Silicon Valley with a wind chill: Calgary aims to make tech a key focus of downtown revitalization

The Edison Building in downtown Calgary is nearly fully occupied, and is considered a tech hub.Jeff McIntosh/The Globe and Mail

The Fuelled Family of Companies has all the trappings of a tech start-up. Rocco and Benny, the resident office pooches, scamper toward the glass doors when visitors near. The firm’s lobby is a fully stocked bar. There’s a ping pong table in the same space as the company’s open-concept workstations. A case of Coors Original sits atop a cluster of lockers. All the employees are men.

But there is one major thing the Calgary company doesn’t have in common with many fledgling tech firms: It is not part of the venture capital ecosystem.

“One thing I find funny in the business is, people celebrate raising equity,” said founder Raj Singh. “I think it is important to also celebrate companies that haven’t raised equity.”

Fuelled, which bills itself as Amazon for heavy equipment buyers and sellers, has eschewed government programs designed to foster the tech industry in Alberta, Mr. Singh said. He does not believe the industry’s future in the province depends on the possibility of huge cash injections or a bevy of government incentives.

The void in Calgary

Going it alone, he argued, can be beneficial: “Your need to find a solution that customers actually want is urgent, because you don’t have a lot of money allowing you to push forward a bad idea for a lot of years.”

Provincial and city officials have long argued that Calgary has the potential to morph into Silicon Valley with a wind chill. Some have hoped government programs and venture capital firms, like the ones Mr. Singh has spurned, would help the process along.

But among entrepreneurs, property developers and policy-makers, there is some disagreement over precisely what steps must be taken.

The push for more tech activity has taken on greater urgency in recent years as the province and the city search for ways to diversify Calgary’s economy, which has struggled because of a downturn in the oil sector. The city is seeking to revitalize its downtown core, which has an office vacancy rate of about 30 per cent.

Calgary officials argue that the combination of empty towers and a highly educated population makes the city attractive to rookie entrepreneurs looking to set up shop, as well as established firms looking for space to expand. The city’s plans to reinvent its downtown focus partly on adding amenities designed to attract high-skilled workers, such as those in the tech sector.

Two people play ping pong in the tenant lounge at the Edison Building.Jeff McIntosh/The Globe and Mail

The building that houses Fuelled’s office has been held up as a model of what the tech industry could mean for the city and its struggling downtown. The tower, which is called the Edison, is nearly fully occupied, and is considered a tech hub. Its tenants also include companies with names like MobSquad, Clio, and Entuitive.

Startup and scale-up tech companies in Alberta have collectively raised $614-million in venture capital so far in 2021, besting the previous provincial record of $552-million in 2018, according to Start Alberta, an information hub for the industry. And the province’s 2,440 startups and scale-ups have an enterprise value of $37.5-billion, compared to around $25-billion in 2020.

Alberta Enterprise Corp. (AEC) counted 2,806 tech firms in the province in its 2021 deal flow study, compared to 1,238 in its 2018 review. Of those tallied in the 2021 study, 58 per cent, or 1,627, were based in Calgary.

“We’re seeing exponential growth in the innovation space and technology space in Alberta,” Doug Schweitzer, the provincial Minister of Jobs, Economy and Innovation, said in an interview.

Kristina Williams, AEC’s chief executive, noted that Calgary’s tech companies are maturing. In recent years, Neo Financial, Symend and others have raised tens of millions of dollars. And Benevity Inc. and Solium Capital have earned “unicorn” status, in deals valuing them at over $1-billion each. The provincial government, through AEC, invests in venture capital funds that, in turn, invest in Alberta companies.

“There’s now some breadth in our bench strength when it comes to the tech companies,” Ms. Williams said.

The Edison, located opposite the Fairmont Palliser Hotel in Calgary’s core, is owned by Aspen Properties Ltd. Before the building found success with tech, it was home to oil and gas companies, including PanCanadian Energy Corp. and its successor, Encana Corp.

By the time Aspen bought the building in 2015, Encana had largely moved to the Bow, another office tower, which at the time was a gleaming symbol of Calgary’s most recent energy boom. Now, with empty floors, it has come to symbolize the bust.

Aspen’s executive chairman, Scott Hutcheson, said the company went to Silicon Valley to tour offices for design ideas. “Silicon Valley has the coolest spaces I’ve seen consistently in the world, because they got the cool kids doing cool new things, and that’s the way to attract that talent,” Mr. Hutcheson said.

“Our thesis was, we’re getting more casual. We’re starting to drop our ties, especially out in Calgary. Why isn’t our office space more casual? Why isn’t it more playful?”

And so, Aspen created a patio dog park, complete with fake fire hydrants and plastic grass. (Fuelled’s Rocco and Benny are among the 100-or-so dogs registered in the building.) There’s a basketball court for tenants, as well as a golf simulator and a gym with a locker room. The tenant lounge has a pull-up bar, pool table, foosball table, ping pong table and garage doors that open to a conference room. There are beehives and planters on another patio, and picnic tables at the entrance of the building. Aspen recently jazzed up Calgary’s former Sun Life Plaza in similar fashion. The building is now known as the Ampersand.

Mr. Hutcheson admits that many of the Edison’s tech tenants came from elsewhere in Calgary, meaning the building itself hasn’t created a wave of outside interest in the city. But there is evidence that stylish workplaces can play a role in nurturing the local tech industry.

Circle Cardiovascular Imaging, a Calgary company that creates imaging software for cardiologists, is looking for new office space. Its chief executive, Greg Ogrodnick, said he expects that Circle will end up in one of Aspen’s redesigned properties. Golf simulators appeal to him not because he wants to work on his short game, but because those types of perks help shape company culture and would, he believes, give Circle an advantage when competing for employees.

“When you’re trying to attract talent, having a very vibrant and cool workspace and everything that goes along with that, it’s really important,” he said. “We didn’t have that up until a few years ago – those types of office spaces didn’t exist in Calgary.”

Rocco, right, and Benny greet visitors to the offices of Fuelled in the Edison Building in downtown Calgary, on Nov. 10.Jeff McIntosh/The Globe and Mail

Politicians and executives agree that talent is the most important ingredient for developing Calgary’s tech industry. But opinions diverge on how well suited the city is to attracting and retaining workers. Optimists argue the prolonged energy slump and pandemic created a glut of unemployed and underemployed skilled employees, like engineers. These educated workers, the theory goes, can meet the tech industry’s labour demands.

Bryan de Lottinville, the founder of Benevity, cautioned against this plug-and-play mindset.

“There is perhaps still a bit of a misconception about the ease with which we can transition one highly educated STEM [worker] into a new role,” he said. The recruitment challenge is particularly acute for companies that have outgrown startup status.

“If you’re a company of scale and somebody has invested a billion dollars in you, they want people who have been there and done that,” Mr. de Lottinville said. “They don’t necessarily want someone who has never managed a software-as-a-service product.”

This problem cannot be quickly solved with new post-secondary programs and government grants for retraining, he said. Deepening the talent pool requires focusing on digital literacy in elementary school, he added, as well as an emotionally and intellectually difficult shift away from energy.

Governments, he said, are still seduced by royalties from oil and gas, which are richer than the tax-based revenue streams that flow from other industries.

“You can be the greatest tech company in the world and you’re only paying corporate tax,” he said.

Vacant Calgary: This is part of a series on the future of Calgary’s downtown, hit by years of economic decline that has left its office towers nearly a third vacant, and the solutions that could drive a recovery.

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