If you think about what led to the start of Silicon Valley, it’s not so different from the seeds that spurred tech innovation in Ontario. During the Great Depression, the first high-tech company was created in San Francisco in an effort to create more job opportunities for students. And then, between 1995 and 2005, more than half of start-ups in Silicon Valley were founded by immigrants

With the similarities between the technology scene in California and Ontario being what they are, it’s no wonder that Ontario has been coined the “Silicon Valley of the North.” While Silicon Valley employs nearly 380,000 technology workers along its Highway 101, the region along Ontario’s Highway 401 is home to approximately 1,000 companies, employing 280,000 and bringing in over $30 billion annually to the international economy. And while Kitchener-Waterloo-based tech companies have spurred national attention, groundbreaking technology innovation can be found in cities throughout Ontario.

Ontario is quickly becoming a global leader in technology innovation. In this article, we explore the factors driving this reputation and some standout tech innovation activity in the province.

 

Technology innovation in Ontario: key takeaways

  • Ontario has a rich and diverse pool of tech talent. One reason for this is because Ontario has a strong university system, which results in local talent and contributes to innovation at early-stage companies. Canada also has strong rates of immigration, bolstered by government-backed initiatives that encourage skilled newcomers to settle in the country.
  • In terms of invested capital, Canada is the third-most productive tech ecosystem in the world. This partly owes to the availability of angel investors and government-backed funding programs. 
  • Canada has a low cost of living, as well as a government-funded healthcare system. This can be advantageous to Canadian tech companies because the cost burden of healthcare doesn’t fall on the shoulders of the employer, giving tech companies a leg-up when it comes to realizing revenue. 
  • Technology companies founded in Canada are thriving. For instance, Wealthsimple and Clearco (formerly Clearbanc) are sitting at $5-billion and $2-billion valuations, respectively. The same goes for tech companies that were created elsewhere and have expanded operations to Canada. For example,  Shopify,  Nuvei Corp., and Instacart have market capitalization rates of $182-billion, $10-billion, and $54 billion, respectively.

 

Unparalleled local talent 

One of the main factors driving Ontario’s tech giant status is the fact that the province has a rich and diverse pool of talent, at both the professional and intermediate level. This owes, in part, to Canada’s stance on immigration, which we will explore more in the next section. Another factor that bolsters the talent pool is the strong university system.

Some of Canada’s top post-secondary institutions for tech innovation include the University of Waterloo, McMaster University, Western University, University of Ontario Institute of Technology, and Niagara College Research & Innovation. With so many capable candidates being educated in institutions right here in the province, tech companies have the opportunity to recruit locally, contributing to the revolving door of innovation at early-stage companies.

And while there is certainly competition for tech talent in Ontario, there’s far less rivalry than there is in California or New York.

 

Strong rates of immigration

It’s no secret that immigration is a fundamental pillar of the Canadian economy. Immigration is also a fundamental pillar of Canada’s technology scene. As such, the Canadian government is actively finding ways to attract foreign tech talent. One example of this is the Global Talent Stream, launched in 2017, which connects Canadian employers with highly-skilled foreign talent. Another is the Temporary Foreign Worker Program. These programs differ from other visa programs in that, in terms of processing time, workers can be admitted into Canada in as quickly as a month.

Canada’s stance on immigration starkly contrasts that of the US. Under the Trump presidency, immigration policies were tightened, giving Canada the edge when it came to top global talent and capital. Today, Canada has six times as many skilled immigrants compared to the US. More granularly, 80,000 tech jobs were created in the Toronto-Waterloo Corridor alone between 2013 and 2019. That’s more than the US tech giants—San Francisco, Seattle, and Washington—combined. More recently, Canada has welcomed 70,000 new permanent residents so far in 2021. This is in keeping with an announcement made last year by the federal government, which expressed plans to bring over 1.2 million new immigrants into the country over the next three years.

By not only growing but diversifying the pool of professionals in the tech space, Canada is making itself privy to different points of views, skill sets, and approaches, all of which can be incredibly advantageous when it comes to creative, out-of-the-box thinking and the development of innovative products and services.

No shortage of funding

According to StartupBlink’s 2020 global startup ecosystem rankings, Canada now has 2.9 percent of the top 1,000 technology ecosystems globally. And with regards to return on invested capital, Canada is the third-most productive tech ecosystem in the world. 

This partly owes to a variety of public and private/angel investors, including but not limited to the Federal Government’s Venture Capital Action Plan program and Canada’s Venture Capital And Private Equity Association. More granularly,  the Ontario Emerging Technologies Fund (OETF) has invested 105-million, combined with a partnered investment of 350-million, into innovative, high-growth, private, Ontario companies. And in June, the Government of Ontario announced that they will be committing $100-million towards a new fund focused on supporting high-potential tech companies in the province.

One more factor to consider is what it costs to employ a workforce. Not only does Canada have a lower cost of living than California, but Canada also has a government-funded healthcare system. This way the cost burden of healthcare doesn’t fall on the shoulders of the employer, giving tech companies a leg-up when it comes to realizing revenue. 

 

The evidence is in the dollars

Now, let’s talk numbers. Shopify came to Canada in 2006. Today, it has reached a market capitalization of $182-billion and has a revenue of 2.93 billion USD. And Nuvei Corp., which came to Canada in 2003, has a market cap of $10-billion. Meanwhile, Wealthsimple and Clearco (formerly Clearbanc), both of which are Canadian companies, are sitting at $5-billion and $2-billion valuations, respectively. Finally, Instacart, which was built by a graduate of the University of Waterloo, came to Canada in 2017. Today, Instacart has a market capitalization of $54 billion and a revenue of $1.5 Billion USD.

 

Technology innovation activity throughout Ontario

 

The bottom line: tech innovation will have far-reaching benefits across Ontario communities

Like growth in any sector, technology innovation in Ontario is bound to be extensively advantageous to the province’s communities and industries. Because of the massive opportunity tech innovation has to add jobs to the market, the province will be a great destination for immigrants and interprovincial migrants alike in the years to come. As for real estate, housing demandand particularly rental demandin submarkets such as Kitchener-Waterloo, Hamilton, London, and Niagara will not only persist, but deepen, as newcomers flock to these regions in search of employment or to spearhead undiscovered tech innovation in communities that can support it.

 

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