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December 16, 2021   Enterprise, Entrepreneurs, Start-ups, Small Businesses, ESG, Financial Inclusion, Sustainable Finance, FinTech and Alternative Finance, Fundraising, Investing, Trading, Innovation and Resources, Research, Stories, Venture Funding and Building, Voices   No comments

Canada’s Low-Carbon Tech opportunity is now or risk another familiar story

BCG | Jason Green, Vinay Shandal, Wendi Backler, Keith Halliday, and Rachit Sharma | Dec 7, 2021

Low carbon tech investments - Canada's Low-Carbon Tech opportunity is now or risk another familiar story

First the good news. A global study of private investment by Boston Consulting Group’s Center for Growth and Innovation Analytics found that Canadian ventures are well represented across 13 key low-carbon tech sectors.  HTEC, Svante, Amp and Li-Cycle, for example, all attracted major funding over the past 12 months, making 2021 a banner year for private investment in the country’s low-carbon tech industry.

As much as US$21 trillion in new investment in both mature and newer low-carbon technologies will be needed globally over the next ten years.

In addition, Canadian low-carbon tech ventures are attracting a greater mix of investment in carbon capture, hydrogen, biofuels and climate analytics than their peers in Europe, the US or Asia-Pacific. BCG data shows they have claimed 8% or more of private investment worldwide since 2016. This is a hefty multiple of Canada’s roughly 2% share of the global economy. (See Exhibit 1 above.)

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However, Canada’s history with past tech shifts suggests that while our venture record is strong, our scale-up record is poor. After a generation of internet innovation, for example, Shopify is the only Canadian company on the list of scale-ups with market capitalizations of more than US$50 billion.

Historically, a major reason has been a lack of sustained attention and investment from Canada’s public and private sectors.

BCG research shows that 80% of Canadian private investment—across the corporate sector, venture capital, private equity and financial institutions—currently goes to ventures located outside Canada.

It will be a regrettable irony if Canada ends up importing key low carbon tech from other places instead of fanning a booming economy in an area where we have already cultivated significant home-grown advantage.

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To help young businesses achieve scale, Canada’s public and private sector should take three steps.

  1. The first is for corporate Canada to ramp up venture investments and partnerships.
  2. The second step is for Canadian companies and government agencies to host more demonstration projects and at-scale deployments domestically.
  3. The final opportunity is to improve the innovation environment in Canada. To win the low-carbon future, we must get serious about addressing tax issues, low levels of corporate R&D, access to risk capital, and the brain drain of talent to the US.

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