There are a few things that investors don’t like to hear from entrepreneurs who are pitching them for money, and one is that the startup plans to sell mainly to government.

Selling to government is difficult. The sales cycle is long – so long the startup can run out of money waiting for an answer. Bureaucracies often resist change, which interferes with the adoption of new technology. If the technology saves money, unions worry about job losses. 

There’s no ideology or bias in these statements. It is simply the result of observation of several startups that have tried to sell to government, often with disastrous consequences. Yes, there are exceptions, but overall mentors and investors worry about startups targeting government.

So if there were a single thing that the Nova Scotia government – or other governments in the region -- could do to improve innovation in both the private and public sectors, it would be to improve its process of adopting new home-grown innovation. Such a policy would have two effects: it would create an early market for young companies and help them to refine their products; and second it would improve productivity within government.

High-growth companies (we call them startups but some are decades old) are the cornerstone of an innovative economy. Atlantic Canada has a lot of the components needed to develop these companies – abundant talent, access to capital, lots of universities, stable government. And the provincial and federal governments have some tremendous programs to fund and nurture startups.

What we don’t have is a lot of private industry. The best startup communities have big corporations that spin off startups, offer entrepreneurs experience in industry, and work with startups to develop their products. There are some of these in Atlantic Canada, but not enough.

One Example of NS Industry Adopting Local Innovation

Government in the Maritimes makes up a larger portion of the economy than other provinces or U.S. states. It would be a huge help to Nova Scotian startups – which are the vanguard of modernizing our economy – if government filled the void left by the lack of big business in the region.

Sadly, it hasn’t.

The rule of thumb is that if your business model depends on selling to government, change your model. Most biotech companies selling in Canada have to sell to the public sector because healthcare is largely provided by government, but many if not most have go-to-market strategies that target other jurisdictions.

What’s needed is an adopt-an-innovation program in specific departments, something akin to an adopt-a-highway program in some jurisdictions. The government should name a couple of departments that will initiate programs to buy technology from Atlantic Canadian startups. The Departments of Health and Education seem obvious candidates as they’re big and there is a lot of innovation that improves performance without threatening staff levels.

These departments should create panels to hear pitches, and the panels have to include both senior management (who can make fast decisions) and rank-and-file staff (who can address difficulties in implementing the technology).  The program should be open to young companies that have new products and also established companies that have sold their products outside the region. Once the panel selects a company, it remains in place to help with the implementation.

Obviously, the winners in this situation would be the startups themselves. But Nova Scotian citizens would also benefit from access to the improved performance of new technology.