Local tech companies critically target OCIF funding

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Not everyone in Calgary’s tech community is thrilled with the announcement that IBM will receive up to $5 million in funding from the Opportunities Calgary Investment Fund.

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Last week’s announcement brought new questions from the industry about the structure and decision-making for the $100 million fund.

“OCIF really doesn’t need to spend public money to fund a multi-billion dollar multinational organization to come to Calgary,” said Jay Gohill, president and CEO of Arcurve, a Calgary-based technology services company.

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“They can do it themselves. They don’t need any help from the city or the government in any way. The companies that are here in Calgary need that and all they need is people to talk about it.”

Gohill said he received numerous calls from other frustrated tech founders after Wednesday’s announcement.

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At the origin of the latest round of questions is the decision to finance one of the largest technology companies in the world. IBM had global earnings of $58 billion in 2021-22 and already has a well-established presence in downtown Calgary, including 25,000 square feet of office space that will be repurposed for its new customer innovation center.

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Premier Jason Kenney said the province will contribute another $5 million to IBM through the Alberta Jobs Now program. IBM is part of the plan, but funding exceeds 25 percent of new hire training and salary up to a maximum of $25,000 per employee.

Under the program, businesses were capped at 50 employees across three entries. Through an agreement with the province, IBM is eligible for up to 60 positions and would reach a maximum of $1.5 million.

“The 10 additional positions available to IBM are a good deal for Alberta because they helped attract additional investment from a multinational company to our province to create good-paying jobs,” said Tricia Velthuizen, press secretary for Minister of Labor Doug Schweitzer, in a statement. email. .

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With its new client innovation center, IBM aims to hire at least 250 new employees and as many as 430 in the next five years. Its goal is to help businesses across Western Canada and in the US through digital transformation to improve their sustainability.

Gohill said there are already Calgary-based companies within this ecosystem that are doing what IBM’s new innovation center promises, including Arcurve, which provides technology and software development and skills training.

Mayor Jyoti Gondek spoke about the need to change the OCIF during her election campaign, saying in October that she would structure it differently.

“I would change the terms of OCIF to focus on local businesses that are already doing well to support them in doing even better,” he said.

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On Thursday, the mayor defended the investment in IBM in a statement: “Unlocking opportunities for Calgarians is important to both OCIF and IBM with this expansion’s focus on sustainability and climate risk management. As a leading global company that chooses Calgary as the site for its expansion, IBM’s global presence and reach fuels the growth of our technology ecosystem.”

Gondek pointed to the number of potential hires and underrepresented populations, while IBM’s talent recruitment and certification program will help grow the talent pool in Calgary.

“Creating a critical mass of qualified professionals required OCIF to evolve to support scale-up and start-up,” he said.

Calgary Economic Development had indicated before IBM’s announcement that there are about 4,300 technology job openings in Calgary.

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“The modern innovation economy is driven by companies amassing and trading vast amounts of intangible assets, such as data and intellectual property,” Bronté Valk, Alberta government affairs manager for the Council of Canadian Innovators, said in an email.

“Given the ‘winner takes all’ nature of tech growth, the government needs to be smarter about signing deals with large global tech companies, because these deals have a negative impact on the growth of Alberta’s domestic businesses, especially in a job market. market with zero percent unemployment among skilled workers.

Brad Perry, CEO of CED, said during Wednesday’s announcement that the investment is intended to reach critical mass and boost the entire tech sector. While companies compete with each other, there is a mutual benefit of more people, more jobs, and more companies in the ecosystem.

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Earlier this year, OCIF committed $4 million to the Calgary-based Thin Air Labs Fund, a $100 million venture fund to invest in early-stage entrepreneur-led technology and innovation startups.

Thin Labs co-founder James Lochrie said in an email that he supported OCIF’s investment from IBM.

“It is one more vote of confidence in our city and the potential of the innovation sector (in) the province,” he said. “This kind of continued investment in Calgary by big tech companies underscores just how strong the opportunity is.”

OCIF has so far distributed $68 million to 22 projects since 2018. The fund’s six investments in 2021 included money for local businesses: $1 million for Endeavor Canada, which supports entrepreneurs across the country; $7 million for Plug and Play Alberta; $3 million for Creative Destruction Labs – Rockies located at the University of Calgary Haskayne School of Business to support early-stage startups; and $333,000 to Movement51, the nonprofit arm of local business The51.

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OCIF also committed up to $1 million to SVG Ventures | Thrive to bring the global accelerator to Calgary to support Canadian agri-food startups; and $6 million for Accelerate Fund III as seed capital for local entrepreneurs in a fund managed by Vancouver-based Yaletown Partners.

According to the OCIF report for the first quarter of 2022, only 1,008 of the 1,920 jobs planned by the fund have been created since 2018, although many of the projects have multi-year scalability.

The first 20 project commitments support a total project investment of $335 million to $680 million.

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Twitter: @JoshAldrich03