Thank you very much.
Distinguished members of the House, thank you for the opportunity to speak to you today. I'm the CEO and co-founder of Bidali, a financial technology start-up based in Calgary, Alberta, that is using blockchain technology to reduce fraud and increase efficiency in payments. We are backed by some of Canada's most prominent angel investors. We recently released a white paper that evaluates how blockchain technology could save costs, reduce fraud and provide the government with better visibility into the effectiveness of stimulus efforts.
In January I had the opportunity to speak about the future of money during the World Economic Forum week in Davos, Switzerland. Our company also participated in this year's blockchain innovation stream provided by Canada's top-tier accelerator Creative Destruction Lab in Toronto. We are also advising various governments on their digital currency initiatives.
First, I would like to thank all government officials and employees for their recent efforts in response to this pandemic. The pace at which programs and policies have changed has been astounding—truly a team Canada effort. In particular, I would like to thank ministers Joly, Ng and Bains for their consultations with small businesses and technology companies. These have been critical to implementing the measures that, thus far, have prevented the collapse of the technology sector, which is critical to Canada's recovery...as well as Madam Rempel Garner's past efforts in developing the precursor to Western Economic Diversification's business scale-up and productivity program, which has been instrumental in supporting businesses in the west.
In a report produced by the Startup Genome project, globally, technology start-ups are the number one engine of economic growth and job creation. In 2018 we saw a total of $3.7 billion of VC investment in Canadian start-ups. According to the OECD, Canada now ranks number three in the world for venture capital investments. Furthermore, some of the most valuable companies in the world, such as Amazon, Google, Facebook, Airbnb and Uber, were born during a financial crisis.
Considering our increasing national debt, in order to secure the future of Canada's economy, we need to take bold and rapid action, as we have already seen is possible. This will undoubtedly require continued investment into frontier technologies. It would be prudent to enable Canadian taxpayers to benefit from the upside potential beyond employment and corporate taxes paid. However, the biggest challenge that many Canadian start-ups face is raising capital. Due to their historical fund performance, Canadian venture capital funds tend to be more risk-averse compared with those of their foreign counterparts, and just aren't investing as often as is required. As a result, many Canadian start-ups need to raise capital from VCs outside of Canada or from angel investors and family offices.
According to reports from NACO and Alberta Enterprise Corporation, on average over 85% of early-stage start-up investment comes from angel investors; and from the CVCA, venture capital funding fell 7.5% in the first quarter of 2020. Furthermore, modelling by the IEC shows that a 25% drop in employment for tech start-ups would wipe out 274,000 high-skilled jobs across Canada.
This effect is compounded in the prairies, just when the start-up ecosystems were beginning to mature. In 2019 western Canada had the highest level of angel investments in the last decade. Many of those angel investors are now facing a liquidity squeeze as a result of the economic blow to the energy, real estate and agricultural sectors, where the majority of their wealth was created. As a result, this deal flow has ceased, and many innovative start-ups are at risk of failing. If this is not remedied soon, we will lose over a decade of progress and hundreds of millions of dollars in R and D investment.
The Canadian government can address this core issue by implementing an investment matching program similar to recent proposals in the United Kingdom and Germany. This could be administered via such regional programs as WD and FedDev, or Canada could develop a new sovereign wealth fund. While this would help ensure that Canadian companies remain Canadian owned, the intent is not to nationalize industries. This would simply be another funding option available for any qualifying start-up that would relieve the liquidity crunch we are currently experiencing, and attract more investment into Canadian technology companies from Canadian VCs and accredited and foreign investors.
Today Canadian taxpayers are already taking on the same risk via such funding programs as SR and ED, IRAP and ISED, which currently de-risk the returns primarily for the benefit of foreign investors. Why not have the opportunity to provide returns back to all Canadians, which could close the gap on our national debt?
This isn't a new idea. FedDev previously had the investing in business innovation program that successfully matched accredited angel investments up to $250,000. Over the last decade, as a technology entrepreneur, I have had the opportunity to see the future that Canadians are building today, and I can tell you that this future is bright, but I can also tell you that right now this future is at risk.
As a result of declining energy prices, Alberta in particular has been hit hard. This is not just an Alberta problem but a Canadian problem. Undoubtedly our energy and agriculture sectors need support but we also desperately need to diversify our economy, and developing front-tier technology companies in Alberta is critical to this. Now more than ever is the time for Canada to take bold action, which will propel us into the next decade as a world leader, and set up future generations in Canada for prosperity.
Thank you for the opportunity to share my opinions. I'd be happy to have further discussions about these proposals at your convenience.
Keep up the great work.