The Alberta Innovation Voucher program – Pass or Fail

Back in rosier economic times the Alberta Innovation Voucher program was an afterthought. A flush government pushed it through so they could point to it and say “See, we’re trying to diversify our economy.”

Despite the economic downturn the first round of innovation vouchers came out in April and the second round will come this fall. Let’s look at the dollars and how they were spread around. (Unfortunately the list with all the company names is down but the Alberta government says you should be able to find the list here)

179 total vouchers equalling $5.23 million were handed out to 24 communities. Calgary got the lion’s share of vouchers with 47.5% with Edmonton second at 32.4%. Edmonton’s number is slightly misleading, if you include the vouchers handed out to bedroom communities Sherwood Park, Spruce Grove and St. Albert that number climbs to 36.8%. I’ve attached a pie chart below. 

When you divide up the vouchers by industry the Information and Communications sector was the clear winner with 40.2% of the vouchers. It’s a bit of a surprise that the Energy sector came in third behind Bioscience. Again I’ve attached one of those convenient pie charts. 

The information in those pie charts comes from here. There were two types of vouchers handed out. $10 000 and $50 000 vouchers. 

Now that we’ve got the numbers out of the way let’s hear from the entrepreneurs who actually got there hands on them.  

Lorand Szoijka is the president of Just In Time Resources (JITR) and he received a $10 000 innovation voucher. A stipulation of the innovation voucher program is that you have to spend money with what the Alberta government calls “approved vendors” (PDF). Calgary Technologies Inc. (CTI) is one of those approved vendors. It’s a business incubator that works with entrepreneurs to help them grow their companies, typically in the high-technology sector, you know, stuff you can patent. 

Szoijka went through CTI and used his $10 000 voucher on marketing. He wanted to refine his company’s message to potential customers. Of course it’s not as simple as that (what government program is). This is from the CTI website.

Vouchers may cover at maximum 75% of the total eligible project costs. The voucher recipient must be able to pay a minimum of 25% of these costs. For example, in the case of the $10,000 voucher, to redeem the full value, the total eligible project costs must be at least $13,335, with the recipient paying the project costs over the $10,000 covered by the voucher. At any rate, the voucher will only cover 75% of project costs up to the maximum value of the voucher. Quote from here

While it’s a bummer that the voucher doesn’t actually cover the whole cost of anything Szoijka was impressed with the application process. He spent a total of eight hours applying for the voucher and said, “for a smaller company this is the way to go. Compared to other processes this is a breeze.”

He’s interested in applying for the $50 000 voucher and he “hopes the government expands it.”

Derek Ball is the CEO of Tynt, he received a $50 000 innovation voucher. An experienced entrepreneur and one who has received a lot more than $50 000 from programs like AVAC, he definitely had a take on the innovation voucher program.

In his innovation voucher application Ball spelled out exactly what he needed, help with his Amazon server costs. They approved his application but Amazon was not on the approved vendor list. He had to pay Calgary Technologies who then ended up paying Amazon for his server costs. Not the most efficient process. 

“The whole approved vendor list needs to go away,” said Ball. “It’s this obtuse and inefficient process especially for the amount of money involved.”

“I’m happy that the government is supporting this but if it’s only 50K they have to make it easier.”

I talked to Marie Cusack, the Public Affairs Officer of Advanced Education and Technology but she didn’t have much to offer besides a “There’s always room for improvement,” and that they were “streamlining the website to make it easier for companies to get what they need.”

I understand where Ball is coming from, great idea but definitely lacking in execution. For a government as myopic and badly run as ours it’s good to see baby steps in the right direction. However in forcing entrepreneurs to deal with “approved vendors” you limit the exchange of ideas and money that could take a good idea and turn in into the next big thing. When these “approved vendors” aren’t specialists in helping web companies like JITR and Tynt grow and instead you force CTI and TEC Edmonton to play ring-around-the-rosie with what entrepreneurs really want to spend their vouchers on you waste needless time, energy and money. 

No one has ever come out and said why the “approved vendor” list came into being but for far too long the government has defined “innovation” as patents and licensing technology. You can see it in TEC Edmonton’s mandate to  “help navigate the commercialization process – transitioning science solutions into business opportunities” and in unofficial conversations I’ve had with CTI employees where they’re only looking for high-tech, patentable ideas. It is an unfortunate tendency of our government to define innovation in such a narrow fashion. To quote Mack Male;

“Quite simply, TEC Edmonton has been ignoring software startups for nearly a decade now. Why does this matter? If we want to move beyond our current energy-based economy to nurture and capitalize on the incredibly smart and talented people we have in Edmonton and Alberta, we need to start paying more attention to software. That’s where innovation is happening and value is being created.” 

That is is from his treatise on how to take Edmonton’s tech community to the next level.

The whole program suffers from a case of schizophrenia. It’s like they read the Y Combinator playbook on how to give early stage startups just enough money to keep going but ignored all the rest and continued with their dangerously narrow definition of “innovation”. 10 and 50k is not a lot of money if entrepreneurs are truly developing brand-new-never-before-seen tech but if you’re talking about early stage web companies where the barrier to entry is low then 10 and 50K is a lot. If the focus is going to be on giving early stage web companies a leg up then you’ve got to divorce them from CTI and TEC Edmonton as they are poorly equipped to aid those types of companies. Seeing as how more than 40% of the vouchers went to the Information and Communication industry it’s a shame they issued vouchers instead of cold hard cash. 

I’m not saying that the provincial government has to develop a Y Combinator Alberta for us but if you’re handing out 10 and 50k vouchers all over the place perhaps some thought should be given to beefing up the innovation infrastructure. After all 10k at CTI doesn’t exactly put Ramen Noodles in the cupboard. 

Grade – D+ – Needs a lot of improvement but is a baby step in the right direction.

Did you get a voucher? How was your experience? What grade would you give the Alberta government for their innovation voucher program?