Canada’s economic relief efforts are a good start, but tech scale-ups demand clarity around eligibility

Some parts of Canada’s economic relief efforts are receiving a lukewarm response from technology scale-ups, according to a new report that also says cash flow remains a top concern during COVID-19.

Published by the Innovation Policy Lab at the Munk School of Global Affairs and Public Policy, in collaboration with Methodify by Delvinia, the report includes responses to a poll seeking feedback from technology scale-ups about the government response overall. The final report is based on a poll of 42 chief executive officers or firm executives of Canadian technology scale-ups taken between March 27 and March 30, 2020.

The government of Canada unveiled its COVID-19 Economic Response Plan,  a set of measures meant to support Canadians and businesses and help bring economic stability.

Most respondents are positive about the government’s response, when given an open-ended question, but are unclear how technology scale-ups, in particular, will be supported. The poll results indicate that among government support available, interest-free loans are most supported, and when asked what more government should do, 25 per cent of respondents think the government should consider procurement options.


CATA asks PM to assist tech firms with rapid emergency aid 


Of the interventions already unveiled by the federal government, provision of interest-free loans, loan guarantees (for financial institutions), wage subsidies, and monetary policy decisions by the Bank of Canada received the clearest endorsement from the respondents. Despite payrolls not being the top concern for businesses, wage subsidies still appear as a policy that garnered high support from businesses, the report noted.

“Gratefully, we are in a position of recurring revenues and can ‘weather the storm’ for now. Our challenge is business development and new revenue generation with most potential client organizations at a complete stand-still. It’s encouraging that the government is listening to and addressing concerns of tech and small businesses that serve as the backbone of the Canadian economy. Tax deferral and interest-free loans are most helpful to us at the moment,” wrote Cynthia Hastings-James, co-founder and owner of BestLifeRewarded Innovations, a firm providing science-based and technology-enabled wellness programs, commenting about the government response.

Several respondents noted they were waiting on more information on supports like the wage subsidy, for which additional information has since been released.

“The world is very chaotic right now and the initiatives that the government is putting through are applauded. At the same time, we don’t want to lose some of our critical strategic assets, the investment in innovation,” Suzanne Grant, the chief executive officer of CATA, told in an interview with IT World Canada. “Tech companies really need to be supported because they can lead us out and get our economy going at the end of COVID. But they need to be supported for the next 12 months at least.”

Room for improvement

The federal government is making continuous efforts to provide optimum support to businesses and the Canadian Advanced Technology Alliance (CATA) has already flagged this issue to the federal government. CATA also confirmed with the publication late last week that the government has restarted the Scientific Research and Experimental Development (SR&ED) funding program in order to mitigate some of the economic strain facing Canadian businesses during COVID-19.

The report also says that tax deferrals and work sharing, two support programs for which there are existing infrastructure to support, received a lukewarm reception from technology scale-ups, potentially related to structural issues with the design of the program prior to COVID-19.

Some respondents were more direct. One chief executive officer of a large technology scaleup put it bluntly, noting the program provided “no support whatsoever.” Ian Paterson, the chief executive officer of Plurilock, a digital security firm, agreed and with reason, writing “Tech companies focus on growth, not profitability. The $10B to BDC + EDC (for direct lending and other financing) is not available to us”, Peterson emphasized in his response.

Kevin Edwards, chief executive officer of SkipTheDishes, a food delivery app, also commented on the government’s ability to understand what scale-ups need.

“I remain concerned that this government does not understand the liquidity/cash-flow needs of businesses. It’s important to provide support to Canadians in dire straits as a result of the crisis – but in the end what is critical is ensuring we have strong stable companies in all sectors able to hire back laid off workers because they have been able to sustain themselves when the dust finally settles.”

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Jim Love, Chief Content Officer, IT World Canada

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Pragya Sehgal
Pragya Sehgal
Born and raised in the capital city of India - Delhi - bounded by the river Yamuna on the west, Pragya has climbed the Himalayas, and survived medical professional stream in high school without becoming a patient or a doctor. Pragya now makes her home in Canada with her husband - a digital/online marketing fanatic who also loves to prepare beautiful, healthy and delicious meals for her. When she isn’t working or writing around tech, she’s probably watching art films on Netflix, or wondering whether she should cut her hair short or not. Can be contacted at [email protected] or 647.695.3494.

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