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Buzz or bubble? Vancouver tech veterans encourage vision among startups

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VANCOUVER - The Canadian founders of mobile gaming company A Thinking Ape embarked on a make-it-or-break-it quest to source first-rate tech wizards when they left Silicon Valley in 2010 to put down roots in Vancouver.

The three-man startup was striving for billion-dollar valuation after a windfall of cash developing chart-topping apps, and a global scan signalled that heading north was the likeliest route.

"As soon as we landed in Vancouver we started a recruiting pipeline," said co-founder Kenshi Arasaki, explaining they'd identified the problem of finding the best and brightest as one of their biggest issues. "We spent a lot of time thinking about it."

That careful planning gained A Thinking Ape its foothold, and the attention of its peers, in a city where veterans caution that high-tech growth must be rigorously cultivated to ensure staying power.

The rising costs of living in Vancouver, a fickle investor market, the ongoing global scarcity of talent and struggle for startups to match salaries offered by heavyweights are all threatened snags to success.

As the arrival of tech giants like Facebook, Microsoft and Amazon generates buzz of a budding Silicon Valley North, startup and mid-sized tech companies are balancing enthusiasm against the challenges.

Some in the industry warn that if players fail to think strategically, confront obstacles or build a cohesive vision as the sector blooms, Vancouver could amount to a "tech bubble" burst.

"I am afraid," said Joseph Nakhla, CEO of bazinga!, a social networking company of 40 employees he founded in January 2012. "At the end of the day, Vancouver is an amazing place. We pray that we stay here for as long as we can.

"But the problem we have is, if we don't fix the funding problems, if there isn't more capital available for these startups here — where they can actually not only attract but retain this talent — they will eventually go."

That's why industry newcomers must think long-term and thriving ventures should endeavor to become anchors, said Nakhla, a 15-year veteran of the city's tech scene.

"A lot of little startups are popping up here. I'm wary of young entrepreneurs just completely being focused on the geographical presence."

Another concern is the admission that Facebook eventually plans to pack up its temporary Vancouver office of about 150 computer engineers, many who were blocked from getting U.S. green cards. Other companies, such as Social Chorus, have similarly sprouted offices as a consequence of the hamstrung U.S. immigration system, and some may retreat when visas are sorted.

Asked recently whether Canada's more progressive visa requirements could brand the country a thoroughfare, federal Employment Minister Jason Kenney said economic migrants are "not prisoners to Canada."

The government doesn't "underestimate the power of attraction of Silicon Valley," said Immigration Minister Chris Alexander while promoting a visa stream in Vancouver last month targeting young entrepreneurs.

"That's why we need to be nimble and agile. That's why we need to have the best business environment in the world."

Proponents of the Vancouver industry remain realistic about its bid to compete globally.

Hootsuite founder Ryan Holmes has long championed the city's potential to become a fully-formed tech hub, but he agreed more work is required.

"Selling out early is always a big temptation," Holmes wrote in an email.

Measures to boost stability include enticing investors who offer "a big vision" and a concerted effort by Canadian educators to counter the loss of talent to the U.S. by quickly and "exponentially increasing" the number of tech graduates, wrote Holmes.

"We really need the educational system to understand the importance of encouraging students into engineering programs now and send the message that the jobs of tomorrow are in tech."

Some 18,750 "emerging" tech companies are counted by the provincial government arm Invest BC. The Vancouver Economic Commission said the city's three most popular tech job websites list more than 1,320 jobs — a figure likely smaller than actual openings, as many go unpublished.

British Columbia's statistical agency tallied 9,010 tech companies and 84,070 jobs overall in the province in an April 2014 report.

Charlyne Fothergill, program director with startup accelerator GrowLab, said that in the "war for talent worldwide," the sentiment isn't about "hoarding talent or companies up here," but about promoting expansion.

"Business has to grow. Whether you grow that business from Vancouver and then grow that into the States, you're still in Vancouver setting up roots," she said.

"What we're likely to see is absolutely companies expand across Canada and across North America."

Departures shouldn't be interpreted as a brain drain, said a professor at the University of California Berkeley.

"Trying to keep everyone in your borders is nice, but that doesn't actually reflect how business is being done — especially not in the high-tech sector," said Canadian Studies chair Irene Bloemraad, originally from Saskatoon.

She said Canada benefits even if the tech wizards only reside in Vancouver for a spell.

"(They) build relationships in Canada they might never have had if they moved directly to the United States."

Follow @TamsynBurgmann on Twitter

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