California’s Highway 101 stretches 95 kilometres between San Francisco and San Jose, connecting small and large technology companies, students, innovators and venture capitalists. Nestled around Highway 101 is the largest innovation corridor in the world – Silicon Valley.
Similarly, Ontario’s tree-lined Highway 401 stretches 115 kilometres between Toronto and Waterloo, also connecting small and large technology companies, students, innovators and venture capitalists. Last year, this Ontario corridor surpassed all other cities and regions and became the world’s second largest innovation corridor. It is the Silicon Valley of the North.
In my 25 years in technology, I have traveled both valleys end-to-end and the similarities between the two corridors are more striking than their differences.
Silicon Valley employs approximately 380,000 tech workers; the Toronto-Waterloo corridor has nearly 280,000. The Waterloo Region boasts nearly 1,000 companies, contributing more than $30-billion annually to the global economy. In 2013, Startup Genome ranked Waterloo as 16th among the world’s 20 global startup hubs.
For Ontario to sustain this innovative trajectory it needs the confluence of three key forces: talent, capital and attitude.
Talent. The Ontario corridor is home to early stage companies, large multinationals, government agencies, academic institutions and technology incubators – all focused on innovation. In fact, almost 60 per cent of Canada’s innovation activity occurs here and with access to a pool of talent added to the mix, the corridor offers the perfect landscape for entrepreneurs. To remain competitive, companies must recruit the best talent, have access to R&D resources, and forge relationships with robust start-up communities. That’s why OpenText opted to work with the Ontario Government to invest $2-billion and create 1,200 new jobs over the next seven years in the province.
Economist Enrico Moretti once said in The New Geography of Jobs that “for each new high-tech job in a city, five additional jobs are ultimately created outside of the high-tech sector in that city, both in skilled occupations (lawyers, teachers, nurses) and in unskilled ones (waiters, hairdressers, carpenters).” What is more, innovation “has a disproportionate effect on the economy of American communities. Most sectors have a multiplier effect, but the innovation sector has the largest multiplier of all: about three times larger than that of manufacturing.” Moretti has it right. Ontario has it right.
Capital. To foster innovation, access to capital is crucial. This access has been the greatest barrier to commercializing Canadian technology innovation, but that’s changing. According Canada’s Venture Capital And Private Equity Association, in 2013, investments made by VC funds totaled $2-billion, surging to its highest level since 2007. A number of initiatives to directly seed technology entrepreneurship and innovations in Canada have recently sprung up, supported by the Federal Government’s Venture Capital Action Plan program. One of these programs is a public-private partnership of a $217-million fund of funds, managed by Northleaf, infusing funding into a Venture Capital Fund providing crucial capital to startups.
Attitude. One of the key ingredients that makes Silicon Valley so successful is the “not afraid to fail” attitude. If technology innovation is to continue to thrive, entrepreneurs must take chances. You embrace failures, learn from it and then try the next iteration. And, when you have clusters of companies of like mind, such as those here in the Ontario corridor, you learn faster. Combine this attitude with the backdrop of expertise, the cost of entry for digital innovation becomes lower, making it less daunting for entrepreneurs to take risks.
OpenText is a Canadian-grown global company, and our roots in Ontario run deep. We started as a technology carveout from the University of Waterloo in 1991 with four employees. Today, we employ more than 8,000 people and have 100,000 customers around the world. Ontario has become a leading digital innovation hub.
I constantly receive letters from governors, finance ministers and business development agencies from around the globe to consider their jurisdictions as a place for us to set up shop to grow our business. We, however, choose to continue to invest in Canada because of the highly educated workforce, our strong university partnerships in R&D, as well as the province’s robust and innovative start-up communities.
The digital economy is the engine that will drive Ontario’s growth and prosperity. Technology innovation is the fuel that will power this engine in its race for the digital future.
Mark J. Barrenechea is President and CEO of OpenText Corporation.