Recent ICT firm sales good for province

Editorial by Larry Sampson – Telegraph Journal | link to orginal article

The recent acquisitions of Radian6, Q1 Labs, and Medsenses have resulted in considerable celebration, as well as people asking how the sale of a New Brunswick company can be good for the province.

The concerns arise mostly out of the loss of control a sale represents, and the potential this creates for a company to close up shop and move the jobs elsewhere. There also appears to be worries regarding corporate tax revenue and head-office jobs, even if it's just the head-office that moves.

The risks are somewhat heightened because resource-based industries such as forestry, mining, or fishing, have physical assets that tie at least some of the jobs to the geography. As the tech sector is more about people, ideas and capital, all of which are highly portable, people rightly see more potential for the work to be relocated.

So why are these recent sales a good thing?

The short answer: They help create the pool of capital and experience we need to generate sustainable growth.

Growing information and communication technology in New Brunswick to the point at which it can offset the decline in our traditional economy means we'll need lots of Radian6s, which translates to a lot of investment. Finding an investor in the tech sector is not so different than other places – you've got to get noticed first. We're not Silicon Valley (yet), but these sales make it a lot easier for other investment opportunities to find investors.

When most of an investment comes from outside the province, it's those investors who end up calling the shots. If they say sell, the company gets sold. If they say move, the company gets moved. To keep a tech company in New Brunswick we'd need to be able to put most of the money up.

Investing in a technology company is not for everyone, because you invest in ideas and people more so than in plant and equipment. Accordingly, many investors shy away from technology companies. Those who typically invest not only have the money, they understand technology.

While clearly we didn't own most of it, the sale of Radian6 alone was reported as creating 50 millionaires, many of whom live and work right here in New Brunswick. One local investor, the New Brunswick Innovation Foundation, walked away with $9.25 million on an investment of $327,000. I think our ability to fund a bigger piece of the next tech startup just got a pretty substantial boost.

Between what it took to create, grow and sell these companies, and the on-going relationship with the buyers, we also have a much deeper pool of understanding around what it takes to be successful in this space – experience that will bear fruit on the next one – and there will be a next one.

Lastly, all the buzz and excitement around these sales will mean more of us recognize the potential ICT has for the province. More of our youth will better understand how technology can be used to help realize their own passions, and choose a career in science, technology, engineering or math. More New Brunswickers will leverage technology to generate growth, prosperity and competitiveness across our economy.

While the notion of wealth creation has been painted in pretty negative terms of late, we need to remember it enables much of what is good in our society. The money the principals earned from these sales will enrich our community in more than the literal sense, and for years to come.

And as Mark Twain once said, « I am opposed to millionaires, but it would be dangerous to offer me the position. »

Larry Sampson is the CEO of the New Brunswick Information Technology Council.