Mark Skapinker is co-founder and managing partner of Brightspark Ventures
I am growing increasingly concerned about some of the fear and paranoia I am seeing from a number of sources concerning U.S.-based mega tech companies opening development centres in Canada. I believe we need to encourage these companies to enlarge their base in Canada, not chase them away. The backlash against Sidewalks Labs in Toronto, or the negativity toward the opening of Toronto research and development (R&D) centres by Google, Amazon, Uber etc. is misguided and will be to our own detriment.
I do not believe that optimizing Canada’s potential as a global tech leader requires us to toil away in isolation. In fact, Canada is doubly blessed to have three major success factors at play: the domestic talent and infrastructure required to enable successful tech leadership; the U.S. market on our doorstep; and the foreign investment needed to fuel our growth momentum.
From our perspective of investing for more than 20 years in the Canadian tech industry as a venture-capital firm, Brightspark Ventures is seeing a more meaningful rise both in quantity and quality of high-potential tech companies based in Canada than ever before.
The Information Technology Association of Canada says there are more than 500,000 direct jobs in tech in Canada, “twice the number employed in the energy sector and more than the auto sector,” contributing $159.9-billion in revenue and $69.5-billion to the Canadian gross domestic product. Toronto alone boasts an industry employing more than 90,000 people and its “technology sector contributed more than $8B in annual employee wages.”
Toronto’s tech success to date can largely be attributed to the fundamentals we have in place: superb universities such as the University of Waterloo and the University of Toronto, both of which are training some of the best minds in artificial intelligence, life sciences and every area of tech excellence. We also have a diverse and creative population, comprised of those born here in Canada and immigrants (like me) who are adding experience to this expertise. And we have financing from local and international sources as well as government programs fuelling the growth engine.
Of course, I understand the fear. We just witnessed the brutal backlash to U.S. automobile companies closing plants in Canada; and I am outraged by the “make America great again” movement’s approach of alienating the non-U.S. marketplace and the way the White House treats Canada. But let’s not inappropriately compare the automobile industry branch offices to U.S. tech companies’ R&D in Canada.
I find it more telling to look to other countries that have succeeded in growing their tech sectors. Take Israel, for example. When you look closely at the résumés of the top Israeli CEOs, many worked at R&D centres in Israel for companies such as Microsoft, Intel and Google. There, they learned the discipline of these companies and the road map of their products. A huge number of startups were born as a result of those experiences, opening the door to additional hires across marketing, engineering, business development and more from these tech giants.
Of course, we must keep a check on Canadian intellectual property protection, and ensure government spending isn’t just focused on motivating U.S. companies to set up shop in Canada. We also need to invest in our local startups and support them on their journeys to becoming scaleups. And we must be vigilant about issues such as privacy, human rights and big corporate interests – especially with our southern neighbour going through such political and cultural upheaval right on our doorstep.
It is not enough to rely only on new companies spinning out from universities and CEOs coming up with unique ideas while working at other Canadian companies. What we need is for Canadians to see U.S. tech giants with R&D in our backyard as an important source of training for our local talent and as incubators for the development of new startup teams discovering huge growth opportunities. These tech giants can help us nurture a new generation of CEOs and corporate leaders that have the drive, passion, know-how and strong ideas to start, grow and run the next generation of Canadian-born tech companies that will ultimately amplify the value of our local tech economy.
My message to the naysayers is to think twice before we push the U.S. giants away from expanding their presence in Canada. The next 100 – or even 1,000 – CEOs and startups are waiting in the wings, ready to be created in Canada, leveraging the expertise, experience and know-how that may very well be learned at one of the U.S. giants that have set up shop in our backyard. These future CEOs and startups may even be the same ones that lure back all the Canadian talent that left Canada for Silicon Valley over the years. With all of this momentum we are seeing in our tech industry now, the opportunity that lies ahead is ours to lose.