Immigration fears in countries such as the U.S. and U.K. might create huge opportunities for economic growth elsewhere—and Toronto is taking note.
TORONTO, Ontario—Despite talk of a business-friendly administration, the U.S. tech sector may face some pretty serious employment challenges under President Donald Trump. First, there was the immigration ban that threatened to stop immigration from seven Muslim-majority countries, then the uncertainty about H-1B visas for skilled workers, and finally questions over how the Trump’s administration’s “Buy American, Hire American” strategy would affect sectors that rely on outsourced or imported talent.
For foreign countries looking to build their own urban tech scenes, the situation poses a welcomed opportunity: With some of the best tech talent in the world anxious about losing their work visas in the U.S., tech hubs around the world are making a push to get skilled labor to their shores instead.
One country that may be an obvious choice is Canada. Canada has not only been vocal about its pro-immigration stance, but has also been investing in a small, burgeoning tech scene that’s emerged in the last five years. Although it’s incomparable in size and dollars to Silicon Valley, where some 23,000 startup companies compete for talent and billions of dollars in funding, Vancouver and the “Toronto-Waterloo Corridor” have been quietly building an ecosystem of Canadian tech entrepreneurs. Now, they say the country is ready and willing to compete for global talent.
One manifestation of this ambition is an innovation hub in Toronto called MaRS, which hopes it can successfully lure Silicon Valley types up north. MaRS is an impressive project on paper: The center sits near the University of Toronto and consists of four towers, housing some 6,000 workers at tech companies small and large. The campus boasts some big names including Facebook, Paypal, AirBnB, Autodesk, Etsy, along with some 200 startups.
Those at MaRS are hoping highly skilled immigrants trying to avoid the impact of Trump’s policies and other immigration-curbing political maneuvering, such as Brexit, can come here. They’re hoping areas offering less political turmoil around visas and immigration will become increasingly attractive.
MaRS is a public-private partnership between Canadian tech companies and the Ontario government (the Canadian Federal government partners on programs) aimed at creating a physical space where made-in-Canada tech ventures can thrive. In addition to a campus with office space for startups, it’s the kind of place where you run into Navdeep Bains, Canada’s Minister of Innovation, Science and Economic Development, waiting for the elevator (as I did on a recent visit).
But the arrangement hasn’t been perfect, and MaRS has faced criticism. The fact that the Ontario provincial government is a partner on the project has brought up political scrutiny and questions about whether bolstering tech hubs is a good use of public money. The center became an election issue for the Liberal party when the Ontario provincial government provided financing totaling over 300 million Canadian dollars to help MaRS to complete development of a building and buy out an American developer. Recently, the center found private funding to repay its loans.*
To be sure, there have been growing pains, but many think that the country is poised for tech growth.
“I think Canada's never been in a better position in terms of its ability to foster the growth of tech companies. I'm very excited about what we're seeing in Canada and there's never been a better time,” said Janet Bannister at Real Ventures, the largest Canadian seed-stage venture capital fund. Bannister says the energy of the Canadian tech sector increases as more local success stories happen. The vast majority of Real Ventures’ investments are in Canadian based companies, but while there is venture capital funding, the tap isn’t flowing as abundantly as it is in Silicon Valley.
That’s because the scale is still comparatively small: Venture capital investments in Canadian companies totaled $1.7 billion in 2016, a fraction of the $59 billion in the U.S. (Notably, the coupon app Flipp raised $61 million last year). But some see that as a welcome change from larger hubs.
“The tech scene for me is much more cultural and a smaller microcosm that is spawning a lot of interaction. Everywhere you walk in this building there's someone going through what you're going through,” says Paul Parisi, the general manager for Paypal Canada, which has its offices in MaRS.
Still, the hope is the proliferation of small companies, some of which will attract enough investment to become bigger companies, will mean those moving to Canada to work in tech will have plenty of options, even in a specific job doesn’t work out.
“Canada's story is a bit divergent from many of the other tech hubs. There's a willingness to tackle some of the big complex problems,” said Ilse Treurnicht, the CEO of MaRS, in an interview. Treurnicht certainly feels the Canadian tech scene is on the verge of something big. Between the fact that Toronto is attracting more international interest generally (applications to University of Toronto from American students are up 80 percent this year) to the more varied types of companies setting up shop, there’s reason to hope Canada could become a destination for tech talent.
But Canadian tech remains far less visible than Silicon Valley, in part because most of Canada’s big tech companies are less focused on consumer-facing products, such as apps, which can generate buzz and name recognition. Shopify, the Canadian e-commerce success story, remains an outlier. Past giants of Canadian tech are companies like Nortel and Research in Motion, one of which has gone bankrupt while the other is still bogged down trying to stage a BlackBerry comeback. Treurnicht concedes the nature of the tech business in Canada—from tech infrastructure, to fintech or digital solutions for the energy sectors—make it less visible abroad.
Even at MaRS, the growth areas are in biotech and artificial intelligence. The incubator’s namesake is short for medical and related sciences. And American tech giants with offices at MaRS tend to be regional sales and marketing offices, rather than programmers and developers working on actual product development. And those are things many find inherently less sexy than the flashy new apps and products being built in Northern California.
The size of the tech sector can mean not any and every startup will get funded as easily as it might in an area with more money to spend, such as Silicon Valley says Michael Serbinis, the CEO of League, a digital health startup that raised $25 million last year. That fact puts a bit of a damper on one crucial aspect of the Silicon Valley tech dream, which is anyone can rake in some pretty big investments with a decent idea.
So if not an extreme sum of money and endless possibilities, what is Canadian tech selling to prospective companies and workers? For companies, it’s cheaper talent because of the exchange rate, and with less competition and more of a focus on work-life balance, less turnover and more loyal employees. To attract employees, Canada is trying to work another angle: homesickness.
Canada isn’t just trying to attract foreign or American talent. What seems more pragmatic and realistic, at least at the moment, is bringing Canadians working in Silicon Valley back home. Bannister at Real Ventures says she’s consistently seen this happen: Canadians who move to Silicon Valley because of the excitement and job prospects, but get homesick when they’ve been there for a while, on the verge of burnout, or when they’re starting families and want more work-life balance. With more job opportunities in Canada, she believes the equation is shifting for talented Canadians in tech.
The initiative “Go North” is the perhaps most blatant about this effort. The campaign placed two billboards at the San Francisco and San Jose ends of Highway 101 that say "Go North Canada.ca." The group also holds Canadian-themed sessions, including hosting guests at hockey games, in Silicon Valley. Go North says the No. 1 question at its sessions is about whether the tech scene in Canada is happening, and whether there are the right opportunities for Canadians to go back home.
Serbinis is a successful example of this plan: He left Silicon Valley in 2005 after nearly 10 years there. He came back, he said, for family reasons, and because he thinks Toronto is the best place in the world to live. Serbinis has been a repeat entrepreneur, and he thinks more Canadian tech workers will follow him for similar reasons.
“The fact is, the political situation isn't awesome for many Americans, but [for Canadians] there's an amazing place to come back to—not only from a quality of life but from a tech economy standpoint.”
The quality of life argument could be an appealing one for those feeling burnout in Silicon Valley. The political argument works for firms looking for contingency plans as the Trump administration’s immigration policies come to light. There are certainly those still holding their breath for a tipping point, but with some 350,000 Canadians reportedly living in Silicon Valley, there’s plenty of skilled tech workers to bring back, for a start.
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