A technology start-up “gold rush” is in progress worldwide with no signs of slowing, and Atlantic Canada is showing it has the educated resources and energy to pan for this gold too.

According to the latest Entrevestor Intelligence report, 153 startups started in AC in the last three years and almost 70% of them are in the IT sector.  This phenomenon is hardly surprising given that IT startups require relatively low investment and offer the potential for attractive returns. Those are perfect ingredients in a region not known for high capital investment.

As a vehicle for economic growth, the IT startup is almost incomparable in terms of quickly developing a scalable and profitable product. Indeed, investor understanding of technology platforms is attracting external investment to the region’s start-ups. The attitude of these investors is so significant that it deserves a closer look.

Driven by R&D and business visionaries, the IT-based paradigm showed up on a large scale in the 1990s. The agile methodology for managing software products came along in 1995. Then in 2000, the market grew for multi-sided platforms, which connect different markets or customer groups, such as advertisers and searchers (Google), or job seekers and recruiters (Monster). The IT-based paradigm grew quickly because software companies could gain huge returns without spending much to service new customers, unlike product-manufacturing companies.

What’s more, these business models possess strong positive, cross-side, and/or same-side network effects. That is, users benefit from -- and are willing to pay for -- the presence of other users on the platform.  Advertisers pay more to affiliate with platforms with more users. That means even in the free model, users are willing to “pay” by giving up their personal data for platform affiliation. The stronger the network effects, the faster a platform-based company scales. Such companies race to acquire customers, and retain them through continually offering innovative new services, and attracting new customer groups.

In this environment, it has never been easier in the history of Atlantic Canada for IT companies to acquire startup investment. And we can make it easier yet by ensuring more IT startups and investments succeed. To that end, various institutions are contributing to a loose-but-shared regional platform, connecting investors, mentors, entrepreneurs, community colleges, universities, government, and industry. Several individual organizations in some of these groups have not yet figured out that they are participants on a common platform, but good government is driving them in a direction of closer teamwork and citizenship.

Atlantic Canada now needs more infrastructure to capitalize on business and IT paradigm shifts. The big shift recently has been the development in which startups have gone mainstream. The agile model we mentioned earlier is now being taken on by software engineers to develop successful business models. Described by Eric Ries in 2011, the lean entrepreneurship methodology is an attempt to increase business model success across startups regardless of the sector. But make no mistake, for the IT sector lean entrepreneurship is fully dependent on software development to help prove a business model.

Moreover, the majority of the sector’s business models are for multi-sided platforms. Thus we must call for our regional stakeholders to invest more heavily in more thoughtful, deliberate, and purposeful IT infrastructure to allow our companies to create platform prototypes more quickly so that they can successfully prove their business models with paying customers.

Volta recently partnered with Amazon to provide Halifax startups with discounted access to cloud and big data services.  These services represent just one example of a building block of IT infrastructure that allows for fast experimentation. Such IT infrastructure not only accelerates product development; it helps their survival rates of the companies themselves. When a company has to spend its limited resources on proprietary technologies versus common-to-everybody technologies, it’s more likely to run out of money before it gets to market.  We are much too slowly putting in the IT infrastructure that provide complementary building blocks for IT startup success in our community colleges, universities and regional incubators. Universities can make it easier for startups by providing IT building blocks.

Atlantic Canada can win through deliberate, purposeful actions to provide, coordinate, and maintain consumable IT building blocks (e.g. identity management, OpenStack API extensions for common tasks, common algorithm implementations, etc.), for its startups. This should take place in conjunction with increasing business entrepreneurship and greater political will.

We are at a critical point in which investing big in repeatable building blocks will empower Atlantic Canada's IT sector to write a new chapter in our economic history. We want to end the paradigm in which one-in-ten businesses succeed and replace it with one in which a broad range of startups prosper.

Dawn Jutla is a professor in the Masters of Technology, Entrepreneurship and Innovation Program at the Sobey School of Business, Saint Mary’s University.