Canada’s tech sector is generating growth and innovation for the country. But how do we scale our talent and capabilities as a country to build a thriving tech ecosystem?
Richard Tuck has a few suggestions. He’s the CEO of Winnipeg-based Wakopa Financial Workers’ Cooperative, an organization that helps startups build their backend corporate infrastructure and is in the process of building an impact fund and social incubator in Manitoba. Tuck has extensive experience working with startups, incubators and accelerators across Canada and the United States. He’s currently focusing that expertise on developing Canada’s tech and social innovation ecosystems. The following is a summary of our conversation.
What were the biggest lessons from 2020?
We learned that tech in general is more resilient as an industry. It continued to grow and attract investment during the pandemic. We also saw that retooling – changing and re-developing your organization – was a good strategy for surviving and, in some cases, thriving. That said, we also witnessed vast inequalities in terms of accessing tech.
Another thing we discovered is that CERB unleashed a lot of entrepreneurial energy that people may not have had the time or resources to exploit before. This will hopefully demonstrate to critics of Universal Basic Income (UBI) that UBI isn’t a left-wing pipe dream, but something that can have productive benefits for the economy, with real returns.
What we’ve also realized in 2020 is that plutocratic capitalism – not capitalism itself – is a failure. In 2021, we’ll see that we need technocratic capitalism, where decisions are based on data focused on long term goals and sustainability. I think this is how we show people that there’s a way to fix a broken system, and that that solution doesn’t have to mean a move from capitalism to socialism in order to build back better.
What should we be excited about in 2021?
Increased motivation for digital transformation
First, companies are going to be more interested in investing in digital changes in 2021. In 2020, a lot of old-school companies took digitization and digitalization seriously. They started by attacking the low-hanging fruit of digital transformation. Now that they’ve seen the transformative impact of those changes, they will be eager to do more, so we’ll see an acceleration in efficiency and innovation.
Innovations from Canada’s “Superclusters”
We will also start to see the fruits of our labour from Canada’s Superclusters – Digital Technology, Protein Industries (PIC), Next Generation Manufacturing (NGen), Scale AI, and Ocean. We’ll discover, for example, how work happening in the nexus between robots and artificial intelligence will transform industries like transportation, logistics, and agriculture.
For the past decade, we’ve been talking about automation, but that’s no longer good enough. In 2021 and beyond, we’ll see a focus on autonomous automation, where robots make smart decisions as opposed to simply being tasked with a specific job.
Explosion in distributed working and increased acceptance
Another interesting development will be the cultural shift towards more acceptance of working and learning from home. We’ve seen that it’s possible, and we’ve rapidly built it into the system and established new ways of getting work done. This will go hand in hand with an explosion in distributed networks that take advantage of API products and services.
Heightened M&A activity
There will also be increased mergers and acquisitions (M&A) activity. If this doesn’t happen immediately in 2021, then we’ll certainly see it in 2022. In Canada, we currently have too many small companies that aren’t attractive enough for investment, and they’re all facing specific problems as a result of that. Some have too small a market. Others have too small a team. We need to begin merging companies so that they start to make sense to invest in to scale and grow.
What are your recommendations for the Canadian tech ecosystem?
Founders should focus on sales, product, and funding
For founders, I would advise them to stick to three things: product development, sales, and funding. Anything you do outside of those activities, including chasing accolades, will increase your chances of failure. Founders are spending too much time trying to build up their corporate infrastructure, like accounting or HR policies. These are important, but they should be done by other entities. Of course, in the early days of bootstrapping, founders can’t afford additional hires or consulting firms, which is where incubators and accelerators must step in.
Incubators and accelerators need to provide meaningful support for entrepreneurs
Incubators and accelerators need to stop operating as events companies with a real estate play. Currently, Canada’s incubators and accelerators create an events-based culture around innovation, but they aren’t providing the wraparound services that the country’s entrepreneurs actually need. They must help innovators develop okay ideas into great ideas, establish product-definition fit before jumping to product-market fit, and provide knowledge and connections to the specific industries they’re disrupting. The venture building model as practiced by Harvest, where startups have support building out functions like HR, marketing, and finance, is essential for the future of Canada’s tech ecosystem.
Standardization in tech investing is required to attract “traditional capital”
For the entire startup ecosystem, we need to move towards standardization of what and how we present startups to angel investors to ensure greater investment. Currently, there is a lot of wealth tied up in traditional industries like oil and gas. These investors and their advisors are used to making investment decisions in a certain way with certain frameworks, spreadsheets, and quotients. These frameworks don’t exist in the startup investing space, so you wind up with a lot of old-school investors becoming extremely confused. Some think education is required to fix this; I disagree. What we need is standardized processes and templates for helping these investors feel comfortable understanding, and comparing, what novel investment opportunities are available in the tech ecosystem.
Read more about the trends shaping Canada’s tech ecosystem by downloading our "Builders' 2021 Almanac: Forecasting the future of Canadian tech innovation”.