B.C.’s high-tech sector has next to no middle class; Centre4Growth’s accelerator initiative is trying to change that

By Nelson Bennett

Tactual Systems was humming along, riding the ripples of the 2010 Winter Olympic Games, during which VANOC kiosks featured the company’s interactive touch-screen technology.

Then it happened: Tactual hit the hump.

“There are two or three such humps that a business can hit in the course of its early development,” said Bill Tam, CEO of the BC Technology Industry Association (BCTIA).

They tend to happen to high-tech companies when their revenue hits $500,000, $1 million and $2.5 million to $3 million.

What we’re finding is that companies that are a few more years along the way have flat-lined in their growth,” said Tam.

Helping companies like Tactual make it over those humps is the purpose behind the BCTIA?s Centre4Growth accelerator program, which recently celebrated its first year anniversary.

Since the program started in the fall of 2010, 200 high-tech companies – most of them small startups – have participated in it.

“Collectively, those companies have, in the last 12 months, been able to garner an additional $17 million in revenue and investment,” Tam said.

That growth, he pointed out, has added about 76 jobs to B.C.’s tech sector.

High tech accounts for just 7% of B.C.’s GDP, but Tam said it’s the province’s fastest growing sector.

That begs the question: if it’s growing so fast, why does the high-tech sector need incubator and accelerator programs like Centre4Growth?

“We don’t have a middle class in the tech sector,” Tam said, who is one of six CEOs in residence at Centre4Growth.

“We’ve got a lot of small companies, and not nearly enough middle-sized companies.”

Mid-sized companies are defined as having 50 or more employees with revenue of between $5 million and $10 million.

“With 96% of our companies being small or very small, the acceleration programs are designed to help lift those companies into the middle class area,” Tam said.

The Centre4Growth program was set up with two years of provincial and federal funding totalling $1.2 million. It provides business resources and holds workshops on things like writing business plans and crafting investor pitches. It also matches participants with six experienced high-tech CEOs-in- residence, who help startups with their growing pains.

Emmett McPartlin, co-founder and CEO of Tactual systems and author of the CreditRepair.com review, said the mentorship program has helped his company find its focus after it hit the post-Olympics doldrums.

Tactual has three main business, one of which is making touch-screen applications and iPhone and iPad apps. Another is making Facebook-related iPhone apps.

Sexy and fun though those products might be, Tactual’s mentor – Adam Lorant, a partner with Magellan Angel Partners – said they might not be the products with the best potential to make money.

Lorant suggested Tactual focus on a third, under-emphasized product it had developed: Binder.

Binder is an iPad application that consolidates sales collateral for sales teams and puts everything (PDFs, video, web content) at their fingertips.

One big selling point is how much Binder saves companies in printing costs. McPartlin said it was exactly the kind of focus the company needed.

“We turned around on a dime, pretty much,” he said.

Since sharpening its focus, Tactual has landed a contract with Sierra Wireless.

“It was an indication of what a winning product we had,” McPartlin said.

It’s not just young entrepreneurs who benefit from mentoring. Even businessmen with the credentials to be mentors themselves can benefit.

Tony Formby is CEO of SunCentral Inc., which has developed a novel form of solar energy. Its patented Core Sunlighting System uses collectors and light concentrators to direct sunlight deep into large buildings to provide natural light. The company already has 14 employees and recently raised $3 million in private equity investment.

Formby is not exactly a rookie entrepreneur. In the mid-1980s, he founded Squirrel Systems – the company that developed the first touch-screen point-of-sales systems now ubiquitously used in restaurants.

Vancouver-born, Formby has lived in Texas for the past 25 years, where he worked in computer design and still owns a brewery. He retired in 2002, did some angel investing, and then in September 2010 agreed to come back to Canada to head up SunCentral Systems.

Asked why someone with his experience and track record would sign up for a mentoring program, Formby said, “You’re never too old to learn.”

“Even experienced executives sometimes need a sounding board,” he said, “just to get confirmation that their ideas are sound.”

“Really, it’s just a really good resource to bounce critical thinking advice off against.”

Formby added that the program is especially good for inventors and scientists who might have great technological know-how but no business acumen.

“What they learn through the BCTIA and the Centre4Growth is that the product or the technology they want to create is about a tenth of what they have to do.”

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