Wattpad chose Halifax over Calgary as the site of its second headquarters, citing concerns about Western separatism and cuts to Alberta’s tax credits for tech companies, The Logic has learned.
Toronto-based Wattpad has announced it was building a new office in Nova Scotia. Calgary had been among the cities bidding to host the company.
At a forum in Lake Louise on Nov. 29, Calgary Economic Development (CED) CEO Mary Moran told a group of Alberta business leaders that “We, as an organization, just lost a 1,000-person company that didn’t come to Calgary, selected another city, because they’re concerned about Wexit.” Moran declined to identify the company at the time.
The Logic has learned that company was Toronto-based Wattpad, a tech firm with fewer than 200 employees that hosts user-generated fiction; the platform has over 80 million monthly users.
According to a source familiar with the negotiations but not authorized to speak publicly, the firm outlined its concerns in a written statement sent to CED. Earlier this year, Wattpad issued a request for proposals to cities interested in housing its second headquarters.
Candidates had to be within a three-hour flight of Toronto and have fewer than 1.5 million people, according to a Globe and Mail report. CED submitted a proposal.
In August, Alberta Premier Jason Kenney’s United Conservative Party (UCP) government froze the Alberta investor tax credit program, which offered a 30 per cent credit to private investors putting money into companies working in the innovation economy.
And there’s been increased discussion of Western provinces separating from Canada since the Oct. 21 federal election, which saw Prime Minister Justin Trudeau’s Liberals re-elected as a minority while failing to win a single seat in Alberta or Saskatchewan.
Moran did not directly respond to questions about whether Wattpad raised concerns beyond Wexit and the tax changes. “We were grateful for the opportunity to respond to Wattpad’s Request For Proposal, and congratulate Halifax on its success,” she told The Logic.
Halifax Mayor Mike Savage said that “We are excited that Wattpad has chosen Halifax, recognizing our city’s talent, location and cost advantages.”
Wattpad declined to respond directly to The Logic’s questions. “We don’t have any comment about the cities we spoke with for this process,” said spokesperson Kiel Hume. Wattpad’s RFP said it would prefer a host city willing to help secure government subsidies, according to The Globe.
(Wattpad) was looking to an ecosystem that complements their personality as an organization
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Volta CEO Jesse Rodgers
Halifax’s bid was a joint initiative that included Dalhousie University, the Atlantic Canada Opportunities Agency, Nova Scotia Business Inc. (NSBI) and the innovation hub Volta, Volta CEO Jesse Rodgers told The Logic.
“(Wattpad) was looking to an ecosystem that complements their personality as an organization. I know Allen (Lau) and Eva (Allen’s spouse and Wattpad’s former head of community), both are interested in the smaller cities – the Winnipegs, the Edmontons,” said Rodgers, whose incubator will house Wattpad in early 2020 until it grows big enough to require standalone office space.
“If you think about Wattpad back when they were starting, they were one of the first companies to say, ‘We can do this in Toronto,’” said Rodgers. “I think they like the early part of an ecosystem. They can really add a lot to the ecosystem.”
NSBI offers several business incentives for firms operating in Nova Scotia, including payroll rebates and an “innovate to opportunity” program, which provides up to 35 per cent of the salary of a new graduate working in tech.
It would not comment on whether Wattpad has indicated it would apply, or whether it has already been offered incentives under these programs. “NSBI does not discuss whether anything is in the works – that’s not how good business is conducted,” said spokesperson Shawn Hirtle.
Alberta’s previous NDP government set up a series of programs designed to encourage tech firms to grow in the province, but the UCP cancelled many of them since taking power after April’s provincial election.
They have so far ended a $5-million tax credit for capital investment, and credits for scientific research and economic development as well as interactive digital media tax credits. All in, the government claimed those cancellations would save over $400 million by 2022–2023.
Kenney’s office did not reply to a request for comment.
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