It is now called the Silicon Valley of the North. Indians in the tech industry looking for a more ‘secure’ alternative to the US, are joining 230 other nationalities who call the city of Toronto their home.
With half its population born outside Canada, Toronto is considered the fastest growing workplace for the tech industry in North America, beating New York and San Francisco (SFO) in job creation.
A 50-city survey of 2017 shows that Toronto added 22,500 new tech jobs, compared to 5,370 in New York and 11,540 in SFO. Coldwell Banker Richard Ellis (CBRE), a global realty group produced this survey -- the North American Scoring Tech Talent Report.
There are striking geographical similarities between Silicon Valley, California and Toronto's tech industry. The Valley is a 300-km-stretch of tech firms from Santa Rosa to San Francisco while Canada's ‘Silicon Valley’ is a 112-km stretch that begins in Toronto and stretches to the sister cities of Waterloo and Kitchener, making it the second-largest innovation super cluster in North America.
It accounts for 60% of all innovation in Canada, and is home to over a thousand tech companies such as Google for Entrepreneurs Technology Hub and RIM (of Blackberry fame).
University of Waterloo, Canada's top engineering school, competes with Stanford and MIT (Massachusetts Institute of Technology), and is one of only three universities at which Google hunt for talent. The university also houses Velocity Garage - the world’s largest free start-up incubator for entrepreneurs.
“We were tired of watching Google poach on our best graduates from the University of Waterloo and suck them down to California,” said Canadian prime minister Justin Trudeau to Eric Schmidt, executive chairman of Alphabet Inc (which spawned Google), during an informal chat at a conference.
While the exchange was light hearted, the industry is, in fact concerned about the drain of talented students from Canada’s top universities. This has led to a concerted effort to solidify the country's leadership role in Artificial Intelligence (AI) by pumping $125 million into a Pan-Canadian Artificial Intelligence Strategy to retain top academic talent and develop AI institutes.
The market for AI-related products is expected to reach $47 billion by 2020. There are also plans to boost Canada’s position in Fintech, clean technology, digital, health and biosciences is also on the charts with Ottawa's 2017 budget providing $950 million to build more "innovation super clusters" in the country and $2.2-billion in new clean-tech spending.
"Canada’s tech investment has reached $1.3 billion in the first quarter of 2018. This is an incredible feat for a country of only 36 million," says Abdullah Snobar, executive director at Ryerson University’s accelerator, The DMZ, in Toronto. DMZ is a leading accelerator for tech startups, helping them to network, mentor, and eventually scale their businesses.
According to a report by the Canadian Venture Capital and Private Equity Association (CVCA,) investments in ICT companies (information and communications technology) continued to receive the majority (64%) of total $1.1 billion, VC dollars invested in the first half of this year.
The upward graph in tech investments is also due to Canada's traditional sectors embracing AI or data to better their business, and thus creating more opportunities for investors in those sectors.
Research director, Darrell Pinto at the CVCA says, “The line of tech is getting blurred. It used to be very distinct silos between tech, clean tech, life sciences and agribusiness, but increasingly with the usage of AI, what we are seeing as a ‘tech investment’ could be what is a traditional life sciences investment.”
For instance, life sciences was a traditional pharmaceutical pipeline of growth (with investments). But the manner in which big data or AI is used in that sector, has become very valuable, and now applications of big data or even AI in different life science streams have become a big growth opportunity.
The farming sector has also seen an increase in tech investments as companies use and build satellite data to create intelligence around where and how to farm more efficiently.
The tech industry is also seeing some new interest from private equity firms. Economic realities of a bullish stock market and high company valuations has made it expensive to buy companies.
And, over the last five years, the slump in the oil and gas sector, which, traditionally, was a big driver for private equity investment in Canada, has also forced them to hunt hard for companies with high returns.
''What we see in the first half of 2018, is private equity firms making smaller deals into a non-traditional sector, for them, at least--- which is in tech," says Mr Pinto.
A report on investments by private equity firms shows that the No1 investment is in the industrial and manufacturing (traditionally dollars come into this sector), but the second-largest is investments is in ICT or tech companies. "That's unusual, to see tech so high up on that list, in terms of dollars and number of deals."
Canada's brand as a country ripe for tech investments has also prompted the tech-focused California-based Silicon Valley Bank (SVB) to open a lending branch in Canada by next year.
With $51 billion in assets and, a global partnership with 2,300 VC and private equity funds, the Bank will provide in-market commercial banking solutions to Canadian companies and their investors in the Canadian tech and life sciences sector.
Barbara Dirks, head of SVB Canada, who spoke from California, says the Bank sees a great outlook for Canada as they see the large number of early stage companies, accelerators and the type of VC investment happening.
This, combined with "fantastic growth" in the corporate ventures arm of many US companies like Microsoft and Google, makes for great opportunities for them.
Ms Dirks says they have a ‘unique understanding of risk’ having been in the business for 35 years, dealing with all stages of a tech company.
Connecting Canadian clients with VC managers in Asia, for instance, or providing them insights into what works and what does not is just some of the value-added services Canadian companies will gain from SVB's tech industry experience.
While all these domestic endeavours seem to be working, it must be underscored that the political uncertainty caused by Donald Trump’s policies have influenced the flow of talent from US to Canada.
A record number of companies have seen a 'doubling of resumes' from last year and chief executive officers (CEOs) are penning Op-Eds in the media of a "brain gain for the first time in years."
"Many folks who move here wish to have their own startups and its simpler than it used to be- say 10 years ago," says Vikram Rangnekar, a software engineer and an ex-employee of LinkedIn, who migrated from California in 2016.
His website https://movnorth.com/
, which gets huge traffic from the US-tech world and elsewhere, has progressed from fielding queries about Canada to matching prospective job-seekers with Canadian employers looking for talent.
But Canadian companies are also exploring opportunities outside ‘safe’ markets like the US and UK.
For instance, Communitech, a Waterloo-based public-private innovation hub and Hyderabad-based T-Hub (a global startup catalyst), have teamed up for a Global Bridge Program, to help Canadian companies accelerate their business and look for opportunities in India.
Canadian Digital Media Network, (CDMN), founded by Communitech, runs the Canadian program here and T-Hub handles the business at Hyderabad in India.
Scott Rairdan, specialist, international programs for CDMN says, "Canadian tech companies are recognising that the Canadian market is not large enough for them and so companies that we are working with know they have to go abroad."
CDMN advises them on how to navigate foreign markets.
Companies in clean tech, sustainable infrastructure, health, biotech and B2B enterprise solutions will be shortlisted and will then receive virtual coaching lessons to make them India-ready, while they work on validating their business models, pricing, and product adaption.
In Hyderabad, they will be introduced to Indian companies and multinationals for sales and networking around the country.
Canadian entrepreneurs plan to visit India for three weeks this November to start their journey with India. It will be interesting to see how this collaborative effort works out.
(Rakshande Italia is an Indian journalist, who immigrated to Canada in 2001 and has worked with several top newspapers in India and Canada. She can be contacted on [email protected]