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Since the Canadian Advanced Technology Alliance (CATA) was created in 1978 we have represented the interests of Small to Medium science and technology-centric enterprises. Today these Canada headquartered businesses are in the tens of thousands and have grown to be the heart of the Canadian economy.
We are over 120 days into COVID19 and still, there is no comprehensive, technology-sector emergency or restart response. We see some well placed companies thriving and others struggling, laying off staff, trying to pivot to improve their chances of survival. A healthy tech ecosystem and critical mass health of small and medium enterprises are crucial to Canada’s economy and job creation.
In this ongoing series, we profile companies dealing with the reality of COVID-19 and their experience with emergency government support programs.
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Govindh Jayaraman is a serial entrepreneur. He is President of IMBA Medical located in Ottawa. The software business has developed a platform to deliver health and wellness products aimed at chronic disease prevention and management. Within days of COVID-19 ramping up in Canada, he was offering a COVID-19 support module to help manage the outbreak. In a few more days his business revenue dropped to zero. No one wanted to make a business decision, everything was on hold. Unfortunately, his story is not unique.
Jayaraman’s IMBA Medical company had been growing at 300% a year as of February. After the COVID-19 crash, it took two months to receive his first customer revenue, just $200.
As for government assistance, “It is a drop in the ocean, you are gasping for breath and the assistance only prolongs the agony of a long slow decline,” Jayaraman says.
He adds, “This is a cash crisis not an accrual basis accounting crisis. We keep going through pay periods and rent cycles. We are told to wait; help is coming but it is not.” Jayaraman did not apply for the rent assistance program because application goes through his landlord and the landlord is demanding confidential and sensitive data about the company. Information Jayaraman is not willing to give up.
There are signs that change is slowly coming. IMBA Medical has signed some Letters of Intent, including a nation-wide deal, plus some contracts but still waiting for payment, and clients are pushing hard for more favourable terms and pricing. Bottom line, still no revenue coming into the company. But the money goes out as staff make hundreds of cold calls per day seeking new leads.
With more funding Jayaraman says his company could hire 30 people by the end of this year. He adds, “As cash and options dwindle, tech companies are being forced to choose between their families, their homes and their tech to be sold for pennies on the dollar in exchange for cash.”
The Canadian Advanced Technology Alliance (CATA) wrote to the Prime Minister proposing a solution for under-subscribed and delayed assistance programs. The alternative uses data from the nation’s largest innovation program; Scientific Research & Experimental Development (SRED).
SRED data is used as a simple pre-qualifier for zero-interest loans at operational scale. The Resilience and Rebound (RR) fund would help bridge innovative companies to the other side of COVID19 and aims to keep intellectual property and talent in Canada.
The loans would be partially forgivable based on company headquarters, intellectual property and jobs remaining in Canada. Established companies within the program have good track records and are known to the Canada Revenue Agency (CRA). RR delivers a speedy response while minimizing fraud or abuse. Delivery could be hastened by using the CERB model via CRA or applied to other programs.
Jayaraman has used SRED for five years to develop his software and says the impact of such a program would be “profound”.
Despite the tough situation Jayaraman says he will never quit. It is not time to retreat. His company has now launched “Take Action” – what he calls, a first-of-its-kind, employee wellness and chronic disease prevention platform in Canada.
CATA invited Jayaraman to join in a phone call meeting they organized with a cabinet minister to explain the RR plan. He outlined his problems and the minister asked for another call to see what they can do.
It has been several weeks and yet no funding solutions. Jayaraman will not wait for what the minister does or does not do but he worries.
“The 2008 recession impact will repeat itself and we will see many tech companies disappear.” says Jayaraman.
For more information visit www.imbamedical.com or email email@example.com.