A Calgary startup established to help Silicon Valley startups access Canadian engineering talent has secured millions of dollars in government support, which Canadian technology entrepreneurs say will make it harder for them to fill jobs and benefit the U.S. economy more than their own.
MobSquad on Thursday opened a 16,500-square-foot office in downtown Calgary’s Edison Building, where it plans to employ software engineers and data scientists who will do work for Silicon Valley startups.
The company, led by former Onex Corp. director Irfhan Rawji, also announced it had raised $11-million in venture financing from Relay Ventures – where Mr. Rawji serves as a venture partner, Panache Ventures and Mindset Venture Group.
MobSquad is similar to San Francisco-based Terminal, another “nearshoring” startup, which was advised by former prime minister Stephen Harper and has hired more than 125 engineers in Waterloo, Ont., Vancouver and Montreal to work remotely for U.S. startups.
Both companies say they can help Silicon Valley startups that are having a hard time finding and keeping talent in the competitive and expensive Bay Area. “We take the pain out of the system,” Mr. Rawji said.
Terminal and MobSquad find, hire and employ the talent dedicated to the projects of their U.S. clients, housing them in shared workspaces. Mr. Rawji said MobSquad will charge close to the full cost U.S. companies would pay for the workers, and keep the difference after installing the talent in the more affordable Canadian market. “It’s an arbitrage play," Mr. Rawji said. MobSquad plans to open offices in Edmonton, Toronto, Vancouver, Montreal, Ottawa, Waterloo and Atlantic Canada and employ 1,000 people within three years.
While Terminal was set up in part to take advantage of Canadian tax credits, MobSquad is tapping another form of public aid.
Mr. Rawji – chairman of the board of governors of Calgary’s Glenbow Museum who helped finance Mayor Naheed Nenshi’s defence against a defamation lawsuit by a local builder earlier this decade – has secured a $1.5-million grant from the city tied to job creation, the first commitment from its Opportunity Calgary Investment Fund. The Alberta government has also provided a $1-million grant, while the federal government has extended $1-million in “repayable contributions” tied to jobs MobSquad intends to create.
Several domestic tech sector leaders said that sends a wrong message in a tight labour market where young and growing Canadian-based tech companies are themselves struggling to hire skilled talent. “Taxpayer funded incentives to lure foreign companies to Canada exacerbate existing labour-market shortages,” said Ben Bergen, executive director with the Council of Canadian Innovators. “With nearly 220,000 Canadian tech jobs set to sit vacant in a few years, governments should be developing access to talent strategies that help Canadian companies instead of encouraging a reshuffling of workers from domestic firms to foreign ones and calling it ‘job creation.’ ”
Marcos Lopez, CEO of Calgary software firm Solium Capital Inc., said “if all we’re doing is subsidizing a business that harms other local business [by poaching their talent] we’ll harm the economy because companies that are building businesses [here] will end up doing their software development elsewhere. I think it’s dangerous for Canada to play labour arbitrage. That’s a hard game to win in the global economy. In a knowledge economy it’s those that can build the products and businesses that win, not those that provide the cheapest labour to those who own the businesses with the intellectual property and product” in other markets.
Mr. Rawji said the overwhelming majority of people he will hire will be Canadians who would have moved to Silicon Valley for work, Canadians who will return home for the jobs or foreign developers who have a hard time immigrating to the United States and would be happy to do the same work here.
“These jobs don’t currently exist" in Canada, Mr. Rawji said. “If you want to keep this talent in Canada you have to bring the job they’re leaving Canada for to Canada. Unless we bring them something compelling to stay here for, they’ll continue to leave.”
Federal Innovation Minister Navdeep Bains said in a statement MobSquad will help diversify Alberta’s economy and that its employees will use the experience to “become founders of innovative start-ups themselves.”
Mr. Rawji estimated just 10 to 20 per cent of Mobsquad employees would come from existing Canadian firms. But Carl Rodrigues, CEO of SOTI, Inc., an 800-person mobile-technology company, said the number might be higher, given his own challenges to entice foreign prospects to move to Canada. Relocating workers from abroad “is a ridiculously expensive proposition,” he said.