Is Canada becoming the new Silicon Valley?

  • Big tech companies like Google have set up their offices in Ontario.
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Published 2019-11-26 08:40

Recent developments suggest that Canada has not only already established itself as another Silicon Valley but is actually also promoted and acknowledged by major technical giants as a good alternative to the existing Silicon Valley in the USA.

A combination of focused government involvement, prioritized university curricula, streamlined immigration policies, and abundant venture capital all ensured the development of an environment conducive to innovation and investment.

Canada’s version of Silicon Valley is situated in southern Ontario and better known as the Toronto-Waterloo Tech Corridor or Innovation Corridor. It is often referred to as Silicon Valley North and is North America’s second largest ICT cluster after Silicon Valley in California. Currently more than 200 000 people are working for no less than 15,000 tech companies, of which 5,000 are startups not older than three years. The Innovation Corridor has the second highest density of tech startups in the world inclusive of the headquarters of major technology companies such as BlackBerry. It is already deemed competition in the tech industry by the USA, China, and other contenders. This status catapulted Ontario from 14th to eighth position in the attraction of venture capital and it also drew more foreign investment than any other North American region in the last couple of years. Further to that Toronto, Edmonton, Montreal, and Vancouver in 2019 were endorsed as the fastest growing tech hubs for innovation in North America. Canada’s tech industry consists of 71,000 companies operating coast-to-coast and providing work to 864,000 Canadians, which totals approximately 6% of the country’s workforce. The economic volume of the tech sector is valued at $6 trillion per year. 

Government’s involvement in boosting the tech sector

The Canadian government, through its Superclusters initiative, invested more than a billion dollars in Artificial Intelligence research and development since 2016 while top universities in Canada also incorporated AI into every dimension of their curricula. 

Importantly, the government strategically adapted its immigration policy to attract the best and brightest tech minds from around the world:

  • The government launched the Global Talent Stream in 2017 to reduce the visa application processing period from 10 months to two weeks for those with experience in IT and STEM-related fields like computer engineering and digital media design. Canada experiences an IT skills shortage of 200,000 jobs that it wants filled over the next few years. From 2017 until 2019, more than 1,000 technology companies have hired more than 4,000 foreign workers through the program.
  • The government introduced the Global Skills Strategy (GSS) that fast tracks immigration for highly-skilled workers that directly to Canada or through U.S. companies. In 2018 GSS over 10,000 applications were received with a 96% visa approval rate.  

In the USA timelines for similar visas are at least 6-10 months. According to the USA’s Department of Homeland Security data, there were 10% fewer H-1B visas issued between October 2017 and September 2018 than in the year before, which represents a continuing downward trend since President Trump took office. As a result, many foreigner tech experts in the USA are relocating to Canada. According to Clay Kellogg, the CEO of San Francisco-based Terminal that develops tech hubs globally, immigration represents a key reason for Canada’s growing status as a Silicon Hub combined with the comparatively lower living costs than in San Francisco and New York.

Recent developments

As a result of the proactive measures by Canada’s government and institutions, its tech capacity matured and developed substantially enough to become a second Silicon Valley through known operations like Shopify, Open Text, and Hootsuite. 

In November 2019, five Canadian companies made CNBC’s 2019 Upstart 100 list namely Attabotics, Calgary; Cmd, Vancouver; Deep Genomics and Nobul, Toronto; and RenoRun, Montreal. These start-ups collectively raised venture capital totaling USD 77 million. 

Earlier in 2019, Vancouver B.C.-based Clio also announced a $250 million funding to further boost the Canadian tech startup ecosystem. This is the largest in Canadian startup history. Even before the Clio announcement, a record USD 3 billion in the first half of 2019 was made available as venture capital to Canadian startups.   

Further promoting Canada’s Silicon Valley status are the establishing of offices in the country by Google, Facebook, and Amazon. Fujitsu in November 2018 also established its global artificial intelligence (AI) center in Vancouver, British Columbia. 

Investing and working in Canada’s tech sector

Foreign companies and tech engineers positively identify the following as attractive prospects to relocate to and invest in Canada’s tech sector: 

  • Vancouver’s proximity to Seattle and San Francisco makes it an easy destination for many West Coast tech operations
  • Canada is the only country that freely trades with every G7 nation
  • In terms of innovation, the tech startup ecosystem in Canada ranks 3rd in the world
  • Canada ranks among the top 20 most political stable countries
  • Foreign companies can receive corporate tax breaks for investing in a Canadian office and any research and development (R&D) work may also be eligible for tax credits
  • The cost of living throughout Canada is lower than in the USA allowing foreign companies to pay lower wages to staff without impacting quality of life. As an example, Montreal’s rent-to-tech wage ratio is 12.6% compared to San Francisco’s ratio of 26.4%.
  • Operating costs are also lower and setting up a physical office offers more value per dollar than in the USA
  • Canada’s government funded health care is cited as a huge perk while its extensive network of incubators and accelerators are also deemed attractive for start-up teams.