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Toronto Tech Boom

jje1000

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Yet another report to tell us what we already know- but it does list out the main reasonings why:

Canada needs more billion-dollar companies to compete in the digital economy: report
Furthermore, Sariffodeen adds that Canada’s difficulty with scaling businesses means we don’t possess enough people who know how to build the high-valued companies the report describes.
Access to venture capital and other forms of venture funding were also highlighted as a key obstacle to building billion-dollar companies in Canada.
The final piece of the puzzle is Canada’s internet infrastructure, which has frequently been lauded as one of the world’s most robust and efficient telecom systems.

However, the report offered several critiques of the steep prices Canadians pay for internet access — some of the highest in the world — and the lack of competition in the space which keeps prices high.
https://globalnews.ca/news/4486757/canada-billion-dollar-companies-digital-economy/
 

jje1000

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CBS to open film and television production hub in Mississauga, Ont.
U.S. entertainment company CBS Television Studios will open a television and film production hub just outside Toronto next year.

The company says the hub will include six sound stages, production offices and other support facilities.

CBS says the 260,000 square-foot facility will be located in Mississauga and is due to open in mid-2019.

The company is promising the hub will bring hundreds of new jobs to the region and help expand its roster of television programming across broadcast, cable and streaming platforms.

The studio says it currently produces 63 series, including "Jane the Virgin," "Crazy Ex-Girlfriend," "Hawaii Five-0," "The Good Fight" and "The Late Late Show with James Corden."

It shoots "Star Trek: Discovery" and "In the Dark" in Toronto, but has several other productions in Canada, including one for the reboot of "Charmed."
https://www.cbc.ca/news/canada/toronto/cbs-to-open-film-and-television-production-hub-in-mississauga-ont-1.4839475
 

Northern Light

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TheKingEast

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I think part of the tech boom is not just the fact that we have plenty of educated technical workfoce to pick from but because we are cheap.

Canada's pay is really low compared to other cities for tech jobs. It's not even close, really. So it makes sense for them to come here. They'll get bright people and pay them much less than they do south of the border.



https://techvibes.com/2018/02/08/toronto-tech-salaries-are-trending-upwards-but-still-fall-behind-u-s-hubs

https://www.cantechletter.com/2017/08/sky-high-rents-low-pay-makes-canada-dud-tech-workers-report/


https://betterdwelling.com/lowest-american-employees-are-57-percent-more-expensive-than-canadians/

Working in the tech sector, we get paid well compared to other jobs, but compared to our peers in other countries, it's pretty mediocre.
 

TrickyRicky

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So you get very good quality employees for the lowest price, an endless pipeline of foreign hire possibilities and Donald Trump is President in the US (for that fact alone and the fact that it will probably see the Canadian dollar drop further thereby making your Canadian labour even cheaper).

The real question is why would tech companies hire anyone in the US at all right now if you have a Vancouver or Toronto branch plant?
 

TrickyRicky

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I noted from an article lately they were talking about the company Hopper (sorry Montreal based company). The article mentioned they were approaching a billion dollar valuation on the basis of an injection of VC funding. What struck me is how poor their financial numbers were, 25 million in annual revenue (gross I presume because none of these companies are profitable) and 200 employees. I find tech fascinating but I'm basically a luddite in a dinosaur area of business but man, that's some garbage right there, $125,000 revenue per employee and a valuation 40 times gross annual revenues! Great when the party is on but basically most of these companies are in serious danger of just vanishing poof if there is a sustained downturn. What I mean is that business strategy seems to basically be grow junk into critical mass before times get bad, at which point the vast majority of companies go under leaving the top entrants in any market segment alive but on life-support. Maybe I'm missing something.
 

jje1000

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Montreal and Toronto round up 1st and 3rd respectively on Strategy in fDi Intelligence's Digital Economies of the Future 2018/19 rankings:


https://www.fdiintelligence.com/Locations/Asia-Pacific/Singapore/Digital-Economies-of-the-Future-2018-19-the-results

Greater Montreal boasts the highest concentration of digital jobs of all Canadian cities, and over the past decade the sector has grown twice as fast as the wider economy. The ecosystem in the city incorporates AI, video games, fintech, software and IT services, while the local TechnoMontreal ICT cluster engages with companies, education institutions, research bodies, investment sources and government bodies to enhance and grow the digital sector.

