By
Michael Volker
What's
Up on the BC Tech Scene?
Been
working too hard to keep up with what's happening? Well, here's a little update
on some of the goings-on in the B.C. technology scene.
ASI
and SCBC merge to form BC Innovation Council,
Since
January, rumours have been circulating that the BC Advanced Systems
Institute (ASI) and the Innovation and Science Council of BC
(ISCBC) would be merging. Last week, the rumour was confirmed with an
announcement that ASI would be absorbed into the Science Council to form a new
Crown agency called the BC Innovation Council (BCIC).
Because
of BC's diminishing financial support to various science and technology
organizations in the Province, including ASI and ISCBC, neither have been as
active as they once were - especially in regards to funding new projects. The
new agency is supposed to do the job of the former Competition, Science
and Enterprise Ministry - that, in the last budget, was downsized
to the Small Business and Economic Development Ministry. That
job, specifically, is to fund the various S&T organizations in BC.
ASI
was started back in 1986 by Dr. Pat McGeer (MLA, Scientist, and
UBC researcher) with a vision of creating an "MIT of the West".
The only problem with this was that it was set up with only $8 million - half
from the Feds and half from the Province under a Western Economic Development
agreement. So, what can you do with $8 mil? Well, I was lucky to be chosen to
answer that question when I came from Ontario to BC in late '88 as its first
full-time executive director under a two-year contract which was extended for an
additional year and I ended up in B.C. for good. Maybe I wasn't so lucky - that
was the most expensive move of my life - I had just negotiated a 15% interest in
a little Waterloo startup called RIM (the Blackberry guys -
although back then they were doing research in different areas - shop floor
automation, film editing products, etc). No, don't ask me what that would be
worth today.
A
couple of programs that were initiated had a lasting impact -the Product
Development Fund - it has invested more than $10 million in over 80
companies and The Exchange, the annual technology event held
this past March.
In
keeping with the McGeerian vision, ASI, with its limited budget, evolved into an
"institute without walls", collaborating with - not competing against
- B.C.'s existing universities. To cement the relationship, ASI was instrumental
in financing and recruiting several ASI "Fellows" - talented and
promising researchers who had a penchant for working with industry. These ASI
Fellows were all on Faculty at UVic, UBC and SFU.
Local technology companies, supported by ASI's Product Development Fund and the
Science Council's TechBC Fund, often tapped into their expertise. Slowly but
surely the walls between academia and industry were becoming more transparent.
This
spirit of collaboration and technology enterprise support continued for over a
decade under the steady leadership of Brent Sauder. Brent left
ASI to head up Research Services at UBC at the time when the BC Liberals
came into power (maybe he saw the writing on the wall?). Victor
Jones, a technology entrepreneur and financier in his own right, took
up the challenge of weaning ASI off its dependence on what was largely
Provincial government support. Indeed, Victor was starting to gain some ground
by garnering more federal support from agencies such as NRC and
Western Diversification. Remember that ASI was started by a
50/50 deal between BC and the Feds.
Although
government supported, ASI was an independent non-profit society with its own
Board of Trustees elected from the tech community. This, I believe, was one of
its key strengths. The Trustees were not government appointees but were
elected from industry, academia, and other local organizations.
I
was hoping that the newly merged entity would adopt this model but then with
whom would that entity negotiate inside government since the internals were
being disbanded under the new policies? Get the picture?
Change
is often good, but why disband or reorganize something that's working well? Will
a government agency do as good a job? We'll find out - but not until the Fall
which is when the new Council will have its first business plan drafted. Hmmm,
why so long you ask? Well, that's because a committee is in charge until a CEO
is recruited (through a North America-wide search).
In
the meantime, Cindy Lum of the former Science Council will
serve as BCIC's chief operating officer and Victor, I suspect, will spend the
summer sailing and getting back to private business.
According
to last week's press release, BCIC will be BC's vehicle for technology
commercialization. Don't be surprised if you see other external groups absorbed
into the new agency. Indeed, there are quite a few such organizations. Just look
at www.hitechbc.com to see what I mean.
Late
last year, the government announced the formation of Leading Edge BC,
another Crown agency, in which George Hunter, head of the TIA,
would take a leadership role (giving the appearance that the TIA is a little
less independent with George now on the government payroll). Leading Edge's
mandate is the marketing and promotion of BC technology companies.
