Three necessary ingredients -- money, talent and a flow of innovative ideas -- are converging to make Canada a global technology development contender.
In the last 18 months, Canada’s tech companies have attracted larger venture capital investments, indicating a class of maturing businesses with promising market opportunity. The average dollar amount per deal rose from $4.4 million in 2013 to $5 million in 2014.ii Twenty-one companies collected more than $784 million.
Further, the speed at which early funding is followed by second and third round funding is accelerating. While historically seven or eight years separated first and second round funding for Canada’s startups, that gap is decreasing to the two to three year pace experienced by Silicon Valley companies. As venture capital firms get more exposure to the quality of Canada’s startups, their investment is a sign of significant sector growth on the horizon.
In addition to the flow of talent to the new, fast-growing tech businesses, Canadian universities are also feeding the talent market by building programs to develop resources with technology skills, and private enterprises are investing as well. For example, SAP launched a program in Canada to promote technology careers through investment in science, technology, engineering and math education.iii
MaRS, a non-profit public-private partnership in Toronto is dedicated to supporting and accelerating innovative companies by providing venture services, funding and facilities. This initiative has helped create over 5,000 jobs and raise $1.3 billion in capital.iv Both federal and provincial governments have also made it easier for employers to obtain the talent they need by providing several funding programs, be it in the form of tax breaks, direct grant endowments or wage subsidies.
Ambition and innovative ideas have always been prevalent among tech entrepreneurs in Canada. The mentorship network is strong and Canada’s ability to nurture innovation is improving. Increasing availability of funding and talent provide greater opportunity to help build ideas launched in garages into businesses of global scale.
To further encourage innovation, Canada now actively targets immigrant entrepreneurs with the skills to build businesses and create jobs in Canada. Canada’s Start-up Visa Program is the first of its kind in the world, enabling entrepreneurs to immigrate to Canada if they can get support for their business ideas from one of a group of designated organizations.v
Whether it is in Vancouver, Toronto, or the Waterloo area, the components are coming together to signal a positive outlook for the tech sector. The expanding technology
ecosystem of Silicon Valley North is likely to continue to outpace Canada’s overall economy and just might be Canada’s ticket to economic recovery.
i El Akhad, Omar, “As economy falters, the tech sector continues to climb”, The Globe and Mail, September 13, 2015, http://www.theglobeandmail.com/report-on-business/as-economy-falters-the-tech-sector-continues-to-climb/article26349564/
ii Dingman, Shane, “Who needs Silicon Valley? Canadian Startups Scoring Bigger Deals”, The Globe and Mail, February 10, 2015, http://www.theglobeandmail.com/report-on-business/small-business/sb-money/business-funding/who-needs-silicon-valley-canadian-startups-scoring-bigger-deals/article22904528/
iii Reid, Andrew, “Keep An Eye On Talent And Tech In Canada”, TechCrunch, October 20, 2015, http://techcrunch.com/2015/10/20/canadian-startups-the-entrepreneur-to-moose-ratio-is-narrowing/
iv MaRs website accessed November 9, 2015, https://www.marsdd.com/about/results/
v Start-Up Visa, Government of Canada, http://www.cic.gc.ca/english/immigrate/business/start-up/