The Quebecois government launched the region’s first digital strategy early in 2018, and announced that C$1.5bn ($1.17bn) would be spent on internet-based services by 2023, helping to increase citizens’ IT competences and create a competitive and innovative business ecosystem. A range of agencies in the city support digital companies, including Finance Montreal, a cluster agency for fintech and finance companies; Montreal Institute of Learning Algorithms, an AI research organisation; and Alliance Numérique, a video game business network.
Third-placed Toronto is home to 44% of Canada’s top 250 ICT companies. In 2017, the city was chosen to host Google’s Sidewalk Lab, transforming the East Waterfront area into a ‘smart city’ and acting as a global test case for digital-focused urban development. The city’s MaRS Discovery District is the world’s largest innovation hub and boasts 140,000 square metres of space in the city centre for start-ups, researchers and innovators. Signatories to the facility include Facebook, Etsy and Airbnb.

Toronto benefits from Ontario’s Immigrant Nominee Programme, which offers the opportunity for permanent immigration pathways for workers in technology and entrepreneurs. Investors can also avail themselves of the many industry-academic collaborations that take place. Co-op programmes give students two years’ field-specific work experience while they work towards their degrees in several Toronto region universities, including University of Guelph, McMaster University and University of Waterloo, which has the largest co-op programme in the world, offering students placements with more than 6700 companies in 65 countries.
https://www.fdiintelligence.com/Rankings/Digital-Economies-of-the-Future-2018-19-FDI-Strategy-winners
 

PMT

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Found these on r/toronto.

From BetaKit:

LEVER IS THE NEWEST US-BASED STARTUP EXPANDING OFFICES TO TORONTO
California-based recruiting software company Lever will be opening a new office in Toronto. Lever, headquartered in San Francisco, said it will use its new location to tap into Canada’s pool of engineering and sales talent.

“Opening our second office is a major milestone for Lever, and is indicative of our continued growth as well as increasing market opportunities in the recruiting software and talent acquisition space,” said CEO of Lever Sarah Nahm. “We’re excited to be a part of Toronto’s growing tech community.”

[...]

Nahm said Toronto was the clear choice for Lever, due to its proximity to its customers, the size and quality of Toronto’s local talent pool, a positive business climate, and the city’s alignment with Lever’s commitment to diversity and inclusion.
And from PR Newswire:

Certain Affinity Announces the Creation of a New Toronto Studio
Certain Affinity, the largest independent video game developer in Austin, today announced that it will be opening a second development location in Toronto, Ontario, Canada. Certain Affinity has a proven track-record developing innovative, triple-A action games, including both original titles and co-development of games in blockbuster franchises like "Call of Duty," "Halo,", "DOOM," and "Left 4 Dead." Certain Affinity's new studio will be opening in February in the Fashion District in the heart of downtown Toronto. To select the right location for its new office, Certain Affinity worked closely with Toronto Global, a team of experienced business advisors assisting global businesses to expand into the Toronto Region.

Certain Affinity recently celebrated its 12th anniversary; during its history it has developed or co-developed 29 products across 12 different franchises, with more than 100 million units sold. The new Toronto location will support the Austin studio currently developing an ambitious original title as well as an original IP game, "Last Expedition," which is a sci-fi co-op FPS.
 

jje1000

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Interesting points and facts from the Financial Times. Same issues as before, Canada seems to have a problem turning ideas into huge companies, largely due to a lack of experience and financing, along with the fact that many start-ups get bought out by larger companies from elsewhere. I wonder how that could be fixed?

Toronto tech: why Canada is attracting the ‘best’ people
[...] Canada already grants foreign students work permits for up to three years after graduation, and in June 2017 the country’s immigration and employment authorities launched what they called their Global Skills Strategy, with the goal of making it easier for employers to bring in highly skilled foreign workers.

