Not everyone in the Calgary tech community is thrilled with the announcement that IBM will receive up to $5 million in funding from the Opportunities Calgary Investment Fund.
Last week’s announcement has raised new industry questions about structure and decision-making in the $100 million fund.
“OCIF doesn’t really need to spend government money to fund a multi-billion dollar multinational organization to get to Calgary,” said Jay Gohill, president and CEO of Arcurve, a Calgary-based technology services company.
“They can do that themselves. They don’t need any help from the city or the government in any form. The businesses here in Calgary need that and all they need is for people to talk about it.”
Gohill said he received numerous calls from other frustrated tech company founders after Wednesday’s announcement.
At the heart of the latest round of questions is the decision to fund one of the world’s largest tech companies. IBM had global profits of $58 billion in 2021-22 and is already an established presence in downtown Calgary — including 25,000 square feet of office space that will be restructured for its new customer innovation center.
Prime Minister Jason Kenney said the province will contribute an additional $5 million to IBM through the Alberta Jobs Now program. IBM is part of the plan, but funding will be up to 25 percent of training and salary for new hires up to a maximum of $25,000 per hire.
Under the program, companies were limited to 50 employees through three intakes. Under an agreement with the province, IBM will be eligible for up to 60 positions and the maximum would be $1.5 million.
“The 10 additional jobs available to IBM are a good deal for Alberta as it has helped bring additional investment from a multinational corporation to our province to create high-paying jobs,” said Tricia Velthuizen, press secretary to Labor Secretary Doug Schweitzer , in an email. †
With its new customer innovation center, IBM has the ambition to hire a minimum of 250 new employees and a maximum of 430 employees over the next five years. The goal is to help businesses across Western Canada and the US through digital transformation to improve their sustainability.
Gohill said there are already Calgary-based companies within this ecosystem that are doing what IBM’s new innovation center promises — including Arcurve, which offers technology and software development and skills training.
Mayor Jyoti Gondek spoke about the need for change in OCIF during her election campaign and said in October that she would structure it differently.
“I would change the terms of OCIF to focus on local businesses that are already doing well, to support them to do even better,” she said.
On Thursday, the mayor defended the investment in IBM in a statement: “Unlocking opportunities for Calgarians is important to both OCIF and IBM with the focus of this expansion on sustainability and climate risk management. As a leading global company that has chosen Calgary as the location for its expansion, IBM’s presence and global reach furthers growth in our tech ecosystem.”
Gondek highlighted the number of potential hires and underrepresented populations, while IBM’s talent recruitment and certification program will help grow the talent pool in Calgary.
“To create a critical mass of skilled professionals, OCIF needed to evolve to support both scale-up and start-ups,” she said.
Calgary Economic Development had stated prior to the IBM announcement that there are approximately 4,300 tech job openings in Calgary.
“The modern innovation economy is powered by companies that collect and commercialize large amounts of intangible assets, such as data and intellectual property,” Bronté Valk, Alberta public affairs manager for the Council of Canadian Innovators, said in an email.
“Given the winner-takes-all nature of tech growth, governments need to be smarter in making deals with large, global tech companies, as these deals negatively impact Alberta’s domestic business growth. especially in a work context. market with zero percent unemployment among skilled workers.”
Brad Perry, executive director of CED, said during Wednesday’s announcement that the investment is aimed at reaching critical mass and powering the entire technology sector. Although companies compete with each other, there is a mutual benefit of more people, more jobs and more companies in the ecosystem.
Earlier this year, OCIF committed $4 million to the Calgary-based Thin Air Labs Fund — a $100 million venture fund to invest in early stage, entrepreneur-led innovation and technology ventures.
James Lochrie, co-founder of Thin Labs, said in an email that he supported OCIF’s IBM investment.
“It is another vote of confidence in our city and the potential of the innovation sector (in) the province,” he said. “This kind of continued investment in Calgary by major tech companies underscores how robust the opportunity is.”
OCIF has so far distributed $68 million across 22 projects as of 2018. The fund’s six investments in 2021 include money for local businesses – $1 million to Endeavor Canada, which supports entrepreneurs from across the country; $7 million for plug-and-play Alberta; $3 million to Creative Destruction Labs – Rockies, located at the University of Calgary’s Haskayne School of Business, to support early-stage startups; and $333,000 to Movement51, the nonprofit arm of local company The51.
OCIF has also pledged up to $1 million to SVG Ventures | Thrive to bring the global accelerator to Calgary to support Canadian agri-food startups; and $6 million in Accelerate Fund III as seed money for local entrepreneurs in a fund managed by Yaletown Partners, based in Vancouver.
According to OCIF’s first quarterly report for 2022, only 1,008 of the fund’s forecast 1,920 jobs have been created since 2018, although many of the projects have multi-year scalability.
The first 20 project commitments support a total project investment of $335 million to $680 million.