Why Canada is becoming the place to launch a tech startup 


Michael Litt, founder and chief executive of Waterloo-based Vidyard, which provides a video-marketing platform to online businesses, took some Silicon Valley advice and returned to Canada.

Is Canada becoming the perfect North American launch location for a new technology business? Recent trends make it appear so. Dozens of new tech companies have launched in, or moved to Canada, primarily Vancouver and Toronto/Waterloo, and begun growth trajectories. Dozens more are starting up monthly.

This trend became noticeable earlier this year when the 2012 report from San Francisco’s Startup Genome project placed Toronto, 8th and Vancouver 9th in the list of Top 10 startup regions in the World. Waterloo, Ont. placed 16, although it could be said that Waterloo and Toronto form a single startup corridor.

RingCredible, a five-year-old Dutch VoIP company that’s application allows anyone to make telephone calls to any mobile or land-line phone in the World launched at a the Canada 3.0 conference in Toronto. Its reasoning is likely to be reflected by many other foreign companies hoping to conquer North American markets.

Ring Credible, which charges 1¢ a minute for usage in Canada, chose the country to launch its North American expansion because its telephone market is “ripe for disruption,” Hans Osnabrugge, RingCredible’s chief executive, said on a RingCredible call from the Netherlands.

“The current telecom climate in Canada is one of the worst in the World,” he observed.  “There are not many countries left where both caller and receiver have to pay for a call. And calling rates are extremely high.”

Also, Canada’s different culture and proximity to the U.S. make it better suited for a company launch or expansion. The culture is “laid back and inclusive” and the mindset is more about team building than the competitive ferocity and demand for hyper-growth that are common characteristics of  New York or Silicon Valley, he said.

“The U.S. is a more individualistic country, where you have to be the top dog all the time, while in Canada companies work together,” Mr. Osnabrugge said. “Companies here have a bigger goal than making it in a month. You can take more time.”

In Vancouver, young tech entrepreneurs are dotted across the downtown area, creating apps or digital companies and the GROW incubator and accelerator launches new companies regularly. Cedars Online, a large aggregator of consumer service in cosmetic surgery founded in New York, set up a year ago, citing Vancouver’s location as one of its main reasons. Cedars founder Aman Datta said the city had a wealth of top talent, a perfect location, a strong startup culture, and was close to its chosen markets, California and Asia. Unfortunately, Cedars failed to gain enough traction in its market and was closed this year by investors.

Michael Litt, founder and chief executive of Waterloo-based Vidyard, which provides a video-marketing platform to online businesses, took some Silicon Valley advice and returned to Canada.

An alumnus of the famed YCombinator accelerator in San Francisco, Mr. Litt worked for a year in California and, after he started his company, returned to Canada to grow it.

“We raised some capital there and a famous investor told us that if we were going to create a B2B (business to business) company, we should go somewhere else because the Valley was mostly B2C (business to consumer),” he said. “There, a B2B company has to be very cool to attract talent. Also, talent there is very expensive and mobile.”

For Hongwei Liu, the 21-year-old chief executive of MappedIn, whose “wayfinding” app creates smartphone-and-kiosk-based guides around malls, convention centres, and other large building complexes, Canada beats Silicon Valley hands down because it better incubates startups involved in the B2B technology space.

He agreed, “Most startups in Ontario are B2B, while in the Valley they’re mostly B2C (business-to-consumer).”

“There, investors like making big bets with B2C so they can make a bigger score.”

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