Only a fraction of Alberta technology firms are taking advantage of government incentive programs that could boost their capital, statistics from a provincewide study released Wednesday showed.
As in previous
years, the fourth annual Alberta Technology Report published by Ernst & Young and Ipsos-Reid indicated that lack of private equity and venture capital topped the list of disadvantages of operating an IT firm in the province. More surprising to the report’s authors was that less than a quarter of respondents apply for benefits under the Scientific Research and Experimental Development (SRED) program. The SRED is designed to encourage businesses — particularly small and start-up firms — to create advanced products or processes. Only 11 per cent, meanwhile, apply to Industrial Assistance Research Program, a service of Canada’s National Research Council that has been available for 50 years.
Ian Robinson, the Alberta leader of Ernst & Young’s technology, communications and entertainment industry team, said some of the possible applicants for government incentives may have been put off by the lengthy process that is sometimes involved.
“”There’s always a lot of paperwork involved in trying to access those programs,”” he said. “”They’ve made efforts to streamline that. . . companies really appreciate when they can receive some cash within 90 days or 120 of the time they send in their tax return. That’s an extremely positive result.””
Keith Guylander, executive director of Alberta’s Information, Communication and Technologies Alliance, agreed that the application and qualification hurdles can be daunting.
“”A lot of them are hard to uncover, and there’s so many of them,”” he said. “”I know I’ve had a directory of many different programs — some of them aren’t operative anymore. You have to really read to find out what you qualify for.””
Robinson said there were some encouraging signs in this year’s report that the overall capital situation is improving. Forty-six per cent of those surveyed said the had tried to raise capital last year, up from 38 per cent two years ago. Nearly 70 per cent said they manage to raise some money through their efforts.
“”They’re very aware of the current realities and the importance of making sure their expenses are in line with their revenue, and making sure they can pay their own freight if they can’t find outside capital,”” he said.
Guylander, whose organization was one of the report’s sponsors, said many investors are simply re-investing in another round of funding for companies that have attracted money before. That means brand-new firms have to make sure their business plan is sound before they look for help.
“”It’s not a