Technology
development and Innovation will be under the auspices of one agency while
marketing and promotion will be under the purview of the other.
At
a recent meeting I had with a government official, he noted that a
"problem" with our industry is that we can't reach consensus on
certain issues and that we can't seem to speak with a unified voice. Well, maybe
this problem will now go away.
I
just hope that in this consolidation process we won't forget about the
challenges that face small companies and their entrepreneurs and that they'll be
heard.
An
upcoming "ASI" luncheon event, co-hosted by the Northwest
Entrepreneur Network - open to all - is coming up on May 21st. It's
titled, "Crossing the 49", a unique BC - Washington cross-border,
networking luncheon. The event will bring together two entrepreneurially focused
audiences to encourage cross-border networking and commerce between two regions
closely tied by geographic proximity, economic resources and technology
industries. A couple of weeks ago I gave a lunch talk to the TAG
tech group in Bellingham about our tech sector and was impressed with their
desire to develop some cross-border relationships. Given that the 21st is a
Friday before our long weekend, I'm curious to see how keen we are to
reciprocate. Additionally, there'll be a speaker - Dr. Christopher
R. Barnes, Project Director for NEPTUNE Canada who'll
present a keynote address on the current progress of the US/Canada collaborative
project and its potential economic impact on the Pacific Northwest. Contact ASI
to book a spot.
Telus
New Ventures Business Competition
The
most common reason given for the failure of tech companies is the lack of good
management. Accomplished entrepreneurs-turned-angels are a good first step for
many companies to take towards finding mentors.
But making connections with these and finding other resources can be a
daunting task for a new venture team. That's the raison d'être for
the TELUS New Ventures BC Competition, an annual event open to
B.C. entrepreneurs, with prizes totaling $120,000.
More than 80 entrepreneurs registered their new business ideas by the
deadline earlier this month. Over the next four months they will attend seminars
and networking information sessions that will give them the chance to turn their
idea into a successful startup.
British
Columbia’s technology business innovators now have the chance to win the BMO
Bank of Montreal First prize package worth $60,000 with more than a
little help along the way. However, the real
prize is not the prize money per se -
it's getting the attention and interest of the investment community that really
counts. I can’t imagine the winners not getting serious offers in addition to
the prize money.
Entrepreneurs
of any age and background with an idea for an innovative product or service
involving a new technology are encouraged to sign up. Everything necessary –
including seminars and networking opportunities – will be available online.
The aim of the competition is to increase the number of startup businesses in
the province and to help establish an entrepreneur-friendly business environment
that nurtures new ideas.
The
BC Ventures Society was formed specifically to run this
competition - the brainchild of Wal van Lierop, a local VC with
energy investor Chrysalix Corp. It consists of a cooperative
endeavor of business, academic and government partners, sponsors and
contributors that have banded together to help stimulate a strong, healthy
economy in British Columbia. It works closely with many other
organizations in B.C., such as the Vancouver Enterprise Forum.
“Entrepreneurs
are the engine of the BC economy, bringing new jobs, tax revenue, human capital
and investment capital to the region. The TELUS New Ventures BC Competition will
establish British Columbia as a great place to develop a new business,”
according to Don Calder, a well-known local industry leader and
chairman of the society.
Other
sponsors include Jarvis DDB, Ernst
& Young, Fasken Martineau, Pacific Press Group, Western Economic
Diversification Canada, SFU , and
the Province of British Columbia, as well as UBC and BCIT.
The
winners will be announced at a gala wrap-up to be held on September 24, 2004.
Contest
details can be found at www.telusnewventuresbc.com.
Also
out to support entrepreneurial development in the Province is Dan Muzyka
- Dean of UBC's Sauder School of Business (and Telus
New Ventures board member) and active promoter of the tech industry with his
recently announced Certificate in Entrepreneurial Business Management.
This
intensive part-time program provides entrepreneurs and entrepreneurial teams
with the management knowledge and skills they need to successfully grow their
businesses. Offered in modules, the program is designed to deliver academic
content, practical workshops and mentoring opportunities within a compact time
frame - minimizing one's time away from the business. There's an information
session on May 6th- it may be for you!
Foreign
M&A's - good or bad?
We keep hearing about BC tech companies getting
gobbled up by foreign interests. This past month, it was announced that MDSI
Mobile Data Solutions of Richmond and California-based @Road,
a leading provider of mobile resource management services, have signed an
agreement whereby @Road would acquire MDSI in a transaction valued at
approximately $86 million.
