Of all the major technology hubs across Canada, the Toronto region in particular is gaining a worldwide reputation as a vibrant and welcoming destination for tech-centric companies to grow and thrive, largely because of the innovative and collaborative culture so deeply instilled in its diverse tech community. For start-up founders, SMEs, academics, university students and global firms alike, Toronto functions as a dynamic incubator where a range of technologies are evolving, including fintech, artificial intelligence, cybersecurity, big data analytics and more.
According to Tech Toronto, an organization that supports and monitors the local community, over 400,000 technology jobs existed in the Toronto tech sector in 2016. Many of these jobs were distributed among Toronto’s active tech start-ups, estimated to number between 2500 and 4100. Canadian companies like Slack, Hootsuite and Shopify, who are not based in Toronto, have opened offices in Toronto to tap into the talent pool and grow the business. These fast-growing enterprises have been largely responsible for attracting a wealth of international venture capital (VC) investors. In 2016, Toronto accounted for 34% of an impressive $1.7 billion of VC funding invested in Canada.
In recent years, there has been an abundance of world-class tech talent pouring out of universities and colleges in the Toronto region. Combined with significant government support for incubators and accelerators, and public-private partnerships, it’s not hard to see why Toronto’s tech eco-system has grown leaps and bounds to establish a commanding presence on the world-stage, and is finally enjoying the level of recognition it deserves.
Homegrown Start-ups a Big Draw for VC Funding
With a winning combination of proven business models, backed by serious cash from international VCs, Toronto is fast becoming a hotbed of successful start-ups. Fintech, artificial intelligence, insurtech, blockchain and cybersecurity are just some of the up-and-coming sub-sectors that are rapidly gaining traction in the start-up scene.
Since artificial intelligence (AI) is all the rage these days, it only makes sense to lead with an AI example …
Canadian born Steve Irvine, a former Facebook executive, chose Toronto to design and develop his AI startup, geared to enable large enterprises to increase both client interaction and revenue growth by training their AI-enabled solutions. His main motivation for choosing Toronto over Silicon Valley was for its exploding pool of regional AI and engineering talent. Clearly it was a very smart choice, because the start-up succeeded in raising $5 million earlier this year.
Top Hat, billed as “a complete teaching solution”, enables students to learn interactively via their mobile phones. Ranked 18 th in Deloitte’s 2016 Technology Fast 50™ Program, Top Hat’s promising trajectory gave rise to $29.5 million in Series C funding by investors in February of this year. Dramatic financing results were also achieved by fintech-focused Sensibill, a company that helps banks generate customized digital receipts for their customers. In early March, Sensibill managed to raise $17.3 million to increase research and development in AI and to fund its global expansion plans.
Last but not least, insurtech start-up League secured $25 million for its health insurance app, designed to enable employers and small businesses to offer insurance plans to their employees for dentists, chiropractors, dieticians and so on. Other noteworthy tech companies thriving in the Toronto tech landscape include Shopify, Hubba, Influitive, Wealthsimple and Wattpad.
Compelling Destination for Foreign Businesses
Toronto is becoming equally attractive to foreign tech companies of every size. Paytm, India’s leading fintech start-up, chose to develop its lab in Toronto because the appealingly close links between the financial and technology sectors paved the way for the sourcing of talent with a proven history of solving problems similar to those Paytm needed to solve. PayCommerce, a fintech firm from New Jersey that specializes in cross-border payments, decided to launch a research and development operation in Mississauga because of the easy access to talent, proximity to the financial services center and the potential to partner with leading academic research institutions. WeWork, a coworking space provider based in New York City has decided to take up 60,000 square foot of office space in downtown Toronto to capitalize on the growing entrepreneurship energy.
This burgeoning trend is further demonstrated by Toronto’s 4 th (up from 6 th last year) place rank in FDi’s 2017/18 American Cities of the Future Report, which analyzes greenfield foreign direct investment across North and South American cities. Points of comparison among the cities included economic potential, business friendliness, human capital and lifestyle, cost-effectiveness and connectivity. Brampton and Mississauga also featured prominently in the report.
Let’s not forget about these massive international ICT companies, each of which exerts a strong influence in shaping the city’s tech sector, that house their Canadian headquarters in the Toronto region:
- IBM Canada, Markham
- Alphabet (Google), Toronto
- HP Canada, Mississauga
- Cisco Systems Canada, Toronto
- Microsoft Canada, Mississauga
For example, IBM has partnered with the Ontario government to provide funding and next-generation technologies that will support 500 SMEs to grow and compete in the global arena. GM Canada will be opening a 15,000 square foot technical center in Markham to conduct research and development on autonomous cars, with the potential to create up to 700 high-quality jobs. More recently, controversy prone Uber is entering the autonomous driving boom in Ontario by launching a new research hub in Toronto with strong intentions to capitalize on the artificial intelligence expertise of the Vector Institute. With cutting edge tech investment pouring in, it is not surprising that Expert Market ranked the Toronto region third out of 20 global tech hubs, ahead of Silicon Valley, Boston and Tel Aviv.
