GLOBE Capital

Driving cleantech innovation through research and data

Partner article written by Joseph Lalonde, Data Manager for MaRS Data Catalyst

Many individuals and industries in Canada are looking to reduce their carbon footprints and are pushing for greener products, resulting in a proliferation of clean technology companies and solutions. Private and public funders have taken notice and made significant investments in clean technology programs. Natural Resources Canada (NRCan) alone has committed CDN$1.4B in program funding for 2019-2020.

This amount of money creates an amazing opportunity for private investors. For example, the Commercial Retrofit Program allows for one-time incentives based on the amount of natural gas saved. Companies can take advantage of these incentives to improve their existing infrastructure and investment dollars, in turn, could then be re-directed toward growing the business.

 

Government and private dollars can drive opportunity, but coordination is key

In 2017 alone, Canadian investors channelled US$9.4B into clean technology companies[1]. Although this number has been trending down over the past few years, clean technology solution providers are still poised to benefit from an influx of capital. With this amount of money being invested, it is extremely beneficial to have an overarching and coordinated investment strategy.

To put it another way, different investors and government can create synergies if the types of investments they make are complementary. For example, government could play a role in getting early-stage high-risk companies off the ground, but step back and allow later-stage venture capital to come in and scale up the companies that need it.

Conversely, the opposite can happen if government and private investment are out of step with one another. For example, both government and private investors could both be putting all their money into early-stage investment, with no incentives for growing companies who are poised to become true scale-ups. Another example is government investing in a type of technology that industry has deemed irrelevant.

 

Good strategy requires good information, but this is a challenge in the cleantech space

A coordinated strategy should be guided by information such as industry trends, firm growth rates, benchmarking against international markets and the latest in new technological developments and trends. The Canadian Venture Capital Association (CVCA), CB insights and Pitchbook and others provide some background information. However, other clean technology reports that use traditional economic analysis, such as North American Industry Classification (NAIC) codes, have been problematic for two main reasons:

  1. Classification of clean technology is complex. As a company introduces a new technology into their business, it can blur traditional industry lines. This natural business progress can outpace analysis, which requires that industry sectors fall into nice, neat buckets. Take an automobile company, for example, that develops both electric and gas-powered vehicles. Would you consider it to be a clean technology company, or not? These are the challenges to determining a clear and concise count of clean technology companies in the automobile industry – or any industry for that matter. Although NAIC has created foundational standards to segment industries, they have not been very nimble in catching up to technological advancements.
  2. Too little, too late. Early-stage, ‘pure-play’ clean technology companies may be too nascent to drop digital breadcrumbs for researchers who are putting together data repositories, such as Angel List, Crunchbase or Pitchbook. For this reason, much information about these startup clean technology companies remains undocumented.

 

Projects and initiatives exist to understand trends, but they need time to take effect

As a result of these challenges, we have a situation where billions of dollars are being spent in an industry that has an arguably slippery classification and information capture challenges. Now imagine a different world where the government acts on robust information, which in turn incentivizes private funding to invest in a way that leverages government dollars. We are getting closer to that reality with Statistics Canada’s Environmental and Clean Technology Products Economic Account, which has begun to estimate jobs and impact of clean technology in Canada.

Another bright spot is the role my group at MaRS Data Catalyst (or ‘Data Catalyst’ for short) plays in this scenario. Data Catalyst is a group hosted within MaRS Discovery District, a public-private innovation centre located in the heart of Toronto. MaRS focuses on bringing government, business, academia, and communities together to catalyze, accelerate and amplify innovation. Clean technology is one of our four main pillars, and we serve hundreds of technology-based clean technology start-ups and later-stage ventures. We are currently conducting a three-year data collection project, recently completing our first year with a partial number of provinces. Public results can be found here.

 

Our data collection strategy is driven by strong partnerships

How do we approach data collection at Data Catalyst? We know that the different regions know their participants and stakeholders best, so we engage with these locations and establish data partnerships with the likes of provincial industry associations such as the Alberta Clean Technology Industry Alliance (ACTIa) and Innovacorp, and with federal-level organizations, such as Statistics Canada and Natural Resources Canada. We also work with organizations like Emissions Reductions Alberta, who have requested analysis to be done for their own purposes.

In addition, we’ve been fortunate to have The Delphi Group and the GLOBE Series on our side to work with stakeholders and ensure that our project to understand clean technology activity is a success. Basically, this means sharing the work, but also reaping the benefits. Data collection can be a long game, requiring multiple years to establish baselines and analyze trends. Three years is the minimum period required to be able to ascertain if there is some kind of trend.

 

Looking forward, what will we be doing and what you can do

Our current goal is to bring on other regional partners who have already provided letters of support in Quebec and British Columbia. In addition, we are in the process of finding partners and formalizing relationships in the rest of the prairies.

 

How can cleantech companies and associations do their part?

  1. Participate in surveys. Seriously, do it! It provides richer data and accurate findings, helping industries focus on what’s important.
  2. Complete your profiles in public sources. (ex: Crunchbase)
  3. Encourage companies you work with to do the same as above. This feeds into a long-term benefit of researchers who might use the data to create trends.

Remember, the better our underlying data on the country’s cleantech sector, the more likely we as a society will reap the rewards in the long term.

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