Earlier this month, Burnaby-based start-up Octigabay
Systems Corp. announced that it was being acquired by Cray Inc
of Seattle for US$115 million. This was the second buy-out for Octigabay's
president, John Seminario, who in 2000, sold Abatis
Systems Corp. (a two-and-half-year old telecommunications firm), to Redback
Networks of San Jose, California for a cool $1.3 billion (Cdn).
Last year, Silent Witness was
taken over by Honeywell (US), ActiveState was
gobbled up by Sophos Inc (UK) and Crystal Decisions
by Business Objects of France.
While some worry about Canadian sell-outs, I
look at it the same way as product sales. We love to see our companies produce
products and sell them globally. Tech companies typically sell most of their
products outside of Canada. Isn't a company the ultimate "product"?
Look at the wealth it creates for its shareholders which in turn fosters the
creation of more ventures.
On the other hand, just this week, MacDonald,
Dettwiler and Associates Ltd. - one of BC's first and largest tech
firms - announced that it has entered into an agreement to acquire
privately held Marshall & Swift / Boeckh (MS/B) of Los Angeles. MS/B is a
leading supplier of property information and valuation solutions to the U.S.
property insurance sector. With about 350 employees, MS/B currently generates
approximately US$70M in annualized revenues. Over the past 3 years MS/B has
demonstrated a compounded average growth rate in revenues and earnings in excess
of 15%. The purchase price for MS/B is US$250 million cash, plus an additional
future cash payment of up to US$90 million based on MS/B’s 2005 performance.
The transaction includes a cash tax benefit to MDA of approximately US$150
million. MDA generates annual revenues in excess of CDN$600 million and has over
2,200 employees.
MDA isn't the only BC acquisitor. Other local
acquisitors that made announcements recently are Micrologix Biotech
and Inflazyme Pharmaceuticals. Micrologix is acquiring MitoKor
of San Diego and Inflazyme is taking over Adprotech of the UK.
SFU's TIME Centre
If you're an entrepreneur looking for a place
to get your company started; there's some great space available at Harbour
Centre downtown. SFU's TIME Centre provides not only office space but
also access to various resources, e.g. tech advisors, access to capital,
mentors, etc. Worried about the high cost of being downtown? Well, not to worry
- they'll even reduce the fees and take some payment in the form of equity.
Check www.sfu.ca/time for contact info.
A reminder: SFU's TIME Centre is open for
business - business folks, that is. TIME is an acronym for Technology,
Innovation, Management, and Entrepreneurship. TIME supports the growth and
development of the tech industry in B.C. TIME features a "Business
Centre" (looks like an airport business lounge) which is open to technology
entrepreneurs and business people to use as a drop-in downtown office facility.
Need to plug-in? Make some calls? Do some work? Hold a meeting? There are some
great facilities for holding your company's AGM. Why hang out at MacDonald's
when you can work productively at the TIME Centre? Drop by and check it out! It
is located at SFU's downtown campus at 515 West Hastings St.
WUTIF?...you
wanted to invest in a tech startup? The Western Universities Technology
Innovation Fund, is an "angel fund" catering to tech startups based in
BC (not limited to universities). WUTIF Capital is a VCC that
offers investors a 30% BC refundable tax credit. Due to the limitations on the
VCC program, WUTIF expects to use up the tax credits available to it by June,
2004. So, if you're keen to co-invest with angels in up and coming companies,
this is a good way to get started. Check www.wutif.ca
for details. WUTIF was partly inspired by my RIM story (above). Very few have
the stomach to play in the startup arena except for some angels that no longer
have the deep pockets they used to have. WUTIF acts as a catalyst by bringing
angels (aka mentors) to the table and co-investing alongside them - looking for
the next RIM!
Michael
Volker, a technology entrepreneur, is Director of the University/Industry Liaison
Office at Simon Fraser University, past Chair of the B.C. Advanced Systems
Institute, Chair of the Vancouver
Angel Network and past Chair of the Vancouver
Enterprise Forum. He owns shares in many of the companies he writes about. Copyright,
2004.
What
Do You Think? Talk Back To Mike Volker
Tech Futures is
a bi-weekly column that focuses attention on new and emerging BC publicly listed
technology companies.
Contact: risktaker@volker.org
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