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B.C.’s Okanagan startup industry spurs legal work

B.C. Regional Wrap
|Written By Jean Sorensen
B.C.’s Okanagan startup industry spurs legal work
Kelowna’s ability to attract new tech sector firms is based not only on its workforce with technological savvy, B.C.’s third largest city also boasts an enviable lifestyle appealing to both established and new entrepreneurs.

B.C.’s Okanagan incubator atmosphere for new technology startups is spurring work for the legal sector as support ranges from incorporations and patents to multi-million-dollar transactions. According to a local 2016 study, the technology sector is valued at $1.3 billion — and growing — with 600 companies employing 8,000 individuals.

High-profile companies in Kelowna include Disney Interactive, Bardel Entertainment (Teenage Mutant Ninja Turtles and Rick and Morty), QHR Technologies (medical records), AgriForest Bio-Technologies (plant tissue cultures) and Data Nerds (real estate industry). One of the larger 2016 sales saw Vernon resident Myles McGovern sell his Kelowna firm Immersive Media for $100 million to the Hong Kong company Digital Domain. The massive media and entertainment firm provides special effects to major films, including past winners such as Titanic, Benjamin Button, Maleficent, X-Men and Iron Man 3. It was the second largest deal in the Okanagan since Disney bought Club Penguin for $350 million a decade ago. McGovern is also the co-inventor of the 360-degree, spherical camera with the technology used by Google to develop its Google Street View in 75 cities.

“There is an energy in the city in the technology sector,” says Michael Macaulay, a partner at  Lawson Lundell LLP, which opened an office in Kelowna in 2017. Visitors compare the energy and excitement of the startup atmosphere as reminiscent of Silicon Valley in the early Seventies, he says.

Lawson Lundell’s new office is in Kelowna’s $35-million Okanagan Centre for Innovation, a technology hub for emergent and mature companies with support companies housed within. Lawson Lundell hired a local technology lawyer and others followed. Macaulay, who had been travelling for years between Vancouver and Kelowna, moved in the spring, bringing the number of lawyers in the office to four with the ability to handle tech issues ranging from startups through to development, including tax and intellectual property law.

Kelowna’s ability to attract new tech sector firms is based not only on its workforce with technological savvy, B.C.’s third largest city also boasts an enviable lifestyle appealing to both established and new entrepreneurs. “There is an atmosphere of work hard and play hard,” Macaulay says. It’s a four-season area offering skiing in winter and lakes for water sports in summer, not to mention it is the heart of B.C.’s wine industry.

“These are people who want to make their own schedule and may want to take two hours off to have fun and then go back to work. That’s difficult to do in the city,” says Steven Morrison, a lawyer with Farris Vaughan Wills & Murphy LLP in Kelowna.

As part of his practice, Morrison has worked startups for the past two years. “You go from the beginning and they are looking at incorporation, financing and investment. You watch them go to the next part and also get involved if they are selling,” he said. “It is really exciting and you feel you part of a team.”

Morrison says an advantage for entrepreneurs derived from the firm’s multi-offices in B.C. is the ability to draw on a range of expertise. “We have had quite a few lawyers working with them and lot of partners before this big boom and the radar went off on the industry.”

An indication of how prevalent the Okanagan has become in the tech sector, says Morrison, is the July appointment of Raghwa Gopal, CEO and founder of Accelerate Okanagan, to B.C.’s new 14-member Emerging Economy Task Force on technology development and growth. Entrepreneur and startup specialist Gopal is involved with growing new businesses through Accelerate Okanagan, which works with entrepreneurs providing support services. (Pushor Mitchell LLP’s Blair Forrest, who also handles technology companies, is a board member along with Macaulay.)

Whiteboard Law’s James Mutter, who handles corporate, commercial and technology law as well as advises on financing, began representing technology companies in 1991 as a partner for Fasken Martineau DuMoulin LLP and organizing a large Vancouver technology practice. Intrigued by the whole process, he stepped away from law and became involved in a startup as a partner in 2000 (the company was later sold). “It was a fascinating experience being part of a startup,” he said. “As a lawyer, you are trained to give advice and build consensus. In the early days of a business, you are told to make a decision. If it is a mistake, fix it. It’s a different approach,” he says.

Mutter moved on to become president of the former B.C. Liberal government’s Premier’s Technology Council. By 2009, he was in Kelowna and returned to law with a wide breadth and depth of the technology industry. Mutter travels between Kelowna and Vancouver and is focused on mainly large dollar deals in Vancouver and currently working on a proposal to raise $120 million.

But, Kelowna’s buzz in the tech sector reminds him of Vancouver’s early-start days 30 years ago when he started, Mutter says. But the sector’s growth rate is faster. “It is definitely punching above its weight,” he says.

Kelowna’s success results from the “ecosystem” in place in the city, Mutter says. There are two educational outlets: the University of British Columbia Okanagan and Okanagan College Centre of Excellence, which both have innovation and technology programs. As well, there is a historical base of seasoned tech support individuals and companies able to mesh with ideas people. The atmosphere is also appealing to Vancouver tech companies who find lower-cost office space in the Okanagan, while U.S. clients find the exchange rate a bonus. It has all combined to create “a critical mass” powering the industry growth, he says.

“The Valhalla Angels are right across Western Canada and there is an active group in the Okanagan,” Mutter says, as they actively get companies investment ready. The Valhalla Angels group has brought more than $54 million in private capital to fund nearly 200 Western Canadian deals.

Mutter estimates that there are approximately 15 lawyers and five law firms in the Okanagan area currently doing startups and technology-related law, but there is room for more. “I don’t know why there are not 20 firms,” he says, adding that firms could easily move in a three-to-four-year call associate. For a young lawyer deciding to move to the Okanagan, “that’s not a tough call,” says Mutter.