Waterloo, Silicon Valley of Canada
Spectrum 28 recently launched a partnership with University of Waterloo, my alma mater, to establish a student venture program for graduate and undergraduate students, and last week I had the privilege of meeting a variety founding teams and startups from the Waterloo community. The program will provide funding, mentoring and resources for students looking to develop their ideas and find new ones. But it’s not just our partnership that keeps me coming back to Waterloo.
Waterloo demands attention
In fewer than ten years, Waterloo has become one of the world’s top hotspots for entrepreneurial-minded tech talent.
So far, 182 former Waterloo students have founded 500+ companies and startups, raising over $2.6 billion. With 1,1100 startups to 500,000 residents, the city itself has the densest population of startups of any city outside of Silicon Valley. Upon the completion of the Waterloo-Toronto corridor, the area will become Canada’s #1 innovation hub — and that’s no coincidence. So what makes Waterloo so special?
Something in the water
Waterloo is one of few universities that lets academics and students retain all rights to their creations. If you invent it, you own it. This fact alone has drawn thousands to Waterloo. Plus, students are constantly encouraged — and challenged by their peers — to pioneer. Waterloo emphasizes the importance of the process of discovery, from the actualization of pre-existing ideas to the finding of new ones. Our partnership capitalizes on this pre-existing culture, bringing even more opportunities for students to identify and develop winning ideas.
Waterloo is the engine of the surrounding entrepreneurial ecosystem, worth about $3.1 billion. From running one of the largest co-op programs in academia to sustaining the world’s largest free startup incubator, Waterloo provides students with unrivaled resources for leveraging their ideas.
Waterloo students’ exposure to applied engineering problems from their first year grounds their learning and exposes them to a variety of projects and real world problems before they graduate. From this base, I find the ideas and work generated from student founding teams not only have more technical depth but are able to find practical applications and commercialize their products and core tech through more efficient feedback cycles. Notable co-op successes include the first autonomous vehicle to drive on a Canadian road, a nanotech device that allows users to detect contaminated drinking water using a mobile phone, and a landmine defusing robot — and that’s just this year.
Students of a different breed
People are bold. Nothing is too big, too complicated, or too far-fetched for Waterloo. “Impossible” is a word you’ll never hear. Instead, they’ll say, “we’re working on it.” so there’s the mindset to take risk and that’s great for Canada. Teams just need more exposure to build on the iterations of other startups outside Canada they may not know about.
Waterloo and the world
U.S. companies need innovative, talented people and Waterloo startups need the network, mentorship and platform to break into the US and global markets. Only about 50% of Waterloo startup customers are foreign, for example, versus 74% for Tel Aviv, a leading market. Waterloo also has a funding gap — one which I think American investors are uniquely poised to fix.
The funding gap is primarily at the seed and Series A levels. Compared to American hubs, Canadian ecosystems don’t fare as well. In Waterloo, seed rounds average $120,000 — far lower than the average of $500,000 found in top ecosystems such as New York, Silicon Valley, Boston, and LA. The funding gap isn’t unique to Waterloo — it is prevalent throughout the Canadian ecosystem. Compared to the U.S. startups in big cities, three to five times fewer Canadian and Waterloo startups receive funding at all. Waterloo’s local Golden Triangle Angel Network has only 120 angels. Consequently, early-stage companies in Canada more frequently encounter funding shortages than American early-stage companies do.
Waterloo has the talent, innovation, and entrepreneurial culture to skyrocket to the top — it just needs a little push. Waterloo has what American investors should look for and I haven’t even talked about the University of Toronto yet!