Why is Canada much sought after for startups recently?

By | May 21, 2015

Gone are the days when people from Canada have to move to California to come up with a startup. Recent trends suggest that Canada is becoming a perfect launch location for many tech startup companies. Canada’s federal government also has made a favorable move to implement a new visa which aims to encourage young entrepreneurs from all over world to launch their business in their country.

The number of Canadian tech startups to raise big bucket of venture funding without shifting to USA are increasing every day. In the past one and half years, a large number of venture capital investments have shown a major shift in the Canadian technology startup scene. The Canadian market is becoming more and more attractive day by day. Canada is the no.1 trading partner for USA, says the report by U.S Census Bureau. With the similar taste, language, behaviors and habits, Canadian markets becomes easier to connect with for the US markets. So many Americans are expanding to north and some are starting their new ventures in the north.


Let’s look the key reasons that make Canada the next startup destination and reasons that attract the tech startups.

1.Financial Growth:
From 2003 to 2012, Canada led G-7 countries in economic growth. The country has a market value a combined gross domestic product (GDP) of $38 trillion. When expanding into a country which is flourishing economically, it can offer much more than alternate sources of revenue. The expansion can also generate new and major source of revenue for the company which would accelerate the growth of the company and improve the financial stand of the startup. When a country is economically strong and wealthy, it just means more buying capacity for the people living there which would be at the advantage of the businessmen.

2. Supportive ecosystem:
Canada has a very favorable environment for the entrepreneurs. It consists of many well-developed incubators, accelerators, universities and lot of investment in startup business. According to Startup Genome’s Startup Ecosystem Report 2013, Toronto, Vancouver and Waterloo have caught places in the top 20 locations in the world to start a business. Also, the startup climate there is favorable for all three different levels that includes local, national and global. Various grassroots movements and government provide immense support, assistance and good access to global networks.

3. Diversification:
By expanding one’s business into Canada, it gives way to generate revenue through many alternate sources. Though the similarities in behavior patterns and culture exist between USA and Canada, the market may not be the same for all the products. This may give way to diversify the products or the services of the company and make the company more resilient to changes in the domestic marketplace. Expanding into Canada can give a business a tremendous opportunity to provide products and services to growing market of Canadian customers.

4. Efficiency:
By tapping into the untouched markets of Canada, one will have the opportunity to increase output with lower variable costs. This could help generating more revenue and would also increase the profit margins. For instance, when starting a company which works on a concept new to Canada, there would be no competitors at least at the initial stage which would give the company a competitive edge and huge advantage on profit margins. For manufacturing startups, the Canadian market can help reducing the cost of production and other hidden costs and make the company more competitive in the U.S market.

5. Product improvements:
New country, new market, new customers can give whole new insights to the product and the company and help the company improvise its products and launch new products into the market. The perspective of the consumers in Canada would not be the same as the customers in USA. The differences in the usage and buying pattern of the products can show all new purpose for the product that was never thought before. These new idea can also help in improving the products sold in the USA market and altering the usage of the users there. Also, it can give way to more and new ranges increasing the options to choose from. For instance, increasing the varieties of flavors for a food item.

6. Easier Visas:
Canada’s federal government has changed its visa policies recently to encourage people from other countries to start or expand business into their country. It is more or less like a call for all emerging entrepreneurs around the globe to consider Canada. Study shows that immigrants are 30% more likely to start business than non-immigrants in USA which can now be pave faster way into Canada if the startups receive $200,000 investment from a designated Canadian venture capital fund or $75,000 from a designated Canadian angel investor group. This help the entrepreneurs to get rid of the bureaucratic red tape and the unnecessary stress of visas and immigration procedure. In 2012, a meager number of 700 visas has grown to 2750 in 2015 and opened the gates for the entrepreneurs to launch their startups in Canada.

7. Simple to start business:

UNDP and World Economic Forum has ranked Canada one among the easiest countries to launch a new business. It is also said by Victoria Lennox, co-founder and CEO of Startup Canada, that 30 minutes is all that is needed to start a business in Canada. Adding on to it, the cost of starting a business is considerably very low, particularly in the ICT sector. The bureaucracy has simplified the process a lot and most of the procedures and applications can be done online with the click of the button.


Group Of Business People Talking And Discussing About Canada

Group Of Business People Talking And Discussing About Canada

8. Government Assistance:
Canadian government is very startup friendly. It invests a lot in startup projects. It also offers a lot of tax incentives for investment in startups. For example, in British Columbia there are angel tax credits as well as many others. Operating in the country is also easier with the public funds and the strong volunteer and entrepreneurship culture. This has made the Canadian society very civic-minded and takes part in many enterprise projects.

9. Competitive Edge:
With the tough competition is every field, it is not wise for anyone to just do business in one country or region. To remain competitive and maintain a competitive edge one has to get into international expansion. For Americans, expanding into Canada would be a logical option. Abundance of talented and skilled workers in Canada would meet the market requirements and would benefit the company. Also the abundant space availability would help in growing various entrepreneurial projects, thereby maintaining a competitive edge among the competitors.