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Toronto Region - A Magnet for Canadian and Foreign Tech Companies

Toronto Region - A Magnet for Canadian and Foreign Tech Companies



Of all the major technology hubs across Canada, the Toronto region in particular is gaining a worldwide reputation as a welcoming destination for tech-centric. For start-up founders, SMEs, academics, university students and global firms alike, Toronto functions as a dynamic incubator for technologies like fintech, artificial intelligence, cybersecurity and big data analytics. Over 400,000 technology jobs existed in the Toronto tech sector in 2016 - many of which are distributed among Toronto’s active tech start-ups that are estimated to number over 2,500. Canadian companies like Slack, Hootsuite and Shopify, which are not based in Toronto, have unsurprisingly had to expand operations to Toronto to tap into the talent pool and scale up. Such fast-growing enterprises are ideal for attracting the attention of international venture capital (VC) investors. In 2016, Toronto accounted for 34% of an impressive $1.7 billion of VC funding invested in Canada. World-class tech talent has been pouring out of academic institutes in the region. Combined with significant government support, world leading incubators and accelerators, supportive public-private partnerships and superb talent, it’s not hard to see why Toronto’s tech eco-system has grown.

Homegrown Start-ups a Big Draw for VC Funding

With proven business models backed by serious cash from international VCs, Toronto is fast becoming a hotbed of successful start-ups. Fintech, artificial intelligence, insurtech, blockchain and cybersecurity are just some of the up-and-coming sub-sectors rapidly gaining traction in the start-up scene.
 
Since artificial intelligence (AI) is the rage these days, it only makes sense to lead with an AI example …Canadian born Steve Irvine, a former Facebook executive, chose Toronto to design and develop his AI start-up, geared to enable large enterprises in increasing both client interaction and revenue growth by training their AI-enabled solutions ($5M). His main motivation for choosing Toronto over Silicon Valley was the exploding pool of regional AI and engineering talent. Top Hat, ranked 18th in Deloitte’s 2016 Technology Fast 50™ Program is billed as “a complete teaching solution ($30M). Sensibill, a fintech company that helps banks generate customized digital receipts is already going international ($17M).  Last but definitely not least, WealthSimple, the Canadian fintech darling based in Toronto, is already managing $1 billon in managed assets ($75M).

Compelling Destination for Foreign Tech Businesses

Toronto is equally attractive to foreign tech companies of every size. PayCommerce, a cross-border payments firm from New Jersey decided to launch a research and development operation in Mississauga because of the easy access to talent, proximity to the financial services center and the potential to partner with leading academic research institutions. WeWork, a co-working space provider based in New York City, has decided to take up 60,000 square feet of office space in downtown Toronto to capitalize on the growing entrepreneurship energy here. This trend is further endorsed by Toronto’s 4th (up from 6th last year) place rank in fDi Magazine’s 2017/18 American Cities of the Future report, which analyzes greenfield foreign direct investment across North and South American cities.
 
Let’s not forget about massive international ICT companies like IBM,HP,Cisco and Microsoft that house their Canadian headquarters in the Toronto region and exert a strong influence in shaping the city’s tech sector. GM Canada is opening a 15,000 square foot technical center in Markham to conduct research and development on autonomous cars, with the potential to create up to 700 high-quality jobs. More recently, Uber is jumping on the autonomous driving bandwagon in Ontario by launching a research hub in Toronto with intentions to capitalize on the artificial intelligence expertise of the Vector Institute. Sidewalk Labs, the urban innovation unit of Alphabet is partnering with Waterfront Toronto to build a high tech city. No surprise then that Expert Market ranked the Toronto region third out of 20 global tech hubs to live and work, ahead of Silicon Valley, Boston and Tel Aviv.

Fostering Synergy in the Tech Community

Great examples of organizations fostering synergy are the Toronto Region Board of Trade and the Toronto Financial Services Alliance. In fact, earlier this year, they collaborated with the OCE to organize a fintech symposium where key players in the financial services ecosystem got together to discuss the challenges they are facing and how to not only co-exist but also partner with one another in an effort to make Toronto a global fintech leader. This is just one example of a multitude of community-driven tech events. In May, a blockchain event at MaRS was organized by the Canada Bitcoin Blockchain meetup where Toronto based Alex Tapscott was the keynote speaker. It was probably the biggest blockchain/bitcoin event in Canada, ever - at least that is what the organizers liked to think so! The sheer number and variety of such events in Toronto is mind-boggling - just check out the events page at TechTO or Eventbrite.

Incubators and Accelerators – The Nurturers

The start-up scene in Toronto convinced incubators and accelerators to swoop in and provide critical supporting services. The most notable examples include the DMZ, MaRS and OneEleven. Partnerships between accelerators and industry players are key for local start-ups to succeed against one of their biggest challenges – scaling up. A prime example of this is the agreement between RBC and OneEleven to work together to support start-ups with the knowledge, network and resources that are imperative for them to commercialize and scale up. This irresistible start-up hype attracted prominent US-based accelerator, Techstars, in partnership with Real Ventures, to get in on the tech action by expanding to Toronto. The ever-increasing support network for incubators and accelerators, often in partnership with corporate players, enables a higher percentage of companies to successfully commercialize their products and scale up, which in turn advances the very same ecosystem that they are a product of.

Federal & Provincial Budget Recognizes Tech Sector’s Potential

The 2017 federal budget and Ontario’s provincial budget included several initiatives clearly intended to support and nurture the continued advance of technology-related business ventures, both in Toronto and across Canada. The Global Skills Strategy initiative is expected to launch in mid-June and will allow technology businesses to acquire international talent within weeks. The Innovation Supercluster Initiative  is designed to bolster Canada’s global growth and competitiveness - $950 million in federal funding will be distributed on a competitive basis around the country to support clusters that can catalyze economic growth in the tech sector. The government of Ontario is investing $80 million in the Autonomous Vehicle Innovation Network in partnership with the OCE in an effort to prepare the province’s infrastructure and transportation network for self-driving cars. The Canadian Institute for Advanced Research (CIFAR) is administering funding for a $125 million Pan-Canadian strategy to generate an AI talent pipeline. Both governments have come together to launch the AI-focused Vector institute with funding of $100M. The Blockchain Research Institute was founded by father-and-son duo Don and Alex Tapscott to research the applications of blockchain on multiple industries.

Endless Opportunities, Limitless Growth

In the global technology realm, it’s becoming evident that Toronto is a place that has everything going for it. In addition to its reputation as a lively ecosystem that embraces tech businesses, Toronto has repeatedly placed highly in international rankings as one of the most livable, competitive and innovative urban centres that tech businesses can call home.
 
Hey Amazon, what are you waiting for?

Written by Salman Khan, Senior Advisor, Investment Attraction, Toronto Global.
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