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Canadian companies are quickly gaining a reputation around the world, and startups grown at home now have access to many of the same resources as their Silicon Valley peers (d_duncan/Getty Images/iStockphoto)
Canadian companies are quickly gaining a reputation around the world, and startups grown at home now have access to many of the same resources as their Silicon Valley peers (d_duncan/Getty Images/iStockphoto)

Guest column

The Canadian tech evolution: what I’ve witnessed as a founder Add to ...

The tech industry in Canada has undergone radical changes in the last decade. As a founder of a seven-year-old startup, I’ve been witness to the evolution of the landscape from a primordial soup of funding, leadership and opportunity to a thriving ecosystem making a major impact on the global stage.

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With an improved funding environment, a tipping point in cloud technology adoption, and a rich pool of talent to choose from, our tech scene is growing at an unprecedented rate. Canadian companies are quickly gaining a reputation around the world, and startups grown at home now have access to many of the same resources as their Silicon Valley peers.

FUNDING LANDSCAPE

I had the unfortunate timing of starting a new business in 2007. If I had any idea of what the fundraising climate was going to be like in those early days, I’m not sure if I would have embarked on the journey. But as they say, ignorance is bliss.

In the winter of 2008, the tech industry was hit hard in the economic meltdown. Many in the industry referred to that period of time as a ‘nuclear winter’ for funding. It was a tough time for startups around the world trying to gain traction.

Renowned angel investor Ron Conway famously sent bleak instruction to the CEOs of his portfolio companies detailing how to survive the downturn, and leading Silicon Valley-based VC firm Sequoia Capital held an emergency meeting to deliver similar advice to its startups.

We took much of this advice and battened our hatches. We managed to make it through that period with a few battle scars, but overall stronger because we had to learn to do a lot with very little.

The recovery from the crash was not the only hurdle to overcome. Canada had a regulatory environment, namely Section 116 of our tax code, that made it cost-prohibitive for international venture capital firms to invest in Canadian companies. Even if investors had funds to give, we weren’t getting access because of these restrictions. However, this all changed in 2009, when Section 116 was removed in a bid to get Canadian companies the resources they need to stay competitive in global markets.

Since then, U.S. venture capitalists have already invested over $700 million in over 30 technology companies associated with the C100, a non-profit that connects Canadian entrepreneurs with Silicon Valley. At Clio, we’ve seen the impact of both the improved tax code and the thriving technology environment first-hand: over the last three years we’ve raised over $27-million, with Bessemer Venture Partners, a $1.6-billion Silicon Valley fund that’s taken more than 100 companies to IPO, leading our latest round.

TIPPING POINT OF CLOUD ADOPTION

In the last five years the world has learned about ‘the cloud.’ It’s not just an IT term used in business – everyone sending e-mails and instant messages, streaming videos or music and storing photos online is tapping into cloud technology.

Venture capitalist Anthony Lee recently wrote that Canadian companies are ideally positioned for modern business software markets thanks to our sophisticated user base, a shift in the software sales model, and proximity to U.S. customers.

While I might not have had the foresight to avoid the economic collapse of 2009, I did see the potential in what was happing in software for business as it moved to the cloud. I knew it would be especially transformative for small businesses.

The legal profession is one of the oldest and most established, which means it also has some of the most restrictive legacy issues in terms of how business is conducted. As the world moves online, the legal profession is playing catch-up to compete with evolving economic realities. Which, from my perspective, is an exciting challenge to tackle.

As we’ve seen with the widespread adoption of Clio, products serving the needs of one specific audience, or vertical market, will be the next wave of technological advancement.

GROWING TALENT POOL

Over the last seven years, some of the leading startups across the tech industry have been built in Canada. Companies like Eloqua, Hootsuite, Radian6, Beyond the Rack, Shopify and Kobo have put us on the map with excellent products, high-profile partnerships, and multi-million funding rounds. The sustained growth of these companies has built up a rich and diverse group of talented engineers, managers and executives with the chops to build the next billion dollar technology companies.

Canada’s talent has also attracted international attention from Twitter, Google, Amazon.com and Facebook, with all companies setting up development and sales centers from B.C. to Nova Scotia. The companies are leveraging both the experienced talent pool that has developed in Canada over the last decade, as well as the tremendous talent coming out of our post-secondary institutions. Graduates from Canadian schools like Waterloo, University of British Columbia and McGill are successfully competing in the job market with alumni from MIT, Carnegie Melon and Stanford.

WHAT DOES THE FUTURE HOLD?

Canada’s ever-improving talent base, coupled with an improved regulatory environment, has created the conditions for what I hope will be a Cambrian explosion of startups. Historically, Canadian startups have sold relatively early in their lifetimes, but the larger capital infusions coming from both sides of the border are allowing startups to think about long-term, high-value exits.

This confluence of factors promises to see the next generation of Canadian technology companies punching well above their weight on the global stage.

Jack Newton is the CEO and co-founder of Clio, the most comprehensive cloud-based practice management platform for the legal industry. Learn more at www.clio.com, or follow @goclio.

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