Until recently, Canadian tech entrepreneurs faced many seemingly insurmountable challenges: a lack of early and late-stage funding, long visa wait times for foreign employees, brain drain to Silicon Valley and more.
Prime Minister Trudeau’s federal government has taken various steps to improve the situation. For example, issuing special fast-track visas for tech employees from abroad is making it easier to attract talent from overseas, while offering hundreds of millions of dollars in venture capital money and support for artificial intelligence research is spurring innovative breakthroughs in a wide range of sectors. This is in addition to existing initiatives developed by the federal government such as the Industrial Research Assistance Program, the Scientific Research and Experimental Development tax credits, the Northleaf Venture Catalyst Fund and the Small Business Job Credit.
The Province of Ontario also offers various incentive programs to support local businesses. Some of these are in the form of funds and grants such as Ontario Exporters Fund, Canada-Ontario Job Grant Southwestern Ontario Development Fund (SWODF), Eastern Ontario Development Fund (EODF) and Northern Ontario Heritage Fund Corporation programs (NOHFC). Others involve tax credits including Ontario Research and Development Tax Credit, the Ontario Innovation Tax Credit, the Ontario Business Research Institute Tax Credit and the Ontario Tax Exemption for Commercialization. Ontario also has sector specific programs such as MaRS Investment Accelerator Fund (AIF) for clean tech, ICT, and life sciences sectors and the Ontario Centres of Excellence (OCE)’s Explore program for companies involved with drug discovery.
As a result, more and more small and large companies from Canada and around the world are trying to take advantage of these opportunities. Microsoft, Google and Uber have decided to form artificial intelligence research teams in Canada. Google selected Waterloo, Ontario, home of BlackBerry, to open a new office last year for 1,000 engineers. Amazon is hiring employees throughout the country, with almost 1,000 employees located in Vancouver alone.
Venture capital investment in Canadian enterprises jumped 26% in 2016 to $2.2 billion from the previous year, after totaling just about $683 million in 2010. Canadian entrepreneurs have reported a rise in interest by U.S. companies and investors in their endeavors. In this vein, several examples have emerged of notable American companies investing in Canadian startups as well. For example, Intel joined a $120 million funding round for Kitchener, Ontario-based Thalmic Labs Inc. in September 2016, while Microsoft invested in Montreal, Québec-based Element AI in December 2016.
Perhaps contributing to this major shift was a realization that the high-tech sector represents a larger portion of the Canadian economy than previously thought, exceeding even the finance and insurance sectors. In 2016, the Brookfield Institute for Innovation and Entrepreneurship at Ryerson University in Toronto released a report entitled “The State of Canada’s Tech Sector,” which demonstrated that over 864,000 employees across Canada were classified as high-tech employees, constituting 5.6% of total employment in 2015. The overall tech sector, which includes over 71,000 firms, generated $117 billion of Canada’s total $1.65 trillion GDP in 2015. Meanwhile, over two-thirds of those firms are small companies with less than four employees.
While business cycles, personalities and trends ensure that nothing remains constant in the world over time, now is seemingly a prime time for companies of all sizes to capitalize on opportunities in Canada.
EDI represents the foreign direct investment and export promotion interests of the Province of Ontario in Israel and is happy to discuss relevant business opportunities with interested Israeli parties.
Michael PlattVP Strategy & Business Development |
Michael, EDI's VP Strategy & Business Development, is responsible for business development and inward investment promotion for EDI’s clients. His primary tasks include targeting potential leads, business development consulting, conducting market research, writing feasibility studies and facilitating communication between companies. |