PHOTO: Hydrostor is testing technology to store clean energy at a facility in Goderich, Ontario
On the site of a disused salt mine near the beach town of Goderich, Ont., there sits an unremarkable beige shed. Two large cylindrical tanks with substantial pipes emerging from the side hint at an industrial use, but you’d hardly think you were staring at a great hope for cleaner power. Yet this facility, opened in 2019, is where Toronto-based Hydrostor proved that a new energy-storage technology — converting compressed air to energy — works at commercial scale, an essential step in adding more renewable electricity sources to the grid.
Enormous opportunities are now opening up. The company, which recently landed U.S.$250 million in investment from Goldman Sachs, is working on two facilities in California and one in Australia that are each more than a hundred times the size of its Goderich one. CEO Curtis VanWalleghem expects that “with just one or two of these plants operational, we will easily pass unicorn status.”
Hydrostor is no outlier among Canadian technology companies. Despite the hurricane-force headwinds of the past two years, many young Canadian ventures are continuing to grow at a rapid clip. Take Dialogue, a six-year-old virtual healthcare provider based in Montreal. Since 2020, it has listed on the TSX and acquired companies in Germany, Australia and Britain. Or consider BrainBox AI. It supplies an intelligent control box that connects to a building’s heating and air conditioning systems to lower energy costs by up to 25 percent. In just three years, its technology has been used in more than 100 million square feet of commercial space across 70 cities around the world. Meanwhile, League, a platform for managing employee benefits, topped a valuation of $1 billion with its latest funding round this past January.
But even before we can truly put the pandemic in the rear-view mirror, these companies face new challenges. Inflation is at a 30-year high. Tech sector wages are rising by as much as 30 percent. And as interest rates head up, stock prices and valuations are coming down, which will have a chilling effect on funding. The next recession, economists warn, could arrive next year.
After a decade of rock-bottom interest rates and a string of recent stratospheric funding rounds, this is unfamiliar territory for many of the entrepreneurs I work with. I lead Momentum, a program at MaRS that supports innovative companies on track to make $100 million in revenue in the next three years. In recent weeks, as I’ve talked to these executives, I’ve been struck by their confidence that they will weather this storm, too. The reason: these businesses aren’t trying to build buzzy consumer gadgets, they’re providing solutions to some of the biggest problems we face. These companies are helping us tread more lightly on the planet, and they provide more efficient services to support health and well-being.
Tackling real-world issues gives them two key advantages. Demand for these kinds of solutions tends to be unusually resilient in the face of economic downturns. Many cleantech products reduce clients’ costs alongside their carbon emissions. Opus One, for instance, provides software that helps utilities operate electricity grids more cost effectively. The sales potential of a company like Ecopia, which harnesses artificial intelligence to create detailed 3D maps that city planners can use in modelling, is driven more by our increasingly unpredictable environment than by the economic cycle.
Plus, we’ve been in a job-seeker’s market for a year now. Software engineers and scientists with highly technical skills are currently in demand everywhere. That demand is particularly acute in Toronto, which is now the third-largest tech hub in North America. An avalanche of recent research shows, however, that workers are increasingly looking for more than just a paycheque — they want to be proud of the work they’re doing and feel they’re making a difference. And that gives organizations working on issues like healthcare or climate change an advantage in attracting star recruits.
I’ve seen many of the Momentum ventures effectively employ their missions as a recruitment tool. For instance, Cyclica, which uses artificial intelligence to hunt for new medicines, has been able to build excitement around the work it is doing at the very leading edge of science. Its founder, Naheed Kurji, has raised the company’s profile through his leadership of the Alliance for Artificial Intelligence in Healthcare advocacy group, helping to land three senior executives. Meanwhile, Ron Spreeuwenberg, the chief executive of HiMama, a provider of business and education tools to daycares, says the issue his company is working on is a major draw for potential recruits. The company has recruited around half its 180 employees in the past two years by emphasizing its mission — improving early-years education — and the opportunities it creates for workers to develop their skills.
I’m proud of the fact that the businesses supported by Momentum are addressing many of the UN’s Sustainable Development Goals. They are succeeding because they have created value propositions that endure — regardless of the economic conditions. And during a period of intense uncertainty, that advantage is priceless.
As inflation soars, financial flexibility is becoming even more vital — especially for the one-third of Canadians who live paycheque to paycheque. Fintech company KOHO has created a product that lets employers give workers access to half their wages each day, without making payroll a complicated mess.
Deep Genomics uses artificial intelligence to rapidly analyze RNA data and identify potential new therapies for genetic diseases. Since its creation in 2015, it has analyzed thousands of potential therapeutic compounds and identified 10 to take into clinical trials.
The team at Prodigy have perhaps set themselves the toughest challenge of all — making kids like math. Taking a cue from parents who smuggle veggies into their kids’ food, Prodigy disguises education as a video game. This spring, the company launched a version that strengthens literacy skills.