Written for Vancity Buzz by Caitlin Cheadle
Recently, Vancouver took 18th place in the Compass 2015 Startup Ecosystem Ranking report, which rates the world’s top 20 “tech startup ecosystems” based on five benchmarks of criteria: performance, funding, market reach, talent and startup experience.
While Vancouverites continue to tout their city as the next big breeding ground for tech – Amazon and Microsoft recently opened up brand-new offices in its downtown core, and homegrown success stories Hootsuite, Flickr and Plenty of Fish continue to buoy this optimistic viewpoint – the fact that the city’s ranking has slipped nine spots since the last edition was published in 2012 is cause for concern.
Vancouver wasn’t the only Canadian city that has failed to keep up as the rest of the world rapidly shifts towards increasingly tech-based economies. Toronto has also dropped nine spots, from 8th place in 2012 to 17th place this year. Meanwhile former tech hotbed Waterloo dropped completely off the list, and Montreal debuted this year – but in last place, at #20.
What’s behind Canada’s apparent fall from grace? According to the report, Vancouver and Toronto both struggle to acquire and maintain experienced, top-level talent and to achieve a significant market reach. Yet both cities have the added advantage of an unbeatable geographical location – Vancouver is a mere two-hour flight from San Francisco and the world’s most thriving tech startup ecosystem, Silicon Valley, while Toronto is a 1.5-hour flight from tech investment capital New York City. Why are Canadian cities slipping behind arguably more disadvantaged leaders such as Sydney and Bangalore?
Part of the problem, according to Manny Padda, founder of Vancouver-based investment firm New Avenue Capital, which has invested more than $1 million in early-stage Canadian tech startups over the past 12 months, is that Canada is suffering from somewhat of an image crisis.
“It’s not like Canada isn’t producing great tech companies, it’s just that people in the rest of the world aren’t necessarily aware that they were started in Canada,” he says. “Companies like Shopify, for example – people outside of Canada don’t know it was founded in Canada.”
“Canada’s economy has shifted rapidly. People still think of Vancouver as predominantly a resource-based economy – but that’s no longer the case: its local economy is now sustained by software development and biotech. It’s important to introduce the idea that Vancouver is a thriving tech ecosystem to other parts of the world, so we can attract a higher caliber of talent and the kind of funding that will help us grow these tech startups.”
Padda has decided to tackle this issue head-on. In early September, he travelled to Istanbul to speak at the Futurepreneur G20 Young Entrepreneur’s Alliance Summit, where he participated in several panel discussions and met with delegates, entrepreneurs and investors from around the world to raise awareness of Vancouver’s potential as a strategic tech hub.
“I went to Istanbul to promote Vancouver as a great place to invest money and talent in, but I was also able to connect with other Canadian investors and entrepreneurs to see how we might be able to collaborate in the future and strengthen each others’ weak spots,” he says. “It became apparent from talking to other Canadian entrepreneurs that we are struggling with the same issues: attracting senior-level talent and achieving a global market reach.”
“It’s frustrating because there are so many promising Canadian startups, like ChangeHeroes, G-Kup and ShareShed – all of which could have a potentially huge global impact because they seek to solve social and environmental problems that many parts of the world are facing today.”
Padda also suggests that Canadian tech startup founders struggle to overcome their own limited geographical perspective.
“One thing that holds a lot of Canadian-founded startups back is the failure to think globally,” he says. “These young companies might gain a lot of early traction in Vancouver or Toronto – but they need to be out there raising awareness in the rest of the world, too. They need to be attracting interest from investors and early adopters outside of Canada and even the U.S.”
Padda will continue to seek outside investment into Canada’s startup ecosystem over the next few months, travelling to Europe, South America and Asia to speak at events and raise awareness of its potential as a sound place to invest talent and money.
“In tech, being global is the key to success. Lifting Canada’s profile as a recognized tech startup ecosystem and getting Canadian early-stage startups more recognition on a global scale is critical,” he adds. “Whatever it takes, as entrepreneurs we’ve all got to be doing our part in promoting our country as a leader.”