Toronto’s star is definitely on the rise. Over the past several years, there has been a noticeable uptick not only in the number of prominent startups based in the city, but also in the number of investment deals being struck and the number of VCs looking to Toronto for their next big opportunity. Keep reading to learn about the factors that have fuelled Toronto’s success – and what this means for the city going forward.

  1. Toronto has become a tech hub to rival other tech hubs.

As I’ve written about in the past, Toronto’s tech scene has become fully transformed over the past decade or so. It used to be that the only jobs available in tech were as in-house software developers or engineers for large organizations such as banks or utilities companies – but now, the opportunities for tech professionals are vast. For example, Amazon’s Toronto Tech Hub currently employs about 800 people, with plans to hire about 600 more and grow their local footprint further. Both Google and Microsoft have announced plans to make Toronto the location for their Canadian headquarters, and it’s only a matter of time before other giants follow suit. 

On top of that, Toronto has been rated one of the top cities in North America for tech talent, with more tech jobs being created here than in New York and Montreal. And, with several world-class universities located close by and the presence of preeminent artificial intelligence expert Geoffrey Hinton, Toronto’s tech dominance is likely to continue.

2. The huge number of innovative and forward-thinking startups that call Toronto home.

You can’t have a lot of VC activity if you don’t have a lot of interesting ideas. So, the fact that Canadian VC deals and funding achieved all-time highs in 2018 shows that not only are investors excited about the opportunities they see, but that local innovators are continuing to come up with unique ideas interesting enough to raise funding for.

On top of that, the first few months of this year have already seen Toronto-based startups finalize huge rounds of investment, with software companies Fiix and Vena each raising tens of millions of dollars in funding from both Canadian investors and US-based firms. And, thanks to the growing number of investments being made in the Toronto market and the number of successful startups who call Toronto home, the city now has a robust infrastructure that is able to nurture entrepreneurs and help them scale their companies. 

3. U.S.-based VCs are looking for opportunities outside of Silicon Valley…

Silicon Valley has long attracted the lion’s share of attention from VCs, thanks to the prodigious amount of talent residing there and the success of so many Bay Area startups. Consequently, there’s a lot of competition amongst investors to find the next “big thing” – the next Uber or Airbnb. This search has led many VCs to look beyond the borders of the United States, much to the advantage of cities like Toronto and Montreal. In fact, U.S.-based investors had their hand in 43 percent of Canadian VC deals in 2018 – and, according to PitchBook, since 2012, there have been more US investors than Canadian VCs investing in Canadian companies, which is a striking statistic. 

Why are U.S. VCs flocking to Toronto? As Sunil Mistry, an audit partner at KPMG, notes, they’ve “taken note of the country’s early leadership in breakthrough fields such as AI, fintech, healthtech and biotech.” On top of that, “VC money is increasingly drawn to Canada because of the country’s stable economy, its highly skilled and diverse workforce, and growing technology ecosystems in Toronto-Waterloo, Vancouver and Montreal.”

However, it is also true that U.S.-based VCs are beginning to face stiff competition from their Canadian counterparts – as I’ll explore in the next section.

4. …while homegrown VCs are also looking to get in on the action.

At the moment, there are a number of prominent VCs based in the Toronto area making a name for themselves: Portag3 Ventures, Diagram, Georgian Partners (an investor at my previous company, Freshbooks) and OMERS Ventures. Not only have these companies managed to raise millions of dollars for their funds, many have also invested significant resources by creating incubators and encouraging entrepreneurship. In fact, some of these VCs have become global powerhouses of their own, investing in companies outside of Canada and opening offices in Silicon Valley. 

In monetary terms, according to the 2018 MoneyTree report compiled by PwC Canada and CB Insights, companies backed by Canadian VCs raised CAD3.5 billion in 2018, while overall Canadian VC funding rose for the second year in a row. Toronto was by far the top Canadian market for deals, with 160 deals struck and over CAD1.3 billion raised (a 47 percent increase compared to 2017). 

So why is Toronto such a hotbed of VC activity? It’s thanks to several factors, including a highly educated, highly skilled workforce, ample support from the Canadian government, and an abundance of enthusiastic local entrepreneurs and investors. That’s what makes Toronto the Silicon Valley of the North. 

Another day, another breaking news story about how a large company is misusing or mishandling customer data. And yet, despite the constant backlash that companies who engage in such practices are subject to, it seems that not many are actually changing their ways. Sure, they might put up new pages on their website detailing their privacy policies, and make it easier for users to see what kind of information is being collected, but very few have made substantial changes to the way they use customer data. The reason for this is simple: our data is lucrative, and it’s the raw material that has made companies like Facebook and Google so successful. 

Take Facebook. Most people are familiar with the company as a social network platform – a place where one can interact with friends, share news stories, and watch entertaining videos. But Facebook’s largest revenue source is advertising – and in order to provide the best results for its advertising partners, the company needs to collect a huge amount of information on the billions of people who are using its platform for free. So, even if Facebook does not share user information with advertisers, as it has continuously asserted, it is in the company’s interest to gather as much personal information as possible. As long as advertising remains Facebook’s greatest source of revenue, it will continue to look for ways to maneuver around regulations and use our data.

In many ways, data has become one of the most valuable resources available to businesses. In fact, most businesses have come to view the data they have at their disposal as their greatest competitive advantage, especially as they embrace Big Data and artificial intelligence initiatives. Consequently, expect to see companies continue to look for ways to collect as much information on their users as possible – and expect hackers to continue to try to get their hands on as much of that data as possible. 

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