There was an editorial in TechCrunch recently written by a US-based venture investor, proclaiming Toronto to be poised to be the next great producer of tech startups. While it is great to get that love and vote of confidence, and Toronto is an awesome place to start a startup, to be the “next great producer of tech startups” will take a lot more.
Where do we stand currently ? I recommend reading this article in The Atlantic, which places Toronto at a solid 12th globally amongst venture capital/startup cities, and this is the only notable mention which Toronto got:
Outside of the U.S., Toronto is the only metro to make the top twenty.
It is good still — but whom are we comparing to become the next great startup city ? Silicon Valley, New York and Boston are uniquely positioned, we can’t be the next either of them when it comes to tech start-ups. We don’t have the tech talent/money of the Valley, we don’t have MIT, and at every level we are a small reflection of NY. Recommend reading this too.
I believe Los Angeles is the light we need to follow. LA is the current “next great producer of startups”. See this map of LA’s startup activity too. We won’t ever overtake it, because the Greater LA area is 3x as big as the Greater Toronto area, it is a ~1 hour flight away from the Valley, and it has universities producing stellar talent. It also has amazing beaches and good weather throughout the year, while we occasionally get freezing rain in the winter. Toronto’s traffic on the Highway 401 is actually worse than LA’s. Not to mention that the next great billion dollar company, Snapchat, is based there. Toronto does not have an anchor lead billion-dollar unicorn (Shopify and Kik are not HQ-ed here), yet.
For Toronto to be great, and to be next great producer of tech startups — it needs to be #5. Beyond Seattle, Chicago, Austin, Dallas and others.
Toronto has the potential, enabling factors to become the #5, the next great producer of tech startups, after Silicon Valley, NY, Boston and LA. But they are no guarantee that it will happen. Everybody, from the government to the local population, needs to double down on Toronto’s startup innovation potential. Even after all that, we will need anchors — global blockbusters, unicorns, with founders who are well-regarded globally. Recommend reading this article about Tony Lacavera in Canadian Business magazine today, who sold Wind Mobile for $1.6 billion, and is now looking to put together a $100 million fund, from global investors, to bet on Canadian startups. Excerpt below:
Lacavera’s goals extend beyond earning a return; he wants to help fix a fundamental problem with the funding landscape today. The recent boom in accelerator and incubator programs, which help young entrepreneurs build or refine business plans in exchange for equity, means ample funding for early-stage ventures. At the other end, funds such as OMERS Ventures and Georgian Partners, two of the country’s most prominent VCs, are capable of investing large amounts of money in more mature companies. OMERS and Insight Venture Partners, for example, led a $100-million investment in Shopify in 2013, which turned heads at the time.
As Lacavera sees it, the problem occurs in the middle. “That’s where we don’t have enough funds,” he says.
Here is what does work in Toronto’s favour today:
Best representative target market of consumers anywhere
The Greater Toronto Area has a population exceeding 6 million, with over 50% of this population being born outside this region, from every part of the world. There is diversity in language, culture, ethnicity, perspectives, likes and dislikes. If you are selling to the world, this is the place to start. Perhaps Uber had other reasons too, but Toronto was the first market in the world where they launched their UberEATS service and then started introducing it in other parts of the US. These are actual consumers from various walks of life who don’t know/care about what the tech world thinks will work. Launch here, and if it does not work here, it would not work anywhere else.
Thriving tech talent pool
From local universities and colleges, to new immigrants (thanks to Canada’s friendly immigration policies) — we have a highly enthusiastic, diverse and talented workforce, which is hungry for more.
Local start-up community is awesome
We have a healthy mix of entrepreneurs who have had successful exits and are on to their 2nd, 3rd ventures and are extremely engaged with the community, in helping others grow. We have the enthusiastic first-time entrepreneurs trying out new ideas. There are accelerators like DMZ providing guidance to a whole bunch of exciting new start-ups. There are venture investors, lawyers, folks with finance and media experience — all sharing their knowledge with the start-up community and enthusiastic about its growth. If you have made something, there is a community willing to support you, whether you succeed or fail. It is exciting and fun to be here!
Life is “good enough” here, so you can focus on your start-up
Immigration system, healthcare, education, overall the city works nicely enough that you can focus on your startup if you can afford it financially. The city is fun to be in from May to November almost, with a wide variety of festivals and events happening. Most importantly, the food is really good here.
It is cheaper/faster/easier than ever to do a tech startup anywhere
There are sufficient tools/frameworks available to quickly build Minimum Viable Products and test out the market. This is true not just for Toronto, but any reasonable place in the world — where you have free, fast and unencumbered Internet.