If you are a startup founder or an aspiring startup founder in Toronto, you may be able to benefit from my experience of working on a startup in Toronto. So let me share my perspective with you.
The general vibe of Toronto is that people are pretty excited about startups. People here want to see Canada make a comeback in the global startup scene especially after the fall of Blackberry (RIM) post launch of iPhone.
Let me clarify here that Canada does have a number of successful tech stories like Shopify, Wattpad and Freshbooks but there is no tech company which competes at the level of the FAANG (Facebook, Amazon, Apple, Netflix, Google) atleast right now (in 2019).
Lets get straight to the pros and cons of creating a startup in Toronto.
Pros :-
- The startup scene is vibrant and socially encouraging.
- Many universities with state of the art research facilities exist in and around Toronto like UToronto, RyersonU and YorkU.
- Tech talent of engineers in Toronto is almost comparable to that in the Valley (except the experience of working on globally scaled systems). Plus engineers in Toronto cost less than those in the Valley. Moreover, housing prices in Toronto are not as insane as in the Valley atleast right now (in 2019).
- Toronto is home to some of the world’s leading research institutes like the Vector Institute for AI (well-known AI researcher Geoffrey Hinton is the Chief Scientific Advisor of Vector Institute), Toronto General Hospital Research Institute for Biomedical Research etc.
- There is lots to do in the city — music, stand up comedy shows, night life, festivals etc. Also, Niagara Falls is about an hour or so away from Toronto by car or by bus. It will continue to amaze you even after you have already seen it ten times!
Cons :-
- It is pretty hard (but not impossible) to create a globally successful consumer startup (B2C) in Toronto. Shopify (headquartered in Ottawa) has done that, Wattpad is kind of close to doing that, but overall, it is pretty hard. I would say this is mostly because of conservative attitude of Canadian investors and lack of marketing talent required to create a global brand. B2B is easier because investors know people who are potential decision makers in big companies. This guarantees warm introductions at the very least, sometimes even guarantees initiation of a pilot programme!
- Big Banks — TD, RBC, Scotiabank, CIBC and BMO dominate finance in Toronto. They are like these huge magnets which have a strong pulling effect on everything that happens in Toronto. Obviously, a lot of seasoned entrepreneurs are aware of this force and try to use it to their advantage. Consequently, they create stuff which increases efficiency of the banks — AI chatbots, internal communication software, AI legal, employee insurance solutions etc. In addition to everything else, creating a product for the banks has this huge advantage of making the startup a future acquisition candidate — which is a pretty good outcome for a conservative early stage investor!
- FAANG (refer above) have their office set up or are in the process of setting up their office in Toronto. So the best talent in Toronto either ends up working for them in Canada or is promoted to their headquarters in the US. Just like the banks have a local pulling effect, the US has a global pulling effect on the best talent in Canada.
- Behind the Canadian veneer of politeness, a lot of the harsh reality gets pushed under the rug instead of being discussed openly. It could only be my personal experience, but I do not remember meeting a lot of strongly opinionated people at meetups or startup events in Toronto. Maybe because the people had not made up their opinion on important issues related to startups, or because they did not want to disagree with me — both are equally damaging to a startup ecosystem.
- Climate — Canada is un-inhabitable (without internal heating) four to six months of the year. This results in less interaction of people on average. Most people just want to go home after work in the winters and want to travel and enjoy in summers. Fewer startup related interactions equal lesser chances of people with similar ideas meeting and forming a team to work on a potentially successful startup.
- Public transport — A lot of aspiring entrepreneurs in Toronto cannot afford to live in downtown Toronto. And subway access in Toronto is inadequate. Consequently, people in neighbouring cities and towns remain mostly to themselves. If there was a more robust and faster intra-city and inter-city transport, it would be much better for Toronto.
- Involvement of government in funding startups is a net negative for the startup scene in Toronto, in my opinion. The Canadian government is too involved in startup funding via fund of funds and what not. This results in unnecessary pressure to “pick winners” or dressing up of normal startups as “outsized winners”. More importantly, this helps in strengthening status quo of intra-Canada B2B players.
- Lack of capital for early stage companies. I know I have mentioned about conservative attitude of investors in Toronto above. But this aspect is so important that it needs its own bullet point. The fact is that if an entrepreneur bootstraps a long way through, then it is much easier to lure them into an acquisition from FAANG or to force them to move to the US to get a huge investment. This results in the US (and FAANG) becoming stronger at the cost of potential home grown winners from Toronto. There is a whole list of winners previously headquartered in Toronto which moved to the US to accept a bigger investment or got acquired by FAANG.
However, inspite of all the short-comings, I still believe that Toronto is the best place in Canada to build a big company and I am sure there will soon be a tech giant which will come out of Toronto. It is only a matter of time.
You can reach out to me (Anmol) on Twitter @anmol1e1
