6 ways our Quayside proposal supports the Canadian tech community
By Nicole LeBlanc
For several years running now, Toronto has had one of the strongest tech ecosystems in the world.
Our city’s tech talent pool is outpacing all North American cities. We’re now home to a significant amount of all venture capital investment in Canada, with major tech companies alongside an estimated 4,100 local startups. And we’re home to government programs that support innovation, world-class research institutions, and a network of incubators and accelerators, such as the MaRS Discovery District, DMZ, and the Vector Institute.
This strong existing tech sector is a key reason Quayside can become a global hub for urban innovation — a place that fosters new ideas for improving quality of life in cities, whether in Canada or around the world.
I sometimes hear concerns that the Sidewalk Toronto project could potentially undermine Canadian tech companies. On the contrary, this project can’t succeed without local companies, large and small, and is specifically designed to support them.
Last week, we released our Digital Innovation Appendix (DIA), which outlines in detail how we are committed to supporting Canadian innovators. We believe a thriving ecosystem is essential for the project’s success, and in the DIA we’ve outlined how we propose to support ongoing ecosystem development, including strengthening access to capital and talent, providing access to sophisticated buyers at home and abroad, and contributing to ecosystem capacity building.
As a summary, below are six ways our proposal aims to build on the city’s existing momentum. Work has begun on all of these initiatives, but ongoing input and feedback from a wide range of stakeholders in Toronto and across the country will be vital over the coming months and years as these efforts develop further. These initiatives could be implemented if the project is ultimately approved — creating even more opportunities for all the entrepreneurs in Toronto, Ontario, and Canada to thrive.
Sparking new ideas with a new venture fund
Compared to startups in other cities, small startups in Toronto face significant challenges to scaling their enterprises. The rate of new startups emerging has far outpaced the amount of VC funding available, forcing entrepreneurs and businesses to slow down development and growth or seek funding elsewhere.
To help tackle these challenges, Sidewalk Labs plans to establish a venture capital fund (a Fund I) focused on Canadian companies. We plan to contribute $10 million to the fund, and are already seeing interest from Canadian corporate innovation arms and respected individuals to grow the fund. The fund aims to grow and scale companies faster, which would assist in establishing Toronto and Canada as a global urban technology leader.
Since growth relies on both access to capital and access to experienced talent, we will also establish an advisory network of experts in Canada and internationally that can assist with a wide range of topics, from reaching new customers to scale up to building out a marketing team.
I’ve been a part of Canada’s tech ecosystem as a VC for over 12 years, and prior to joining Sidewalk Labs, I was an investor with BDC Capital. There, I worked with a portfolio of nearly 200 early stage companies across Canada. The potential our project has to help these companies scale globally is why I joined Sidewalk Labs. I’ve seen first hand the struggles these innovative yet resource constrained startups face. Having corporates like Sidewalk not only invest, but provide new ways to drive growth is exciting to see. It’s an amazing opportunity for Toronto and Canada to contribute to new models of innovation.
Expanding tech access with a patent pledge
In our initial proposal, we offered a patent pledge that would allow Canadian-resident innovators to build on top of any digital innovation patents covering software or hardware that Sidewalk Labs files in Canada. While many appreciated a patent pledge, we heard concern that restricting the pledge exclusively to Canada would in fact limit the potential growth of Canadian companies that took advantage of the pledge.
From this feedback, we decided to expand our patent pledge from Canadian-only to global — meaning Canadian innovators will have the right to use our Canadian and foreign patents covering hardware and software digital innovations and scale those businesses globally. We’re making this pledge to enable any startup, non-profit, government agency, or independent entrepreneur to build on Sidewalk Labs’ patents without fear of litigation or other assertion of patent infringement.
Buying local technology wherever possible
The vast majority (75 percent) of digital systems proposed for the Sidewalk Toronto project would be substantially purchased from third parties, meaning only a quarter are expected to be built by Sidewalk Labs, creating a significant opportunity for Canada’s innovation ecosystem.
Whenever there are existing companies that have the capability and incentives to implement the systems required for the Sidewalk Toronto project to succeed, we will prefer to purchase third-party technology — or partner with third parties to create (or enhance) it. Specifically, we plan to give priority to technology that is local to Toronto, Ontario, or Canada.
The benefits for local companies are not merely integration into the Quayside project. Sidewalk Labs intends to promote its partners internationally, thus helping support Canadian companies scaling up and achieving greater global distribution. ,
Launching an Urban Innovation Institute for learning and research
Toronto has an extraordinary existing network of urban innovation leaders, from accelerators to companies to academic institutions to major corporate businesses to innovative public-sector agencies.
A need that Sidewalk Labs has heard is that the city could benefit by having an organization embedded in Quayside that could support the ecosystem’s ability to come together and to test new ideas, which could provide core infrastructure for applied research, and which could provide a home to foster knowledge and skill development. To address this challenge, Sidewalk Labs has proposed $10 million to fund the business planning and early activation of an independent Urban Innovation Institute (UII).
The goal of this proposed commitment is to establish a new, independent institution that is complementary to the city’s extraordinary existing institutions, and that helps support and advance the work of local urban innovation leaders. The UII would build on the strength of the existing innovation corridor on Toronto’s waterfront, including tenants such as George Brown College, Corus Entertainment, OCADU, MaRS, Artscape, Remix, HXOUSE, and others.
Published standards and trusted data sharing to foster innovation
Sidewalk Labs firmly believes that published standards for digital hardware and software, and public access to data collected in the public realm, is fundamental to catalyzing a diverse multi-stakeholder innovation ecosystem to improve quality of life in cities. There is already leading work on smart cities standards happening today in Canada, and Sidewalk Labs plans to support these efforts that are being led by government, NGOs, and others to ensure digital infrastructure results in public benefits and an equal playing field. Sidewalk Labs is committed to using published standards where they exist, and supporting the efforts of Canadian and international organizations and institutions who are advancing the development of new standards.
Another important part of the Quayside project is the commitment to testing and establishing new models for trusted data sharing. There is widespread recognition across public, private, non-profit, and academic sectors that greater data sharing can have substantial benefits for public policy outcomes and foster innovation. Sidewalk Labs is committed to implementing robust and secure data exchange mechanisms needed for the proposed digitally enabled services at Quayside. However, those mechanisms are different from creating a way for third parties to re-use and apply that data for public benefit.
To further the goal of data as a public asset, Sidewalk Labs suggests that a hub for data collaboration be created (potentially anchored at the Urban Innovation Institute) and be operated collaboratively with cross-sector partners to unlock the value of data for the public and the larger ecosystem. The future of the smart cities industry will require accountability for achieving public policy objectives, and trusted data sharing is essential to providing cross-sector confidence that smart cities are legitimately achieving public benefits.
Sharing revenue with the public sector
In our initial draft plan, we proposed that the public sector receive a percentage of our profits from certain products or other solutions that would not have been developed but for the opportunity created by the project, for a 10-year period following the sale of that innovation to another city. Based on Waterfront Toronto’s request, we have agreed to shift to a revenue stream on products and services piloted in Waterfront Toronto-facilitated testbed area, based on global net revenues.
We believe this is a first-of-its-kind arrangement with government, representing an innovative approach to the public and private sectors partnering not only to create technology, but to jointly reap the proceeds from success.
Nicole LeBlanc is Director of Investments for Sidewalk Labs, based in Toronto.
