Tech update: US climate bill makes it more urgent for Canadians to develop local solutions
Canada’s climate plans are under the microscope again after the US Senate passed a bill this week that would pump hundreds of billions of dollars into clean energy sources.
The Cut Inflation Act, which is expected to be approved by the House of Representatives in the coming days, would see an unprecedented investment of $370 billion (US) in clean technologies. This will provide a launch pad for green investments and set the country on a path to reducing greenhouse gases by 40% below 2005 levels by 2030. It will also spur Canada to shift away from fossil fuels.
How the US bill compares to Canada’s clean energy plans: U.S. investment is three times higher per capita than Canada committed to in its last federal budget, says Aisha Bukhari, cleantech sector manager at MaRS Discovery District. “The pressure on Canada to increase its investment in clean technology solutions has increased dramatically – we need to ensure our businesses can stay competitive and capture a significant share of the global trillion climate economy market dollars,” she said.
The role of tax credits: The bill contains a slew of tax credits aimed at nudging people toward clean energy, low-carbon transportation and more efficient energy use, helping to lower the cost of going green. Canada’s regime offers similar incentives. “We have a very tight timeline between now and 2030 to get us on the path to net zero, and the credits help accelerate commercialization and large-scale adoption of new technologies by reducing costs,” Bukhari says. “The tax credits will also help companies accelerate the development of major infrastructure projects and stimulate investment in clean technologies.”
Technology funding is down
The hot days of tech investing are getting colder. Dizzying funding announcements, which were coming in droves last year, are becoming far less frequent, and startup executives now also have to deal with soaring inflation and higher interest rates. However, tech founders shouldn’t panic, says Craig Leonard, chief executive and general partner of Graphite companies, adding that less transactions are to be expected in this climate. “We typically find that at the start of a down cycle, investors halt funding until they have a better understanding of where they think things are going,” Leonard says.
For founders who are strategic and plan carefully, there can be great opportunities to capitalize on, Leonard says. From Microsoft to Airbnb, there’s a long history of successful startups during economic downturns.
By the numbers: A new report of informed.in shows that technology investments are down across Canada: a total of $1.9 billion in 107 deals in Q2, compared to $4.7 billion in 184 deals in the same quarter last year.
According to the briefing.in Waterloo region report, tech companies there raised $559.1 million in the second quarter of 2022. Although that was a 256% increase from the same quarter last year, the number of deals dropped significantly to just four. Ninety-six percent of funds raised in the region came from a single transaction: FairSeries G extension of $537.7 million in May.
Tips for founders of tech startups: Business owners need to get back to basics. “Customer revenue is still king, both in terms of leads and attracting funding. Now is the time for founders to focus on the pragmatic foundations to build a lean business with option,” he says. “Excessive optimism in these markets will have a more negative impact than in times of foam.”
Canadian companies find themselves on a coveted list
Research firm CB Insights named four Canadian companies to its list of the world’s 50 most promising advanced manufacturing private companies.
Toronto-based AI-focused software company Analytical ProspectingMontreal startup in automation VentilationVancouver-based robotic welding innovation company Norvac Technologies and a Toronto-based biotechnology company BenchSci were selected from over 6,000 worldwide.
Finalists were chosen for their expertise in research and development activities, market potential, business relationships, investor profile, news sentiment analysis, competitive landscape, market strength team and the novelty of the team.
Canada and Germany tied for second place, each with four startups making the cut. The United States was first, with 27.
In other news:
● HVAC technology company based in Montreal BrainBox AI announced the final close of its Series A funding round, securing $30 million (US). The money will help further expand the global footprint of its software platform, which uses artificial intelligence to help reduce energy consumption in buildings.
● Biotechnology company Genecis Bioindustries Inc., announced that it has raised $7 million (US) in funding. The Toronto-based company, which makes compostable plastics from food waste, has also secured a $3 million (US) credit facility from Silicon Valley Bank, subject to customary closing conditions.
● Sault Ste. from Marie Algoma University partnered with a Toronto-based health tech company Downwind to launch a new mental wellness awareness program for students. The training app aims to prepare new university students for the mental stresses of school, while collecting their insights to help improve mental health support programs.
● Saint John, New Brunswick — software provider based Procedure flow secured $11.8 million in an investment round led by the Canadian Business Growth Fund. ProcedureFlow’s platform allows users to create, organize, update, share and track procedures for easier end-to-end management.
● The Capital Angel Network (CAN), a group of angel investors from the Ottawa-Gatineau region, and Invest Ottawaan economic development agency, announced that 15 Canadian founders have been selected for the third cohort of ElleBoot, a six-week bootcamp that helps women entrepreneurs prepare their investment case. At the end of the program, the founders will compete for $150,000 in equity funding.
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