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Communitech lays off 15 employees following 30 per cent cut in provincial funding

Anthony Reinhart
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Communitech has laid off 15 of its 105 employees in response to a 30 per cent funding cut from the Ontario government, The Logic has learned.

The layoffs are part of a 10 per cent cut Communitech will make to its overall budget—about $2.2 million per year—in response to the province’s rollbacks.

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The layoffs took place earlier this week across several departments, including marketing, finance, events and data. Communitech will lose 30 per cent of its funding from the province. The incubator received $7.5 million from the province in 2018.

“Having to let some of our team go was a difficult decision, and this was a challenging week,” Communitech CEO Iain Klugman told The Logic. “However, we’ll be working with the tech community in Waterloo Region to make sure that all of those affected find their next job.”

Christine Wood, press secretary to Ontario’s economic development minister, did not directly reply to questions about how much Communitech’s funding had been cut, or whether other marquee incubators like MaRS and Invest Ottawa had been affected.

“We have a great working relationship with MaRS and Communitech. They want to be self-sustaining. We think that should be the goal and we will work with them to make it happen,” said Wood.

Despite the cuts, Chris Plunkett, the organization’s outgoing vice-president of external relations, said the incubator is in a good position.

“We’re very confident in our ability to continue to deliver for the tech sector from Waterloo going forward,” Plunkett told The Logic. “The organization is strong. We have continued provincial funding, we have federal, we have the private-sector funding.”

Plunkett is also leaving Communitech, but not as a part of the layoffs. He will become the head of global communications at OpenText, a Waterloo-based software company with a market cap of US$11 billion.

Klugman noted that the incubator has relied less on public funding in recent years. It received 76 per cent of its funding from the provincial and federal governments in 2014; in 2018, that number fell to 42 per cent. “We have doubled our private revenue over the last three years and have received federal funding that will allow us to continue supporting the Waterloo Region tech community.”

“We have been in touch with the government preparing for this possibility and understand the rationale,” said Klugman.

In April, The Logic reported that the Ontario government planned to cut funding to Communitech following an announcement by Prime Minister Justin Trudeau of $18 million in funding over five years for the incubator. MaRS and Invest Ottawa got $17.9 million and $16 million, respectively.

At the time, Communitech CEO Iain Klugman told The Logic, “We expect to get a small reduction, keeping in line with the province’s approach to their fiscal situation.”

MaRs and Invest Ottawa did not immediately reply to a request for comment.

“These federal investments are coming at a time when the provincial Ford government continues to slash support to these important organizations,” said Dani Keenan, press secretary for federal Innovation Minister Navdeep Bains. “We were disappointed to learn today, that these cuts will result in 15 lost jobs.”

More to come