Victoria packs a pint-sized punch as a small but flourishing tech hub

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Burgeoning tech companies are on the rise in Canada, attracting funding and IPO buzz in hubs across the country. Our occasional series explores how each locale nurtures its entrepreneurs, the challenges they face and the rising stars we're watching.

Owen Matthews found the perfect way to convince his father, Ottawa tech pioneer Terry Matthews, to invest in a startup in his home base of Victoria: The company, Echosec Systems Ltd., can track social media postings by their geographic origin, so to demonstrate the power of the tool, the younger Mr. Matthews showed his father what had been posted to Facebook, Twitter, Instagram in the vicinity of his house. What showed up during the demonstration eight months ago shocked the billionaire: 15 pictures, including one of his grand-daughter, on his property. The first thing the elder Mr. Matthews did was track down the posters to get them to remove the pictures. The next thing he did was invest. "I like this tool, it clearly has a lot of value," he told his son, who noted that the technology is already used by military and law enforcement agencies.

While Terry Matthews is known as one of Ottawa's most prominent tech investors, he and his son have also poured money and time into Victoria, another government town with a surprisingly buoyant tech ecosystem. Victoria does not have any big tech companies, but it has enough small and medium-sized firms that the sector – not government or tourism – is the top employer in the metropolis of 344,000 people. The Victoria Advanced Technology Council says there are 900 technology companies employing 15,000 people in the area, generating $4-billion in economic impact. "Most people go to Vancouver and miss Victoria because it's a cute government town," Owen Matthews says. "But this place has a very entrepreneurial attitude."

Mayor Lisa Helps argues that Victoria's climate, abundance of restaurants, local beer and coffee, rental units and pleasant lifestyle options ("work here ends at kayak o'clock") make it a magnet for startups. "What works in our ecosystem that makes us unique is small companies that grow rapidly and punch away above their weight on the world market," she says.

It's certainly helped by the Matthews family: Owen Matthews, 43, came to University of Victoria to study computer science and psychology and never left, starting a telecommunications software company in 1998 and selling it to Vancouver's CounterPath Corp. in 2007 (the Matthews family owns close to 30 per cent of the stock).

He's since helped develop the local startup scene by convincing several government and industry bodies, along with his alma mater and father, to fund the creation of the non-profit Alacrity Foundation, dedicated to helping nascent entrepreneurs get on their feet.

Owen Matthews argues that the first six to 12 months of an entrepreneurial enterprise is too early for serious investors to commit financing. So the foundation offers training, space, mentorship, access to industry players and expense money to help get B.C.-based business and engineering graduates on their feet as entrepreneurs. The idea is that if they flourish at Alacrity, there may be investors ready to jump in after a year.

Sure enough, several companies that have graduated from the program have landed seed investments, from the Matthews family and others. They include telecommunications software startup Tutela, online marketing firm Pretio and Echosec.

Karl Swannie, a former partner of local geospatial technology firm CloverPoint who heads Echosec, argues that "you have to be good in Victoria to survive. Your software has to be good enough to make it off the island. Because if you don't do well, you die."