Tipping point

Nova Scotia’s tech sector needs to achieve a critical mass of startups before it can really take off. Some say it’s almost there

After developing a tool that could predict system and app failures, Halifax tech firm topLog was off to a promising start. In 2013, it even became one of the first businesses in residence at Volta, a Halifax incubator founded by Jevon MacDonald and Milan Vrekic. Today, however, topLog only exists on paper.

One of topLog’s co-founders, Özge Yeloglu, who now works in Toronto as a Microsoft Data Solution Architect, explains what it was like building a startup in Nova Scotia, beginning with their experience at Volta. “[Volta] was just starting, we were just starting, it was a very collaborative experience,” says Yeloglu. “Jevon was kind of a mentor to all of us, and the whole place was kind of like peer mentoring to each other. We were really close.”

Volta gave topLog the opportunity to attract and find mentors, board members, and investors — which they did. But Yeloglu says one of their biggest challenges was finding mentors with experience in their specific niche, because the startup scene in Nova Scotia was (and still is, really) so young.

Overall things went reasonably well for the startup, but Yeloglu says they didn’t have the money to grow as quickly as they wanted. When it became clear that “it was not going to be a successful venture eventually,” they decided to wrap it up. Now that Yeloglu’s at Microsoft, she realizes how little she knew about running a business, and says she wishes she’d had the knowledge she’s gained at Microsoft during her startup days.

“I did my best, my mentors supported me as much as they could. But getting into it, living it, seeing it, I realized I really didn’t know much,” says Yeloglu. “I think in Atlantic Canada, that’s one of the disadvantages. It wasn’t easy to find good sales people, and it was almost impossible to be trained by them because there were so few of them. If you’re focused on technical people, Dalhousie is producing good technical people every year. There’s never going to be a technical shortage in the region. But sales, marketing? Those were hard skill sets to find.”

Darren MacDonald is committed to making it easier. As the manager of Cape Breton’s Island Sandbox, a joint program run by Nova Scotia Community College and Cape Breton University that supports technology, entrepreneurship, and social enterprise, he provides education, mentors, and networking opportunities that support Nova Scotia tech startups.

Like Yeloglu, MacDonald believes the lack of startup experience in Nova Scotia’s business ecosystem makes it a tough go. He’d love to see more people from traditional industries cross over to collaborate with and mentor people in the tech start-up community.

“In other areas, when a startup fails, the talent kind of gets absorbed into the ecosystem, and they take that experience and knowledge and learning that they had from the failed venture to the new venture,” says MacDonald. “I just don’t think we’ve had enough of them yet.”

Unlike Yeloglu, MacDonald thinks Nova Scotia needs more technical talent because although more universities are increasing their computer science offerings, graduates “tend to get snapped up by the bigger companies.” He says that should improve though: IT enrollment at the NSCC Marconi Campus doubled last year, and programs like Cape Breton University’s UIT Startup Immersion Program are bridging “the gap of knowledge for founders both on the business side and the technology side.”

“There are companies in the growth stage doing great things, so that’s bringing a lot of attractiveness to the area,” says Yeloglu. “So even if you need to bring your mentor from out of the region, it’s actually becoming attractive for a mentor or an advisor to advise a company in Atlantic Canada, compared to what it was three years ago.”

It goes both ways though, since Yeloglu says many of the people who go through these programs end up leaving for corporate jobs in bigger centres, like she did. But don’t cry brain drain yet — it’s actually kind of a good thing, because it means the province is building a stronger network.

And of course, not everyone leaves. Sreejata Chatterjee, co-founder and CPO of LeadSift, a four and a half year-old company that uses an algorithm to help companies target their sales and marketing efforts, is determined to stay in Nova Scotia. That doesn’t mean there haven’t been challenges, though.

“We’ve talked about having our sales guy or CEO move to (Silicon) Valley or New York or somewhere else where most of our customers are,” says Chatterjee. “When we’re here, we’re calling, but there are no serendipitous sales happening, and no camaraderie. No ‘I’ll meet you at a conference and buy you a drink’ sales happening, which is how it goes in other places. And travelling to San Francisco is so expensive.”

But in general, LeadSift’s experience has been positive.

The company started as kind of a fluke one weekend when Chatterjee and the other founders (Daniel Allen, Tapajyoti Das, and Hatem Nassrat) were experimenting with some Twitter data. They came up with the idea of using it to find leads, and showed the idea off at DemoCamp Halifax. It’s an event for the regional technology and startup community to give live demos of what they’ve built, get feedback, learn from speakers and network with other technology innovators. Following DemoCamp, LeadSift was offered funding through Atlantic Canada Opportunities Agency (ACOA) — its first influx of cash. Shortly after that, they joined Propel ICT’s first cohort, back when the startup accelerator was only in New Brunswick.

“Every weekend we would drive either to Moncton or Fredericton. In fact, I lost my first car to those thousands of kilometres,” Chatterjee says. “It was fun though. It was a really good learning experience, because I think it gave us the discipline to do something like this.”

Propel ICT helped LeadSift get off the ground by working with them to develop a five-month business plan as well as teaching them how to pitch, and build, their product.

“A lot of people helped us,” says Chatterjee. “That’s kind of an Atlantic Canadian trait anyway, but we had so much help. People were ready to make introductions and give us all kinds of advice, and that’s really what we needed because we only sat behind computers. We had no idea how to run a business or how to do our financials.”

Chatterjee also says it’s easier to hire in Halifax than it is in places like Toronto. There’s a lot of talent because it’s a university town, and people are willing to be paid a little less to stay in Nova Scotia.

“If there really were a lot of drawbacks, we would have just moved,” she says. “The company was started by immigrants. We don’t have family here. But we really do love Halifax. Not only is it pretty, but the people here are so nice.”

The province needs more companies like LeadSift to build a solid base for its budding tech industry, and MacDonald says he believes the tide is turning that way. “We have an example of a company that had space in Toronto that’s now here in Sydney, and they’re building their whole team here,” he says, referring to Ubique Networks, Inc.

And he doesn’t think that it will be long before the region reaches the critical mass of experience and expertise that the industry needs for growth. Last year, he went to Northwest Arkansas, where their tech industry is only about 10 years ahead of Nova Scotia’s. According to MacDonald, Northwest Arkansas has matured enough that they have multiple venture capital funds for early stage companies, as well as some exits and acquisitions.

“Eventually, we may need to look at bringing people back home, bringing in new Canadians, and getting people to move here in the first place,” he says. “Yeah, I don’t think it’ll be too long now. We just need to maintain this momentum.”

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