capital, including the labour-sponsored venture funds, along with tax and research and development incentives.

"We don't have a lot of venture capital here and we definitely don't have a lot aimed at early-stage tech companies," he said. "B.C. is a lot more friendly in terms of giving early stage funding."

Booth said one of the outcomes of the less favourable tech and biotech climate in Alberta is that early stage companies develop technology but sell it to companies in B.C. and the U.S. instead of growing it at home.

"Alberta has become the incubator of technologies but the companies never grow to a large size," he said. "We sell the technology before it is mature."

B.C., with a highly educated population and a tech community, offers potential employees to Alberta companies and Booth said companies could find themselves having to move here simply to find enough people to hire.

According to the report, B.C. dwarfs Alberta when it comes to technology and biotechnology.
For example, Victoria's Aspreva Pharmaceuticals secured more venture capital funding in 2004 than the entire province of Alberta.

"I think we see the B.C. market as being a lot more mature than the Alberta market in general," said Booth.
"Our average tech company is 10 employees or less.
"We look at companies in B.C. and they are a lot bigger. It is just a much more robust industry in B.C. than what we have here."