Size Matters in B.C. Tech

If I am the technology industry in B.C., all I want for Christmas is a behemoth. It’s not too much to ask for, is it? I have been wishing for a gargantuan company ever since I spent time in Helsinki, Finland, and Waterloo, Ontario. It’s true. I have great-big-tech-company envy.


Finland is eerily similar to B.C. Historical prime industry: forestry and timber-related products. Population of Finland: 5.2 million (2008), compared to 4.4 million (2009 estimate) in B.C. Finland’s GDP is $193 billion, compared to about $150 billion in B.C. (B.C. Stats).


In technology, however, we differ. Here in B.C., our largest home-grown technology company (apologies to Telus, which is a service company in my mind) is PMC-Sierra Inc. at $1.8 billion market capitalization. You may have heard of Finland’s giant technology company, Nokia Corp., with a market capitalization of $60 billion. The global leader in cellphone technology, Nokia’s annual revenue is $76 billion (yes, Canadian), a full half of B.C.’s GDP. That, my friends, is a giant.


Nokia dominates Finland’s technology industry. Over the last decade, a healthy venture capital industry has blossomed and funded many of the entrepreneurs who spin out of Nokia to try building a new company. Nokia also funds research, facilities and scholarships. The local economy suffers when Nokia suffers in the market, but the company is in no danger of failing and being broken up, like Canada’s former giant Nortel.


In Waterloo, population 500,000, sits Canada’s new giant, Research in Motion Ltd. (RIM) With a market capitalization of $40 billion and revenue exceeding $12 billion, it is a smaller giant than Nokia but has significant upside as the global leader in the smart-phone category. To say that the Waterloo region has benefited from RIM’s climb to global superstardom would be an understatement. The two co-CEOs have spent a good chunk of their wealth creating basic research facilities (Perimeter Institute for Theoretical Physics) and think-tanks (Centre for International Governance Innovation) that have attracted the best minds in the world to their tiny Ontario enclave. As a sideshow, one of them wants an NHL hockey team back in Canada. Two of the newest venture funds in Canada (the BlackBerry Partners Fund and Tech Capital Partners) are housed in the region, feeding off the spin-outs and research that can be traced back to RIM.


I want a global technology company right here in B.C. I want the basic research benefits and the spin-outs. Alas, my Christmas wish is somewhat unrealistic. These companies do not appear overnight. It takes years of innovation and market success to climb to the top of the global technology world. But do we have any potential giants hiding in the weeds in B.C. that might fulfill my wish in the future?


We have exciting growth stories such as Sierra Wireless Inc., Absolute Software Corp. and Westport Innovations Inc. We have stalwarts in industry such as MacDonald Dettwiler & Associates Ltd. We might have had a global software giant in Crystal Decisions, but it was absorbed before it could break out as a public company. Creo was a significant company with disruptive technology that peaked at around a billion dollars in value. These are all great companies that have employed thousands of B.C. residents and spun out new startups. I don’t begrudge any of them; they are fantastic successes, but they are not giants.


If it’s going to happen, I think the B.C. giant is likely to come from the entrepreneurs currently swinging for the fences with game-changing technology. Companies such as General Fusion Inc., D-Wave Systems Inc. and Etalim Inc. are potential giants, but are very, very early. It might take 10 to 15 years for one of these to emerge as a global player. Like many others have in the past, the shareholders may elect to sell before these, or companies like them, grow to a huge size. I have absolutely no problem with that. It is the time of year for wishes, and I am simply wishing big.


Brent Holliday heads the technology practice for Capital West Partners, a Vancouver-based investment bank.