Jun 25, 2022 - Economy & Business

Canada wants in on the startup boom

Illustration of a Canadian flag on a field of squares and rectangles

Illustration: Natalie Peeples/Axios

Canada’s startup and venture scene undoubtedly continues to grow and mature, but it has to balance its historical strength as an exporter and international collaborator with its desire to bolster the industry at home.

Why it matters: A thriving tech sector is crucial for any country's economic growth, its ability to retain and attract skilled workers and its efforts to avoid overdependence on other nations.

The big picture: The Canadian startup scene has grown in recent years, with the amount of venture capital invested in startups jumping from $2.1 billion in 2016 to $13.7 billion in 2021, per Pitchbook.

  • That money has spurred huge successes for a number of homegrown tech companies like Shopify, ApplyBoard and Dapper Labs.
  • The U.S.'s northern neighbor has benefited from an influx of immigrants with tech skills, even as America tightens its own visa programs, a move that began under the Trump administration.

What they're saying: As a country with nearly the same size population as the state of California, “Canada is an exporter,” Information Venture Partners’ Alex Tong tells Axios.

  • He says Canadian tech startups need to look for customers internationally, at the very least, in order to build viable and durable tech companies.
  • That’s a notable reason why it’s been successful at spawning businesses in areas like fintech and B2B software.
  • Tapping American VC interest also means looking outside for backers: U.S.-based investors have been spending increasingly more time and money in the country.

Between the lines: While Canada is more than happy to attract the attention — and dollars — of American funders, there are still some questions about how deeply involved locals want U.S. companies to be.

  • Local investors say they welcome the competition, as it motivates them to up their game when vying for local startups.
  • The Canadian government and provinces are also involved in the startup ecosystem via various investment programs focused on deploying capital locally.
  • The Business Development Bank of Canada, a government investment arm, had a huge booth at the conference, for example.

Yes, but: Overall, Canadian investors remain more risk-averse than their Silicon Valley counterparts, VCs tell Axios.

  • Some are trying to espouse the American ethos of taking bold bets on entrepreneurs in the early stages of founding a company. But it’s not as widespread yet, says Garage Ventures’ Mike McCauley.
  • He and his partners participated in Y Combinator’s accelerator program a decade ago, with their respective startups. They moved back to the Waterloo area after a number of years in the Bay Area to bring home and share what they'd learned.

The bottom line: Blackberry phones may have gone extinct, but that's far from the case for the rest of Canada's tech industry.

Go deeper: Dispatch from the north

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