Why The Rise Of The Canadian Tech Scene Is Only The Beginning

When the Covid-19 pandemic knocked the world online in March 2020, Greg Smith had an opportunity in front of him. He’d been quietly grinding away on Canada’s west coast for eight years, building a platform to develop online course material. He had amassed a loyal following of users, assembled an incredible team, and developed a product that really worked — allowing anyone to turn their special know-how, be it ballet or bookkeeping, into an online course.

Then the crisis happened and the world came knocking. Sign-ups skyrocketed as out-of-work coaches, performers and teachers sought alternate revenue streams. The company recorded a 368% increase in new courses created in the first two weeks of the pandemic. Smith’s technology, born in Canada, was suddenly in the global spotlight. And he wasn’t the only Canadian cashing in.

Smith’s story is a common one coming out of Canada these days. His company, Thinkific, is one of several Canadian companies to emerge as billion-dollar-plus, global success stories during the pandemic. While the country’s national animal is a beaver, it might as well be a unicorn right now. Vancouver alone — often thought of as Toronto’s lesser sibling — had six companies become unicorns (companies valued at $1 billion or more) within six months.?

The first quarter of 2021 saw record investment in Canadian venture capital at $2.7 billion.

Investors in the United States and around the world are taking note, because here’s the thing: while recent Canadian valuations may be turning heads, this is just the beginning.

The right ingredients

After spending the last 25 years building and investing in Canadian tech companies, I’ve seen that founders like Smith are not overnight success stories. These companies have always been a bit like Michelin-star restaurants in an overlooked neighbourhood. They had killer ingredients and creative chefs, but had a hard time attracting the attention of investors with deep pockets to take them to the next level.

But Canada has always had inherent advantages. It routinely ranks among the top countries in the world for quality of life, social purpose, healthcare, and the best places to raise children. It’s one of the best countries in terms of immigration, scoring top marks for education and anti-discrimination.?

My family, Ismaeli refugees from Uganda, came to Canada in search of a safe place. They were entrepreneurs in their home country, and what they found in Vancouver wasn’t much different than the typical “American Dream.” They worked hard to build an electronics store, all the while enjoying the safety and social freedoms Canada has to offer. I followed in their footsteps, taking advantage of the entrepreneurial spirit of this country, building internet companies in the early days of the web. I now run a venture builder out of Vancouver.?

No doubt, I’ve encountered challenges to growing a company in Canada, the biggest being access to capital. Entrepreneurs would have to head down to Silicon Valley and knock on doors to find interest in our offerings. The major investment we were seeing south of the border just wasn’t there in Canada, where the banks are more conservative and high-rolling investors are fewer and further between. Recruiting senior talent to head north was also a hassle. We sometimes felt like Canadian Football League GMs, trying to scoop up the players left over from the NFL offseason.

But it was only a matter of time.

Canada finds its killer dish

Even Silicon Valley didn’t happen overnight. It took more than 60 years to go from Hewlett Packard to Google, Tesla and Facebook. It took time for the flywheel to gain momentum. Ditto for Canada.?

Companies like Nortel and RIM (later Blackberry) were some of the first tech companies to grow into behemoth players on the global market. Sure, they failed rather spectacularly, but they still had spinoff effects on talent, investment and inspiration. They scattered seeds for new startups, which in turn did the same for others as they succeeded or fizzled out.

Fast forward to the latest wave of success stories, buoyed by e-commerce giant Shopify, which saw its stock and sales soar during the pandemic. Now sitting at $180 billion, it is the most valuable company in the country, surpassing even the Royal Bank of Canada. Shopify served as proof to even the most conservative investors that Canadian tech can thrive on a global stage.

So what’s the spinoff? We’re seeing clusters of innovation emerge from coast to coast. St. John’s, a small city in a province on the brink of financial ruin, is becoming a place where education and entrepreneurship collide. Verafin, an anti-fraud tech company, was born at the local university in 2003 and worked hard for years before hitting the jackpot. The company sold to Nasdaq last year for $2.75 billion, which included a promise to stay local, and a guaranteed $1 million to put back into the university’s innovation program. That local flywheel has already spawned several other promising startups providing jobs to a desperate economy.

We’ve seen similar momentum in bigger cities like Vancouver, Montreal, Toronto and Kitchener-Waterloo.

What’s notable — and what U.S. giants are catching on to — is that these companies have global ambitions, indistinguishable in so many ways from their brethren south of the border. Same cutting edge technologies, same talent, same vision — but built on Canadian soil and hence less picked over by investors, with far more upside.

Canada’s secret sauce — quality of life, deep talent pool, great governance — isn’t going away. Meanwhile, the ecosystem effects are building. The Canadian flywheel will only gather momentum as successful companies and entrepreneurs reinvest in the people around them.

What is clear: the country has firmly arrived on the global tech stage. The success is anything but overnight, and it’s just starting to boom.

A version of this article was originally featured in?Techonomy. Keep up with my latest posts by following me here or on?Twitter?and?Instagram.