The CCI Newsletter: September 2024

This edition of The CCI Newsletter was originally shared with CCI’s subscriber community on September 2, 2024. To receive our monthly briefing on the scale-ups shaping Canada’s future, the policies that matter, and insights you won’t find anywhere else—subscribe here.

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Dear Innovator,

Since CCI's inception, we've understood that strategic procurement is among the most powerful tools available to governments for fostering economic growth and innovation.

Much like our members who set bold, audacious goals for growth and impact, at the start of 2024, we declared this the Year of Procurement. We have since committed new resources to enhance the effectiveness of our advocacy efforts in this vital area.

In April, we published a significant policy report titled Buying Ideas, which dissected the inefficiencies plaguing Canada's procurement system and explored how more agile, strategic procurement processes could drive economic growth while enhancing government efficiency. Following this, we engaged in a series of discussions with procurement agencies and purchasing departments at both the provincial and federal levels to delve deeper into the report's findings.

Now, we're widening the aperture to look at the economic imperative for strategic procurement. Next week, we will release Building Winners: Strategic Procurement in the Age of Innovation, authored by esteemed economist Dan Ciuriak and CCI's Policy and Research Director, Laurent Carbonneau. Drawing on research and insights from our membership, this new report explores the economic benefits that flow when domestic companies sell to their own governments, contributing to both regional and national prosperity.

To celebrate the launch, we are hosting a special event on September 10 at 10 AM ET via Zoom. The event will feature a panel discussion with experts including Dan Ciuriak, Nicole Janssen, and Neil Desai. I encourage you to join us. You can register here.

Later this month, the CCI team will descend upon Montréal to host Canada's CEO Summit, our annual gathering of 150+ of Canada's top innovators, policy leaders and investors. Limited tickets are available for founders and CEOs in the ecosystem who themselves are also focused on building winning companies – learn more at CEOsummit.ca.

Keep growing,

Benjamin Bergen

Benjamin Bergen is the President of the Council of Canadian Innovators, a national member-based organization reshaping how governments across Canada think about innovation policy, and supporting homegrown scale-ups to drive prosperity. If you are interested in learning more about the Council or joining our cause, get in touch.

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INNOVATION UPDATES

Capital Gains Changes: In August, the federal government announced tweaks to the Canadian Entrepreneurs' Incentive (CEI) — the tax credit tied to their capital gains tax hike. In a nutshell, CEI was meant to help shield founders from the full impact of changing the capital gains inclusion rate from 50% to 66%, but it was drafted in such a way that many entrepreneurs would not qualify.

This Toronto Star article does a good job of explaining the details of what was changed, and also includes a quote from CCI that sums up our views. The bottom line is that these are "irrelevant tweaks" that don't do anything to incentivize investment, and they don't do anything to help skilled workers who will be hit by higher taxes on their stock options.

CCI's outspoken advocacy on this file has also been included in articles this week in Betakit, CBC, Yahoo Finance, The Logic, and Investment Executive. Also notably, The Logic has reported on venture capital fleeing Canada, out of concern about capital gains taxes.

Ottawa has also launched consultations on the CEI changes, and the deadline to respond is Sept. 11. You can share your feedback by emailing consultation-legislation@fin.gc.ca. CCI will be making our own submission.

Temporary Foreign Worker Program: In Ottawa, a lot of attention has been focused on the temporary foreign worker program, and the federal government announced a freeze on new employer applications to bring in certain low wage workers.

Critics have said this doesn't go far enough, and that the policy has been suppressing wages for Canadians. We are monitoring this file closely because the Canadian tech sector uses the temporary foreign worker program extensively — albeit a different stream, focused on highly skilled workers.

Canada's lagging productivity: Recent discussions across Canada about our country's productivity decline have seemed to be sparked by Bank of Canada Deputy Governor Carolyn Rogers' now-infamous "break the glass" comments and Jim Balsillie's mythbusting op-ed in the National Post earlier this year. We're currently tracking three venues for dialogue taking place in Ottawa, Atlantic Canada and the Prairies.

Last week, Treasury Board President Anita Anand announced the establishment of a new federal working group to investigate Canada’s declining productivity.

In Alberta, Finance Minister Nate Horner recently announced the Government of Alberta is partnering with the University of Calgary School of Public Policy to spearhead a Productivity Summit in October of this year. CCI's Director of Prairie Affairs, Jess Sinclair, recently published an op-ed in the Calgary Herald talking about how important it is to include private sector leaders around the table, as policymakers look for strategies to make our economy more innovative and productive.