Among its promises was that work permits for such individuals (and their families) would be processed within two weeks, subject to police and medical checks. Within little more than a year, more than 12,000 people had applied, of whom 95 per cent had been accepted.
There is nothing new about Canada being receptive to immigration: some 51 per cent of Toronto’s residents were born in another country — more than New York’s 40 per cent. But the strategy has given a new tech focus to Canada’s immigration policy: the most common professions among those admitted were developers, computer analysts, university professors and software engineers.
The prospect of a change in Washington is one challenge Toronto Global’s Mr Lennox sees on the horizon for his city: “At some point Trump is no longer going to be president,” he says, and his successor could make it easier for those with tech skills to choose the US. Before that moment, he says, “the trick is for us to translate the momentum we’re seeing now into something that’s abiding and resilient.”
Kerry Liu is not worried about Toronto running short of technology talent. “What we may have is a shortage of commercialisation success,” says the Rubikloud chief executive, an AI company which helps retailers use their data.

Toronto’s tech scene has many assets other cities would envy, such as incubators, commercially-minded academics and industry-friendly politicians. But it lacks a homegrown unicorn, a start-up valued at $1bn or more.

The reasons, industry leaders say, include funding shortages and big company experience. “We don’t have enough venture capitalists in Canada and we don’t have enough really talented leaders who have the experience of taking their companies to a bigger scale,” says CIFAR’s Elissa Strome.
VC investments in Canada jumped 35 per cent to a record $3.5bn in 2018, of which Toronto companies raised $1.3bn, up from just $300m in 2013, according to PwC and CB Insights MoneyTree. But this is still a fraction of the $99.5bn VCs invested in the US last year.

Mark Usher, chair of the Canadian Venture Capital Association, says some of the money now going into Toronto’s start-ups was made by investors in Shopify, the Ottawa-based ecommerce company that went public in 2015 and now has a market capitalisation of $20bn. “Success begets success,” he notes.

Yet Toronto still lacks senior leaders with experience of building companies to that scale, Mr Liu says: “What you won’t find here are too many people who’ve taken a company from the $100m level to $1bn.”
MaRS Discovery District’s Yung Wu believes his campus is breeding “the next 20 unicorns”, pointing to life sciences company Highland Therapeutics as a possible contender. Hubba’s Ben Zifkin agrees that 20-25 Toronto companies have that potential, naming Ritual and Drop among them, but thinks only two or three may realise it.

Counter-point from Reddit:
Bumblingrump said:
Because it's easier to import talent here compared to the US. Many big US firms are opening offices in Canada to skirt the tough and toughening immigration laws in the USA. It's a mixed blessing for Canadians. On one hand it's pushing down wages big time for those in Canada, but given the fact that we have such good relations with the US most talented Canadians actually leave for the US quite easily and enjoy amazing wages and incredible standards of living. I personally know 5 people that have left to Dallas, Austin, and Denver, and are living in unbelievable prosperity that they would never earn anywhere in Canada. Wages are nearly double for most positions and houses are significantly cheaper. Healthcare is a mess but any company worth their salt will give great benefits, plus most tech workers are young and actually need very little healthcare if they eat healthy and exercise. Canada is an amazing place but not somewhere you wish to be if you want a good quality of life. Canada is much like California, great if you are a not working (retired), earning less than 35k, or more than 300k, otherwise you're getting squeezed from all directions.
 

jje1000

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A dark side that ties into Canada's issues with monetizing and building up that tech unicorn.

I think the solution might lie halfway down the article- unify university intellectual property guidelines, and make Canadian companies the preferable partners of choice for university research.

How foreign companies use Canada’s universities to steal away huge chunks of intellectual property
Innovation Nation: Lax rules around university R&D programs are doing more to benefit foreign multinationals than Canada
In November 2017, the head of Google LLC’s parent company praised Prime Minister Justin Trudeau for Canada’s advances in artificial intelligence, saying he was “enormously thankful to Canadians” for its contributions to AI research and, by extension, its contributions to Google’s bottom line.

Alphabet Inc. chairman Eric Schmidt, who was speaking to Trudeau at a Google event in Toronto, explained how the company had built much of its cutting-edge software, which it later sold through various finished products, in Canadian office spaces.

