I somewhat agree, but there have been plenty of exceptions to your rule. You make it sound like Canada has no startup market to speak of, which couldn't be further from the truth.
Flickr was based in Vancouver, as is HootSuite, ActiveState (the perl guys), Peer 1 Hosting, PlentyofFish. There's Shopify in Ottawa. Edmonton has Stormboard. Toronto has/had Kobo eBooks, Freshbooks, Well.ca, CryptoLogic (one of the main online gambling platforms, though they moved to Ireland), among others. On the more enterprisey side there's Layer 7 in Vancouver (API management), Bycast (bought by NetApp). There's also SMART technologies in Calgary (still independent though no longer a startup). There were many successful game companies (many WERE startups in the 1980's and 90's but are no longer): Bioware in Edmonton, Digital Extremes in London & Waterloo (Unreal & UT, Bioshock 1 & 2), BlackBox in Vancouver (Need for Speed), Uken Games in Toronto (a startup for once ;), and Ubisoft in Montreal (arguably French but most of their success came from the Canadian studio). There are also thousands of startups I haven't even mentioned in smaller communities like Halifax, K-W, Moncton.
I don't think it is necessarily bad that Canada is basically a "farm league", a ground for niche companies (only making millions, not billions). This is just an evolution of it being a "branch plant" economy for nearly 70 years since the early-mid 20th century. Clearly there is a small but thriving startup culture, particularly in Vancouver, or (for now) K-W, where good engineers don't have to go into IT, they can work at pure tech companies. Canadian startups tend to exit the only way MOST do - by acquisition. As Pmarca would say, the problem is with the poor IPO market.
Beyond IPOs, to become a disruptive multi-billion dollar play is by its nature a rare event. Add in the fact that Canada is geographically disbursed across five time zones, with huge (labour-intensive) natural resources to exploit, and the same population as California... the incentives need to be right to change Canada's industry structure. I'm not too worried about it - if one wanted to start a successful tech company in Canada, it's clear that there's enough talent to make it happen, and likely enough capital to get through seed or Series A. It might require foreign capital for subsequent growth investments, but by the time you're in the tornado, that won't be a problem.
The problem is not with "startups". The problem is with scaling - there is TONS of startup activity going on in the Toronto, Waterloo, Montreal, and Vancouver areas. If you look for it you'll see that it's thriving as more and more people consider startups to be viable career options.
Very few of these companies manage to break out and go big - when the dotcom bubble burst, all of our former giants like Nortel and Corel imploded, leaving only RIM to pick up the pieces in the tech sector.
There are reams of tech companies in the $1MM-$300MM space, a few in the $300MM-1B space, and basically one (RIM) in the $10B+ space.
Getting capital to scale aggressively is a huge problem - it's just not as easy or as free-flowing as in the USA. However, foreign financiers are starting to notice that they can get better returns on Canadian companies because of a paucity of funding, so I'm hoping that will improve things over time.
Otherwise, Canada is a fucking awesome place to start companies. We just need more people with the balls, the drive, and the unwillingness to accept no for an answer when it comes to raising money.
I can't see how doing a startup in Canada in general is a good idea. Policies there are a lot more restrictive than the states. It's a great place to visit, though.
You don't have that problem in Canada, and you have many of the same advantages but you don't have nearly the amount of startups and definitely almost no big ones.
I can't help but disagree with the claim of how much it supposedly "kicks ass" to be a Canadian startup. I founded a Canadian company a few years ago (still going) and am friends with a few of the founders of those other startups listed there. We're mostly on the same page: we're started here because we lived here, but being in Canada isn't exactly a hub for innovation.
One thing Canadian tech companies are good at is growing to 20-30 employees and selling out to a US company. But that's very different - the innovation is sucked out in those circumstances.
I feel that the "Revenue? We'll worry about that later" attitude is somehow important for innovation. Investors in Canada are really not one for high risk, high returns.
