Radian6 funding is a low risk, analyst says

The provincial governments decision to invest $3.8 million into Radian6 may have kept the Fredericton-based technology darling away from shipping 300 jobs to another province.

Economic Development Minister Paul Robichaud announced on Wednesday the provincial government was handing over cash in the form of payroll rebates to help the social media monitoring company expand its workforce in Fredericton and Saint John.

Radian6 will get up to $12,000 for each of the 300 jobs it is creating in the two New Brunswick cities.

Radian6 is now a mature, reliable company that is attracting the interest from other job-hungry governments, according to David Campbell, a Moncton-based economic development analyst.

"The competitive reality is that a lot of jurisdictions want these jobs, and they're prepared to put incentives on the table to get those jobs," he said.

Radian6 has earned a high-profile inside New Brunswicks business community.

The company was founded in 2006 but expanded quickly and was sold in 2011 for $326 million to Salesforce.com.

When the company was sold, the New Brunswick Innovation Foundation made $9 million, 28 times its initial investment in Radian6.

Robichaud told the legislature on Wednesday that he expects that Radian6s expansion will contribute about $8.5 million to the provinces gross domestic product annually.

The economic development minister said the information and technology sector is one of the priority areas for the provincial government when it comes to attracting new jobs.

Investment criticism

The provincial governments decision to invest in Radian6 is being met with some criticism.

Kevin Lacey, the Atlantic Canada director for the Canadian Taxpayers Federation, said in a message on Twitter that these government subsidies are a "race to the bottom." He advised the provincial government to "save [New Brunswick] tax money than out bid others.

"Cut tax, reduce red tape. These things help all businesses not just the ones friendly with [government], who secure special deals," Lacey said on Twitter.

But Campbell said the provincial government is often criticized for putting money into high-risk companies, especially when they collapse and take taxpayer dollars with them.

The economic development consultant said there is little risk of that happening with Radian6.