During the Ontario election campaign, leaders of the various political parties have been offering individual policy prescriptions for many of the province’s economic ills, which includes one of the worst youth unemployment rates in Canada. Yet for all their talk, not a single one of them – not the Liberals’ Kathleen Wynne, nor the Conservatives’ Tim Hudak, nor the New Democratic Party’s Andrea Horwath – have presented a comprehensive solution that addresses this complex issue.
Ontario’s youth – defined by Statistics Canada as those between the ages of 15 and 24 and currently facing a 13.6-per-cent jobless rate or at best, underemployment – are too smart and too impatient to wait for Queen’s Park or Ottawa to improve their dismal prospects in a labour market upended by a declining manufacturing sector.
If I were 24 years old today, I’d likely be doing exactly what many enterprising young graduates are already doing – creating my own job by launching a startup business in the flourishing high tech industry. As an executive-in-residence at the Schulich School of Business, I’ve been encouraging students to consider entrepreneurship as a viable career option.
Indeed, with the rise of cloud computing and a globally available Internet reducing the need for bricks-and-mortar investment, there’s probably never been a better time – let alone such an urgent need – for young Ontarians to start their own businesses. While the high tech sector interests me most as a former CEO for Hewlett-Packard Canada, there is also a great need and tremendous potential today for enterprise startups by youth in other areas, particularly in the skilled trades.
In the high tech sector, a good example is Thalmic Labs, the maker of Myo, a gesture-control armband that uses your muscles’ electrical impulses to control digital devices. It has raised $14.5-million in funding, with Intel Capital and Spark Capital among their major investors. Launched two years ago by Stephen Lake and his co-founders, then engineering students at the University of Waterloo, Myo was conceived during a fourth-year mechatronics class project. Full disclaimer: Thalmic’s pitch was so compelling that I also invested in them.
There are many other recent examples of Ontario startups that have generated wealth for their founders, while creating highly skilled jobs and contributing to our overall economy.
The Kitchener-Waterloo region’s Desire2Learn and BufferBox, along with Ottawa-based Shopify, are other examples of local startup success stories that are helping to develop this province’s high tech industry.
Since small and medium size businesses – defined by Industry Canada as companies with revenue of less than $50-million – contribute 39 per cent of Canada’s gross domestic product and account for 90 per cent of Canadian jobs, startups are vitally important to sustain our country’s labour force and economy.
Ontario, in particular, stands to gain from high-tech entrepreneurism, which promises to replace the province’s declining manufacturing sector with a high-tech corridor that already stretches from Waterloo to Ottawa.
So what can we do to make conditions more favourable for the success of these high-tech entrepreneurs?
First, we need an education system – both colleges and universities – that does more to develop graduates who are able to collaborate. Yes, we need more engineers, scientists, and business leaders, but we also need liberal arts and law graduates, all fully able and willing to work together.
2. Professional schools
The STEM programs – science, technology, engineering and math – need to do more to encourage entrepreneurial traits and skill sets.
3. Link government and business
We need businesses and governments to come together to provide valuable supports for new ventures. Leading the way is Kitchener’s Communitech, which nurtures startups from concept and angel investment, through incubation, acceleration and even taking a company global. Communitech has grown into a real hub of activity, supporting 1,000 startups with a combined revenue of more than $30-billion so far. More telling, every $1 in public funding received by Communitech has generated more than $14 in economic activity. Not a bad return on our tax dollars.
4. Provide more capital
We need more “patient capital” support for new and mid-stage ventures to allow them to reach their full potential. At OMERS Private Equity, the investing arm of the Ontario Municipal Employees Retirement System, John Ruffalo is showing leadership in investing in ventures that otherwise might have to sell earlier, allowing them to achieve greater heights under their original Canadian ownership.
5. More federal and provincial funding
We need more federal and provincial funding support for ventures that are further along the development path so entrepreneurs are not forced to take premature exits, selling to interests abroad. We’re off to a good start with the federal government’s $400-million Venture Capital Action Plan and Ontario’s $50-million investment, matched by Ottawa, in the Northleaf Venture Catalyst Fund
6. Support startup incubators
Finally, we need to support tech startups in communities like Guelph, Toronto and Kingston – to truly strengthen the corridor running from Waterloo to Ottawa.
As with many disruptive innovations, the startup wave has begun with a new way of looking at an age-old problem. Necessity is the mother of invention. Our youth need jobs, so many are making their own. The rest of us – as voters, business leaders and consumers – would do well to support their efforts.
Paul Tsaparis is executive-in-residence at York University’s Schulich School of Business (@SchulichSchool), former CEO of Hewlett-Packard Canada and a director of numerous private and not-for-profit boards, including Indspire, which helps indigenous people.