“We now use it throughout our entire business and it’s a major driver of our corporate success,” he said. “So we owe you.”
The comments probably gratified many in the room, but for some it was a reminder that Canada, for all its advances in research and development, routinely gives away huge chunks of its intellectual property rights to foreign multinationals — often through the very academic institutions that it pays to develop innovative new technologies and concepts.

Companies such as Google and Apple Inc. increasingly rely on Canadian workers, who come cheaper than those in Silicon Valley, and universities to bolster their corporate know-how, then sell the finished products through U.S. headquarters.
Federal and provincial bodies funnel approximately $12 billion into research and development efforts every year, according to a 2017 report by the University of Toronto, consisting of a mix of government grants, tax credits, loans and other measures.
But some of those funding efforts may increasingly end up creating IP for foreign companies. In 2016, 58 per cent of the patents granted to Canadian inventors were assigned to companies located in other countries, up from 45 per cent in 2005.
The report found a “glaring gap between invention and ownership” when studying Canada’s ability to generate returns on the patents it develops, ranking it 12th out of 17 nations on this measure.
In Ottawa, federal ministers tend to use every available breath to promote job growth through “innovative” programs, often through consortiums involving university research centres. But Hinton and others say the results of such programs in terms of economic output are so weak that government officials need to reconsider how they are sold to the public.
“It’s pennies on the dollar for the amount of money you put in,” said Jim Hinton, fellow at the Centre for International Governance Innovation.
The reasons for the shortcoming, if viewed that way, are complicated. Part of the problem, observers say, is that university professors are afforded an immense amount of discretion on which companies they partner with for research, and there is minimal oversight about who they partner with and how. The approach to intellectual property, and who ultimately keeps it, also differs from one university to the next.

Hamid Arabzadeh, founder and chief executive of Ranovus Inc., an Ottawa company that develops efficient infrastructure for data storage systems, said multinational companies have largely crowded out much of the available university research grants. The company in its early stages, he said, had to fight hard just to find somewhat obscure professors that it could work with.

“Pretty much everything that is above the ground level has already been picked up,” he said. “So what we have to do is go find things that are below ground and that have talent.”
“Huawei may have 10 people in Ottawa, and their only job is for each of them to work with five professors, get their IP, send it to China, assess it, shortlist it, get it productized, all with thousands and thousands of people behind them,” Arabzadeh said. “My job is to build a business here that is sustainable, so I cannot assign 10 of my guys to go and work with these professors.”
 

jje1000

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Unfortunately a decline in the number of startups and deals since 2015, but still increasing volumes of investment, I wonder if the sector is reaching its regional financing capacity and is consolidating.

FINTECH INVESTMENT IN TORONTO REGION GROWS BY 10 TIMES OVER FIVE YEARS, REPORT FINDS
Investments for FinTech startups in the Toronto region grew to a total of almost $221 million across 25 deals in 2018. However, the report also found that the region has a smaller share of global Fintech investment in regards to the number and size of deals compared to other major financial centres such as San Fransisco, London, and New York.
https://betakit.com/fintech-investment-in-toronto-region-grows-by-10-times-over-five-years-report-finds/
 
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jje1000

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Another warning from Bloomberg:
Canada Falling Behind In the ‘Intangible’ Economy, Report Warns
Canada has a complex relationship when it comes to foreign investment from its southern neighbor, and is now facing calls to safeguard another key sector.
Americans hold large chunks of Canada’s resource, manufacturing and retail industries, yet U.S. companies are largely excluded from key sectors like banking, broadcasting and telecommunications that are seen as strategic or sensitive.
A growing chorus of prominent Canadians has begun to wonder whether that list of protected industries should widen to include technology. The latest call comes from two of the more influential federal policy makers of the past decade -- Sean Speer, a long-time Conservative, and Robert Asselin, a Liberal.
Their conclusion: the government should do more to keep IP and data in Canada, encourage the development of Canadian-based technologies and protect them from foreign takeovers. This includes stemming the use of public funds for research by foreign tech companies, using public procurement to buy technology from domestic firms and toughening criteria for foreign acquisitions that have negative impacts on the “broader innovation ecosystem.”
 

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