For a nascent industry like virtual reality (VR), 17 million headsets hitting the global market during the 2010s is no small sum.
But does investing in the VR hardware business hold much promise for British Columbia’s fast-growing VR industry?
Not really, according to OMERS Ventures associate Prashant Matta, who was in Vancouver March 15 to speak at the second annual BC Tech Summit.
“If you look at hardware and accessories, it’s more likely than not they’ll be controlled by large manufacturers,” he told an audience gathered for panels focused on B.C.’s digital media industry. “Where I see opportunities is top of the stack, where you see emerging content and applications.”
In Metro Vancouver, VR and augmented reality (AR) firms like Finger Food Studios, Archiact and LNG Studios are developing products ranging from VR tours of condos still under construction to AR content that visualizes life-size tractor-trailers in need of redesign.
Finger Food Studios CEO Ryan Peterson told BIV last year that his company had a run rate of $20 million in 2016. Five years earlier, the Port Coquitlam firm generated just $380,000 in revenue.
Meanwhile, Matta’s venture capital firm has found B.C. to be ahead of every other jurisdiction in Canada when getting its products to market.
OMERS Ventures surveyed more than 200 companies involved in Canada’s VR industry, including more than 50 companies in B.C., and found B.C. firms have 87 VR/AR products either in the prototype stage or on the market.
Of those West Coast VR products, 51% are on the market either for free or already generating revenue. Among Ontario firms it’s 34%, and for Quebec firms it’s 46%.
“That could be either because of the VFX (visual effects) and traditional talent around content creation, or that could be because of the way the startup ecosystem is evolving in British Columbia,” Matta said after previewing the survey results to the tech summit audience.
But in terms of volume, Ontario is still outpacing B.C., with 138 products either in the prototype stage or on the market.
Ontario also holds a big advantage over B.C. when it comes to one of the most critical issues all tech firms are facing: the limited talent pool. The number of employees captured in the survey comes to 654 in Ontario. In B.C., it’s 344, while Quebec has 309 VR workers. Keeping up with demand is one of the big challenges all Canadian VR firms will have to face, Matta said. Vancouver-based Archiact, for instance, has seen its workforce more than double to 80 from 35 over the past year.
It hasn’t been shy about going overseas for talent. It has about 20 employees based in Shanghai.
“I was surprised by the numbers,” Anne-Marie Enns, producer of May’s Consumer Virtual Reality expo in Vancouver, said at a later panel when asked about the data Matta presented.
Enns, who also works at Archiact, said she believes B.C. will soon pull away from other jurisdictions in terms of VR content production and head count due to its background in film and VFX.
But Matta said that the creative skills needed to develop VR and AR content aren’t necessarily transferable from existing media.
“It’s something that needs to be trained and looked at from the ground up,” he said.
Bits and bytes: BC Tech Summit keynote highlights
•Tesla Motors (Nasdaq:TSLA) co-founder JB Straubel told attendees his electric-vehicle company is recruiting engineers at the summit. He said Tesla now has more software engineers than mechanical engineers: “For a car company, that’s pretty crazy.”
•Microsoft (Nasdaq:MSFT) corporate vice-president Julia White said the tech giant is “thrilled” with the growing business links between Vancouver and Seattle known as the Cascadia corridor. She added that local partnerships in the virtual reality and augmented reality space have been paying dividends, and further tax incentives will bolster the relationship.
•Mojio CEO Kenny Hawk recalled when his cloud-computing startup nearly shut down client T-Mobile’s (Nasdaq:TMUS) network days after a product launch. Hawk said he reached out all the way to Microsoft CEO Satya Nadella’s office for help. The tech giant agreed and worked three days straight to stop Mojio’s outage from impacting its client.
•Premier Christy Clark announced that the province is doubling the number of post-secondary co-op programs to 14,000 from 7,000; increasing the number of science, technology, engineering and mathematics (STEM) graduates by 1,000 a year; and expanding the previously announced virtual reality (VR) tax credit to encompass all technology applications as opposed to only VR entertainment applications. Instead of just gaming and films, VR firms specializing in enterprise applications will have access to tax credits.
Clark took aim at the U.S. immigration system and said it’s “absolutely true” that Canada’s system is superior. “But it’s a low bar and it’s getting lower,” the premier told the audience.
Clark added that while other countries are looking inward, B.C. and Canada have a “unique opportunity” to embrace high-skilled foreign workers. Clark floated the idea of granting citizenship to foreign PhD students on the day they graduate.
Funding announcements at the summit: Victoria and Ottawa announced $43 million in joint funding for clean-tech innovations through Sustainable Development Technology Canada on March 13. The funding is aimed at the pre-commercial stage of tech development. The federal government also announced it’s investing $17.6 million in UrtheCast Corp. (TSX:UC), a Vancouver-based Earth-imaging firm. The money is earmarked for UrtheCast’s Earth observation satellites.
The dos and don’ts of running a B.C. cleantech
Over the last nine years Ben Sparrow has hired two vice-presidents from outside the clean-technology company he founded in Vancouver.
“I fired them both,” the CEO of Saltworks Technologies Inc. told an audience at the two-day B.C. Tech Summit.
While Sparrow admitted he’d be on stage all day if he shared everything he did wrong leading his company, he took time to share some of the desalinization firm’s biggest follies and successes.
While Sparrow lamented over those external hires, he said one of the best things he’s done is hire from within, specifically by focusing on young hires given the opportunity to succeed and fail.
Another big boon to the business was raising money from customers, including British Petroleum (NYSE:BP), ConocoPhillips (NYSE: COP) and Cenovus Energy Inc. (NYSE:CVE).
“Our customers, they’re not focused on a quick flip. They’re not focused on pump and dump. They want robustness,” Sparrow said.
But the CEO acknowledged that it was easy at times to offer too many applications for the company’s technology. And he recalled spending “way too much time with one person” who wanted to create fertilizer from sea water.
“We got distracted by shiny objects,” he said.
After Sparrow addressed the audience, MineSense Jeff More took to the stage to tell the crowd he was nervous to speak next.
“I was an external hire.”
