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.
On Tuesday, Wattpad announced it was building a new office in Nova Scotia. Calgary had been among the cities bidding to host the company.
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. Alberta has frozen its investor tax credit program, which offered a 30 per cent credit to private investors putting money into companies working in the innovation economy. And in recent months, there’s been increased discussion of Western provinces separating from Canada.
At a forum in Lake Louise on November 29, Calgary Economic Development (CED) CEO Mary Moran told a group of Alberta business leaders, “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 October 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.
“We are excited that Wattpad has chosen Halifax, recognizing our city’s talent, location and cost advantages,” said Halifax Mayor Mike Savage on on Tuesday.
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. 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 Tuesday.
“[Wattpad] was looking to an ecosystem that compliments their personality as an organization. I know Allen and Eva [Lau, 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.
On December 5, Volta announced Eva Lau would join its board. Wattpad and Lau did not respond to inquiries about whether her board appointment was related to Wattpad’s involvement with Volta. Emails to Lau and to Wattpad elicited a response from Rodgers instead, who told The Logic Lau’s appointment was unconnected to Wattpad moving into Volta. He said her position is unrelated to will be unpaid and that she has been an active member of the Volta community since at least 2018, prior to when the request for cities to bid was sent out.
“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.”
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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.
With files from Catherine McIntyre