Venture capital and the Manitoba tech sector
According to the Canadian Venture Capital & Private Equity Association in 2021, Manitoba saw $57 million in venture capital (VC) come into the province through eight deals—with seven in information and communications technology (ICT). In the first quarter of 2022, the province saw $1 million in VC flow in, with two deals total, and one of those was in ICT.
Compare that to one province over. Saskatchewan saw $210 million in venture capital arrive in 2021—17 deals total and 12 in ICT. In Q1 2022, they saw $107 million enter the land of wheat and Roughriders in six deals—three in ICT. Don’t even ask about Alberta (Q1 alone saw $466 million) and British Columbia ($485 million). This begs the question: what gives? Why is Manitoba lagging so far behind when it comes to VC and our tech sector?
Kelly Fournel, CEO at Tech Manitoba, has many thoughts on why there is such a difference between Manitoba and the other western provinces. “First, you can’t compare us to B.C. or Ontario,” she says. “We are not pumping out nearly the amount of tech talent they are from post-secondary institutions. It’s not a fair comparison.” However, what Manitoba does have in its talent pool is diversity—a unique selling proposition in today’s tech world. “We’re seeing more women, more new Canadians, and more Indigenous peoples in our tech sector than other places in Canada. And that is attracting attention,” says Fournel. “It’s something that sets us apart, and it’s something we’re actively cultivating.”
There is a reason for encouraging that diversity. According to Fournel, talent attracts investment. When a talent pool is well-established—especially with an in-demand skill set—and it’s also diverse, it catches the attention of investors because they see the value that brings to companies. “Our number one priority is creating a talent pool here that is skilled and ready to work, and has the experienced people needed to help startups grow. When you have that, money follows,” says Fournel.
Talk about it
Joelle Foster, CEO at North Forge Technology Exchange, sees that communication about the tech sector here needs to be better to get attention from VCs looking for their next deal. “If you look to Calgary for example, their tech sector is vibrant and constantly pumping out news about what they are doing,” says Foster. “We need to come together as a group—governments, organizations, founders, supporters —and tell our stories. We’re too humble. We must get better at showing what we’re doing here and why it matters.” There is a remarkable group of people powering the local tech sector, but if no one knows about it, the money doesn’t show up.
Next door neighbours
Even with the diversity in the tech workforce, Manitoba is still far behind when it comes to attracting venture capital in tech. Saskatchewan saw $107 million in the first three months of 2022, and we saw $1 million. Why?
Fournel sees a cultural difference between us and Saskatchewan. “Having lived and worked across the prairies, there is a bit of risk aversion here in Manitoba,” she says. “Saskatchewan saw a brain drain for a long time of people heading for Alberta. I think that has led to Saskatchewan business being forced to step up and take some risks.” As well, the provincial government there has made commitments to the tech sector, including Saskatchewan Technology Startup Incentive (STSI), Co.Labs (a tech incubator in Saskatoon) and programs through Innovation Saskatchewan (the province’s innovation agency). That experimentation and willingness to try new things—and government investment—has led to a tech sector in Saskatchewan that has attracted serious attention—and money.
Foster also sees how private firms, like Saskatchewan’s Conexus Credit Union, have put the Saskatchewan tech sector on the map. “Conexus Venture Capital has done amazing work in supporting tech startups and attracting outside investment,” she says. She also sees the importance of all government in setting the stage for investors.
“The City of Calgary has integrated themselves into their tech sector. It’s part of what they do. We need to do the same thing here.”
Making it happen in Manitoba
So, how do we make our tech sector shine like the others? Both Fournel and Foster have great hopes for the province’s recently announced $50 million venture capital fund. The fund, announced in the last provincial budget, will invest in several funds to boost the local tech sector and attract further investment. More details are coming this year, and Foster hopes to see the cash start flowing in the fall. “The fund shows a lot of promise for our tech startups,” she says. “Plus, a fund of this magnitude by the government indicates to VC investors that Manitoba has something to offer.”
Fournel agrees. “This new fund of funds is exciting for tech. It signals a commitment by government to our sector and that helps show our value here and outside the province,” she says. While Manitoba has seen successes such as SkipTheDishes, Neo Financial and Bold Commerce elevate the sector, there is plenty more yet to be discovered by VC investors.
Both Foster and Fournel have a lot of optimism for the tech sector, and the money that could (and should) be coming our way. “There is massive opportunity for everyone here,” says Fournel. “With the talent we have and now a fund that can attract more capital, big things are on the horizon.”
“There is so much promise here,” says Foster. “The number of tech founders that North Forge was working with grew 300 per cent during COVID. That alone should tell you something about what we have happening here. We just have to work together to make it grow.”