And in Atlantic Canada, CCI is hosting our first regional Productivity + Prosperity Summit in St. John's, NL, on October 30. This is a new forum that will bring together local business and government leaders for a half-day dialogue focused on securing long-term growth for Newfoundland and Labrador - and the entire Atlantic Region. If you have operations or customers out east, or are planning on expanding your presence there in 2025, join us for this important discussion about the future of the region.

Chinese EV Tariffs: The federal government also announced 100% tariffs on Chinese electric vehicles in August. These tariffs mirror similar trade restrictions imposed by the United States. Moreover, the government announced new 25% tariffs on steel and aluminium from China.

2025 Pre-Budget Consultations: In early August, CCI submitted a policy brief to the House of Commons Finance Committee, as part of their pre-budget consultations. The budget development process is a marathon, not a sprint. Across the country, governments will be studying proposals and departmental funding requests throughout the fall before assembling their budget plans in early 2025. Read more about our submission here.

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THE BIG READ

It's been a turbulent time in capital markets, and that has made for a challenging landscape for scale-up technology companies. Few people know that better than Phil Fayer, CEO of Nuvei.

Based in Montréal, Nuvei is an online payments processor that notably had movie star Ryan Reynolds as an investor and public spokesman. The company went public in 2020 and rode the technology stock rally in 2021, to more than a 270% gain over their IPO share price. The stock has since come all the way back down to around the IPO price.

Fayer recently sat down to talk with The Globe and Mail's Sean Silcoff, talking about the challenges of being a public company, and why he's taking the company private again.

"The worst part is the instability it provides to our employees and customers when we have volatility in the stock. When things are good, the stock is going up, it’s engaging, people are motivated. But when it has a significant movement, it has a deep impact on culture, morale and clients," Fayer said.

Read the full conversation here.

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THE BIG DEAL

On the topic of the public markets, digital health company WELL Health Technologies told Betakit in August that they are planning to spin out their SaaS business — WELL Provider Solutions (WSP).

WPS provides clients with electronic medical records, billing and revenue cycle management, patient engagement, eReferrals, telehealth, and medical apps.

Vancouver-based WELL Health is already a publicly traded company (TSX: WELL), but CEO Hamid Shahbazi said he believes that their market valuation is below the sum of its parts, and spinning out WSP could unlock significant shareholder value.

"In addition, we believe we could accelerate the growth of this business as a standalone public company, which would then ramp up its own capital allocation program to ensure it is growing methodically, both organically and inorganically," Shahbazi said.

Read the full story here, and learn more about WELL Health Technologies at well.company.

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SCALE-UPS TO WATCH

Canada has great homegrown scale-up companies, and as a country, we should do more to celebrate our winners.

This month, CCI President Benjamin Bergen sat down with Workleap CEO Simon De Baene to talk about how hybrid work is changing the workplace. Read the interview here.

We've also been thrilled to add a few new CCI members to our national team of innovators:

• Protexxa is a Toronto-based cybersecurity platform, led by CEO Claudette McGowan
• Redbrick Technologies, a Victoria-based software company led by CEO Tobyn Sowden, building tools for digital entrepreneurs.
• PharmAla is a Toronto-bases biotech company, led by CEO Nick Kadyish, creating clinical grade MDMA and other novel compounds
• Lorica Cybersecurity, a Toronto-based firm, led by CEO Mark Girvan, working at the intersection of digital privacy and artificial intelligence.  

Here are a few other highlights from the Canadian tech sector in April:

• Lightspeed beat its revenue forecast in first full quarter under Dax Dasilva’s renewed reign
• Novari Health implemented a first-of-its-kind diagnostic imaging central intake system in Northwestern Ontario
• AlayaCare named Rhonda Bosch Chief Customer Officer, emphasizing customer-centric strategy
• Clarius received funding from PacifiCan to scale portable ultrasound technology

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DISPATCHES

In the 2024 federal budget, we were pleased to see the government adopt a key recommendation from our Buying Ideas report: setting a procurement spending target specifically for small- and medium-sized enterprises.

In this month's dispatch from one of our bureaus across the country, we hear from CCI's federal director Nick Schiavo and summer federal affairs coordinator Michelle Ehinlaiye about how the government can get the most success out of this policy. Read their dispatch here.

And if you're hungry for even more procurement policy discussion, be sure to register to attend the launch of Building Winners, our forthcoming report that builds on the ideas in Buying Ideas, and examines the economic imperative for procurement reform.

Happy reading!