Fostering Synergy in the Tech Community
The creation of synergy among governments, academic institutions and public and private stakeholders is a critical component of Toronto’s successful tech ecosystem. A great example of this is the Toronto Financial Services Alliance (TFSA), a public-private partnership tasked with fostering the connection between the regional financial services cluster in relation to government, financial institutions, start-ups and academia.
In March, I attended a Finance Cybersecurity conference hosted by the TFSA in collaboration with the Ontario Centres of Excellence. The conference provided a platform for experts from financial institutions, fintech companies, universities and government to discuss some of the challenges they face, and brainstorm solutions and opportunities to collaborate. This is just one example of a multitude of tech-related community-driven events. Yesterday evening, I stumbled into a blockchain event at MarSDD organized by the
Canada Bitcoin Blockchain meetup where Alex Tapscott was the keynote speaker. It was probably the
biggest blockchain/bitcoin event in Canada, ever! The sheer number and variety of such events in Toronto is mind-boggling … just check out the events
page at TechTO.
For anyone interested in learning about a certain type of industry or technology, searching for meetups is another great place to start. From HackerNest meetups geared towards emerging tech industry trends, to highly-specific artificial intelligence meetups that focus on recommender systems or neural networks, you’ll be sure to find a variety of options to cherry-pick from.
Incubators and Accelerators – The Nurturers
The start-up scene in Toronto created a vacuum for tech incubators and accelerators to swoop in and provide critical supporting services to both early- and later-stage start-ups for accessing VC funding, mentorship, working spaces, and other business services. A few of the most notable examples include DMZ, MaRS and OneEleven.
This irresistible start-up hype recently convinced prominent US-based accelerator, Techstars, in partnership with Real Ventures, to get in on the tech action by setting up shop in Toronto. David Brown, co-founder and co-chief- executive of Techstars,
supported the move to Toronto because of its “incredible ecosystem”.
The ever-increasing support network for incubators and accelerators, often in partnership with corporate players, enables a higher percentage of companies to successfully commercialize their products and scale globally, which in turn advances the very same ecosystem that they are a product of.
Federal & Provincial Budget Recognizes Tech Sector’s Potential
The recently
released 2017 federal budget and Ontario’s provincial budget included several initiatives clearly intended to support and nurture the continued advance of technology-related business ventures, both in Toronto and across Canada. The
Global Skills Strategy initiative, expected to launch in mid-June, will allow technology businesses to acquire international talent within weeks. This is an important development as early-stage technology companies need this talent to scale quickly.
Superclusters
Designed to bolster Canada’s global growth and competitiveness, $950 million in federal funding will be distributed on a competitive basis around the country to support clusters that can catalyze economic growth in the tech sector. The government of Ontario is
investing $80 million in the Autonomous Vehicle Innovation Network in partnership with the OCE in an effort to prepare the province infrastructure and transportation network for self-driving cars.
Artificial Intelligence
The Canadian Institute for Advanced Research (CIFAR) is administering funding for a $125 million Pan-Canadian strategy to “promote national collaboration, develop a robust AI talent pipeline, attract companies seeking to invest in AI, and build a Canadian AI brand.” In addition, both the federal and Ontario governments have come together to launch the Vector institute with funding totaling around $100 million. Google, Thomson Reuters and Accenture are some of the 30 corporate sponsors of the institute that are putting up $80 million.
Venture Capital Support
To replace the expiring Venture Capital Action Plan, the Business Development Bank of Canada will administer funding for the Venture Capital Catalyst Initiative, providing $400 million over three years to promote growth of late-stage Canadian companies. On the province side, the Ontario government is expanding the Business Growth Initiative to $650 million over 5 years. This initiative is targeted towards helping innovation-driven SMEs grow and compete internationally.
Endless Opportunities, Limitless Growth
In the global technology realm, it’s becoming progressively evident that Toronto is a place that has everything going for it. In addition to its flourishing reputation as a lively ecosystem that embraces tech businesses, Toronto has repeatedly placed highly in international rankings as one of the most liveable, competitive and innovative urban centres that tech businesses can call home.
The “Canada” brand further elevates Toronto’s viability as a centre of excellence, and the city in turn has contributed significantly to growing the strength and visibility of the national brand. To the global community, Canada represents inclusivity, health, safety and trustworthiness. By choosing to have a presence in the Toronto region, all businesses, regardless of whether they are Canadian or foreign, will be perceived and ranked among the ever-increasing numbers of elite members that reinforce these standards.
Written by Salman Khan Senior Advisor, Investment Attraction
Salman Khan is a Senior Advisor at Toronto Global, a government funded not-for-profit agency that helps international companies expand to Toronto Region. You can reach out to Salman at skhan@torontoglobal.ca if you are interested in learning more about how Toronto Global can assist in expanding your business to Toronto.
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