Toronto was recently ranked among the top five startup hubs globally, one of the most livable cities in the world, and the fourth-largest city in the North America in terms of population—but what does this all mean for community’s entrepreneurial future?
Although still lagging truly large startup communities like Silicon Valley, Toronto has all the necessary ingredients to possibly lead this elite group. Let’s look at the factors that will help the boost the startup ecosystem.
There’s no question that over the past decade, the startup culture in Toronto has grown significantly and that Toronto has emerged as a real leader in cultivating innovation. One of the most important factors that has helped accelerate this growth is the diverse and entrepreneurial workforce.
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Toronto is arguably the most multi-cultural city in the world and the diverse nature of its population gives its workforce a global perspective. Many immigrants come to Canada with entrepreneurship in their DNA and a desire to build. Universities in Ontario have a strong emphasis on research and innovation. They are producing the deepest talent pools in business, engineering and science with many of these graduates choosing to start their own businesses.
National and provincial government has shown solid support for local startups. Government grants, R&D support, and loans have been a critical element in the GTA’s success thus far. Programs like the startup visa initiative welcoming new entrepreneurs, and $500 million in venture capital funding from government sources will further strengthen the ecosystem.
Another key factor has been the accelerators in Toronto. Lately, there has been a lot of discussion around the increasing number of these accelerators, but this should be seen as a positive development. GTA has produced some of the best accelerators in North America, that are nurturing hundreds of new startups, some of whom will achieve great things.
Lastly, the funding environment for early stage companies has improved significantly. In 2012, Toronto captured the largest share of VC funding in Canada (approximately 25%—which is even higher when you include Kitchener/Waterloo). Canadian VC fund raising has increased and many US VCs are now investing significantly in Canadian companies. On the bright side of investing, one of the key items not imported from the US is the higher valuations for early stage companies. Canadian companies have much more reasonable valuations.
Toronto has a great ecosystem for building young companies. The local initiatives have gotten attention from investors and entrepreneurs globally. With a bit of further help, the startup culture can become entrenched in Toronto with the supporting ecosystem to build world class companies.