While Saskatchewan’s tech sector is a bright spot in the provincial economy, things have not always been so rosy. Just five years ago, it raised just $3 million in venture capital for the whole sector and Saskatchewan-founded Skip the Dishes departed for Winnipeg. There were people trying to build companies, but no real source for consistent capital. “Back then, we were a flyover space where tech was concerned,” says Sean O’Connor, Venture Capital Manager at Conexus Credit Union. “There were companies still making things happen, like Vendasta and iQmetrix, but there was no real ecosystem yet.”
Fast forward five years, and things are much improved for tech in Saskatchewan. 2019 was the best year yet, with precipitous growth in companies, $114 million in new investment and best of all—no signs of slowing. So, what happened? “It was a few things coming together,” says O’Connor. “Innovation Saskatchewan made investments to bolster the community through initiatives like the Made-in-Saskatchewan technology program, the government introduced the Saskatchewan Technology Startup Incentive (STSI), and Co.Labs was founded in Saskatoon.” Also, Conexus Credit Union launched the first Regina-based incubator, Cultivator, in January 2019 and began work on its first venture capital fund to support the sector. These initiatives created a perfect storm of interest, investment, and start-up growth—just what tech needed to boom.
An Ecosystem is Born
The sector has moved away from its duct-taped, bootstrap existence into something that is getting noticed here at home and across the continent. “There is now a growing number of angel investors that see the value of tech,” says O’Connor. “The STSI signalled to investors that they could benefit from this new sector and that it’s a viable opportunity just mining, agriculture and energy.” Also, the incubators—Cultivator and Co.Labs—brought founders and investors together, literally. Pitch events and networking allow investors to meet start-ups and see where their money could go and how it could grow.
COVID-19 as a Disruptor
Unlike many sectors, tech didn’t take the punch in the neck that others did. “While it’s too soon to tell what COVID-19 has done to investor confidence, stock markets are enjoying all-time highs and e-commerce is booming more than it ever has,” says O’Connor. “E-commerce grew more in the first eight weeks of the pandemic than the previous 10 years combined. It’s unprecedented. We’re also seeing similar trends in tech companies that offer things that businesses need to keep moving. For example, Coconut Software—business appointment scheduling software—saw huge demand as organizations had to book virtual meetings with clients and staff.”
Capitalizing on Growth
The growth in the sector showed Conexus that there was an opportunity here, and major demand for capital that needs to be filled long-term. “Saskatchewan is still very low on venture capital, when compared to major markets like British Columbia, Quebec and Ontario,” says O’Connor. “However, we are growing faster than most secondary tech markets in the country, including Alberta. In 2019, Conexus launched its first venture capital fund to support the Saskatchewan tech sector. $32 million was raised from two dozen investors and will be poured into seven companies over the next four years. The fund was so successful that another will join in late this summer. The second fund is focused on Canada-based, early-stage AgTech and FoodTech companies. “These companies are often overlooked, and with Saskatchewan’s deep connections to agriculture and food production, it only made sense to invest in the space,” says O’Connor. “We have experts right here, such as the University of Saskatchewan and Protein Industries Canada, and successful AgTech companies like IntraGrain Technologies. It’s a win-win.”
While things are booming in tech, we’re still in the first “couple of innings” according to O’Connor. Ideally, Saskatchewan needs a big exit, or its first IPO to charge ahead. While companies like Vendasta, Skip the Dishes, Coconut and 7Shifts have had remarkable growth and recognition from all over, more and bigger is the name of the game. “We want to see major exits and IPOs. That creates more wealth, more attention, more seed capital, more experienced founders, and attracts more talent and investment,” says O’Connor.