I mean, it's not horrible here or anything, but I really don't think our startup environment holds a flame to the US.
It will be hard to get startups to be based in a Canada if their target market is the US. We’re talking a difference of 36 million people vs 300 million. When it comes down to it Canada looks big but is a really tiny country.
I suppose but I mean... I feel like Canada is a near perfect location for the start up.... furthermore, it's not as if Anchor companies are far away (like the US for example).
As a Canadian now in the US... I really wish that Canada would step its game up and get a group of angels together or a proper incubator program. My family friends have started a pseudo incubator at http://www.thenext36.ca/
A major problem in Canada in my humble opinion is a lack of or alternatively a very poor startup ecosystem... unfortunately Canadian society is still very much conservative in that regard and it is not very welcoming towards startups and in turn startups have a somewhat negative connotation. That's a shame of course... we have lots talent and very intelligent folks around here..
Yup, you're essentially right (I wrote the post). The gist of the article really could have been "Why you should start your startup outside of the valley" ... but choosing Canada has a few specific advantages I never really delved into with this post ...
The proximity to US market means many of the "best and brightest" workers + companies end up migrating south of the border, resulting in an overall lackluster tech environment when compared to any of the major US cities.
If you look at many SF and NYC startups, as well as Facebook, Yahoo, and Google's rosters, you will find many Canadian tech entrepreneurs - maybe even moreso than within Canada itself :)
There was also historically issues with Canadian startups getting foreign investment / selling to a foreign company, although that situation is now changing.
canada seems to be lagging in terms of new startups. Also google/amazon etc employees doesn't meant they are necessarily great. Canada needs startups and startups need all round devs, and large companies usually need specialised workers.
I'm canuck and am very cynical about the startup space in Canada.
1) Large number of the best developers leave. I doubled my salary moving from Toronto to the Bay area.
2) Silicon Valley (and NY) has smart money. Not to insult Canadian VCs, but the ones I've met are glorified bankers.
3) This is no longer true. The recent govt is increasingly unfriendly to immigrants.
4) In the bay area, everyone I knew (and their dog) was working on a startup. Toronto and Vancouver don't compare.
5) I am very jaded by the govt influence on R&D. This attracts the wrong sort of people. e.g. I've heard of consulting firms that will write your proposal and greatly increase your odds of success - all you have to do is give them a 25% cut. Frankly, the cost of creating a startup is low enough that if you believe in your idea/revenue generation potential, you should not waste time writing proposals.
There are several reasons why you generally have a huge disadvantage when doing a startup in Canada, and it's not just about taxes and laws.
Want to use that cool new service (e.g., Stripe)? Sorry, not available in Canada.
Want to start a service that ships anything in the mail? Prohibitively expensive.
Want funds? Banks won't lend you anything and investors are very few and risk averse. $20-50K investments in web startups are rare and big news when they happen.
I love Canada and I'm not moving from it. But Canadian entrepreneurs have much lower chances of succeeding than American ones.
Can you make millions in Canada? Sure, but it's a much less likely occurrence. And if you do, it will generally be still less than what American startups can make.
This is why it makes no sense to start a company like Twitter in Canada. You can't sustain it. The best approach for Canadian startups is to bootstrap by charging money from day one.
So you can get a lot of nice "Italian restaurants on the web" doing SaaS and making good money, but don't expect groundbreaking innovation a la Google from Canada.
With that said, those who are already in Canada, like me, have no free pass. If you don't succeed, you can only blame yourself.
"In Silicon Valley they hand out money like candy" is not a good excuse for never achieving your dreams in Canada.
Not a whole lot. All of the money, culture, and innovation in technology is happening outside of our borders. With few notable exceptions you will find Canadian start ups tend to follow industry trends rather than make them. The salaries are rather anaemic and the jobs are not terribly interesting. On top of that most Canadian tech start-ups are forced to consider the first exit they can get by their conservative backers. Why would you even consider a Canadian company?
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