Feds ramp up Trade Commissioner Service to better support scaleups

The Canadian Trade Commissioner Service (TCS) is bolstering its support of Canadian scaleup companies by expanding programs and services that provide critical financing and expertise. The move comes amid mounting criticism that the government is overly focused on attracting foreign investment and isn’t doing enough to identify and help “game-changing” Canadian firms grow into global competitors.

Under Ottawa’s Trade Diversification Strategy, the TCS recently received Treasury Board approval to ramp up its programs and services for Canadian SMEs, Emmanuel Kamarianakis, director general, investment and innovation at Global Affairs Canada, told delegates at the RE$EARCH MONEY conference in Ottawa April 16.

“One of the things we’re trying to do at the TCS is really help the ability of Canadian firms to scale up, primarily through exports,” he said during a panel session on whether attracting foreign direct investment (FDI) and scaling domestic multinationals are compatible goals.

The TCS will also increase its network of FDI officers from 16 to 44 by the end of this summer, Kamarianakis said. These officers work on attracting “greenfield” FDI to Canada, such as a company from another country building a new production plant here and employing Canadians.

FDI in Canada rose to $51.3 billion in 2018, the highest total since 2015, according to Statistics Canada. In March last year, the government launched a new federal organization, Invest in Canada, to promote FDI into Canada.

But panelist Audrey Mascarenhas told R$ delegates that the government’s focus on attracting FDI does not do enough to help Canadian scaleups, which in turn hurts the nation’s economy.

“We’re seeing other countries coming here and handpicking our amazing companies that are about to scale,” said Mascarenhas, president and CEO of Calgary-based Questor Technology Inc., whose patented technology cleanly combusts industrial waste gases and produces power. Mascarenhas, who chaired the Clean Technology Table – one of six industry-government Economic Strategy Tables – said she heard numerous stories of Canadian firms with $10 million to $100 million in revenues being snapped up by other foreign companies. Also lost with these acquisitions are homegrown technologies, IP and other high-value intangible assets.

“I think what we’re failing to see is that other countries are actually poaching our bright minds . . . We’re actually subsidizing the rest of the world’s GDP growth,” she said. Other entrepreneurs and innovation policy experts have made similar arguments to R$.

More help coming for scaleups

Kamarianakis told delegates that TCS is expanding its Technology Accelerators initiative into new markets, so Canadian SMEs can access capital and technology to grow their business. The TCS also is launching a new Global Mentors program to help connect Canadian firms with Canadian mentors who live in and understand foreign markets, and can help Canadian companies grow internationally, he said.

As well, the TCS is piloting a new Account Managers program to identify growth-stage firms and provide them with heightened service delivery to help scale their export markets. For example, the TCS chose Windsor, N.S.-based BioMedica Diagnostics Inc., which makes blood testing kits, for a six-month fast-track pilot to support the company expansion into more international markets.

Panelist John Hayden, venture catalyst at Northumberland CFDC (Community Futures Development Corporation) in Cobourg, ON, said he’s seeing very active foreign venture funds filling a gap in the Canadian market by providing early stage capital to startups. “There’s an appetite to invest in Canadian companies.”

Mascarenhas, however, said if Canada wants to win “gold medals” in global business, government needs to provide less funding to struggling startups and more support to scaleups that actually have potential to be world competitors. “If we want to be successful, we need a culture change that says it’s okay to support the winners,” she said.

Kamarianakis said part of the challenge in supporting mid-tier scaleups is the structure of Canada’s economy, where the separation between private sector and government involvement in business is more pronounced than in “old world” countries in continental Europe, Japan and other parts of the industrialized world. Such structural problems limit collaboration and cross-fertilization between government and the private sector in Canada, he said.

Mascarenhas said she sees an opportunity for government and the private sector to work together on public-private partnerships that identify world-class scaleups and make investment decisions to grow great companies in Canada.

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