
Why Startups Should Choose Canada Over Silicon Valley - dquail
http://www.techvibes.com/blog/choosing-canada-over-silicon-valley-2013-04-08
======
vecinu
I have a few problems with this article, namely the comparisons drawn between
The Valley and Canada.

I am currently a Canadian citizen, working in San Francisco at a company that
moved from Vancouver many years ago.

The author seems to be comparing the Bay Area to the entirety of Canada.
Canada is not a small area, a city or a state. It is an entire 'continent'
spanning multiple provinces with very different laws and dynamics. A startup
in Waterloo, Ontario targeted towards engineering may fare better than one
founded in Vancouver.

Secondly, he is mentioning his connections in the Bay Area that have helped
him succeed in Canada. First he is arguing FOR founding a startup in Canada
but then admits that most of his barriers to entry were lifted with help from
the valley. There is a difference when you're starting fresh in Waterloo
without any outside help.

I think what the author should have done is draw a parallel between The Valley
and somewhere in Canada (Waterloo, Vancouver, Montreal, etc...). One may not
be better than the other but perhaps working WITH The Valley can help get your
startup off the ground elsewhere.

I would personally love to work for a startup back home in Toronto and perhaps
one day found my own but I don't see the same enthusiasm towards tech and
startup in Toronto that I see here in The Valley.

~~~
jsingleton
Agreed. A lot of people seem to be mentioning Toronto (never been) but can
anyone comment on the tech/startup scene in Vancouver (loved it but it seems
very small)?

~~~
dquail
Vancouver has exceptional talent, a shared time zone with the valley, and ski
hills minutes away. Grow labs and launch academy are also seeding and
launching legit companies. All this adds up to a pretty strong scene. I'm not
aware of investors stoned Boris and Bdc ... But again, SV investors aren't shy
to invest globally. In fact, many including Dave McClure, and our former
investors (tandem entrepreneurs) focus on these markets.

~~~
spitfire
It's funny that theres a west coast startup lab called "grow labs". Wonder
what sort of business ventures they focus on.

------
strebler
Rose coloured glasses. You want to startup in Canada? Either a) have access to
network with money, or b) bootstrap like there's no tomorrow.

Investors in Canada have an appetite for risk somewhere in the neighbourhood
of "mutual fund vs GIC" levels. For someone with Silicon Valley connections,
fine it could work, but this is not good general advice.

Even iNovia, which is probably the most forward looking VC in the country, has
a fairly small fund (low $100M if memory serves), I believe below the size of
the average US fund.

~~~
3pt14159
This man here speaks the truth. Without revenue, it is easier to get a $30k
grant than it is to find an angel investor willing to invest for the same
amount. (Source: I raised a $30k grant in about 3 meetings and 5 hours of
paper work. I also spent about 6 months with two idiot "angel investors" from
Ryerson Angel Network when I was young and dumb and didn't close a dime. One
guy said he wanted to invest but sheepishly said "I'll have to ask my wife
first, since it is $10k". More like RRSP investors. The only angel investor in
Toronto that is worth anything is the one guy from maple that told me that
nobody in the city has any money and to just get on bootstrapping.)

It is even easier to raise $800k in grant money too. Depending on your
startup, the CMF may think that your startup is in fact an "emerging digital
platform" that has promise. Most startups I know that raised this type of
capital did so from Americans.

If you are a Canadian angel that disagrees, feel free to talk to me. I know a
bunch of pre-revenue startups that are cool, but you won't ever hear of
because they've all given up hoping to raise Canadian cash.

~~~
dquail
Why does everyone seem to think you need to raise money from Canadian
investors? We raise from US investors in our first startup. We were Canadian
nobodies with nothing but a beta as a pitch deck. Yes, it's easier to raise if
vc's can drive down the road to visit .... But it's a lame excuse to use.

~~~
3pt14159
When you are in university or fresh out of it you don't know to get us angel
funding.

------
ultrasaurus
One thing that Canada has in it's favour is that for competent CS graduates,
you're competing with stultifying companies rather than companies in the SF
bubble. PagerDuty is one of those companies that I expect Canada would've been
happy to keep, and we're loving it in SF, but we're fighting with a lot of
similar companies for people.

This year, we opened up an office in Toronto, and even though our standards
are the same (exact same interview process everywhere) we've had a measurably
easier time attracting CS talent.

~~~
mahyarm
But can't Canadians move to the valley too with the TN visa?

~~~
bzmwillemsen
Canadians can move to the valley with a visa but there are a lot of Canadians
who want to stay in Canada. I live in Waterloo and am a CS student and I have
talked to hundreds of students who do not want to leave Canada, even if they
are offered a very attractive package from a company simply because they like
Canada. Myself being one of them.

------
OmarIsmail
A good direction seems to be Waterloo/Velocity->YC->Seed round->Main office in
Canada

There's a ton of advantages of having your main office in Canada, but there
are many disadvantages as well. Seed round pretty much has to be done in SV as
Canadian investors are notoriously cheap and horrible [1]. So you get your
seed money in SV and then work for cheap in Canada.

The downside is that not having "close" communication with your investors may
impact follow-on financing, though that remains to be seen. Also, for certain
types of companies being surrounded by a bunch of other startups can be very
useful.

No matter what, if you're going to be in the tech industry it's usually a good
thing to have some contacts and relationships in the valley. If you're a first
time founder then doing everything from Canada is going to be difficult. If
you've been around the block a few times, then the downsides aren't so bad,
and the upsides are major.

[1] Unconfirmed, but I heard a stat recently that BDC takes controlling
interest in 75% of their pre-Series A deals.

------
j_mack
Other than the Dragon's Den show that makes a mockery of early stage
entrepreneurs, or "cockroaches" as one panelist likes to refer to them, Canada
has failed miserably to participate in the tech scene.

From a recent report by the Conference Board of Canada titled "Canada Fails to
Put its Money Where its Ideas are—and it Shows in Poor Innovation Grade":

"Ottawa, April 4, 2013—Canada ranks second-to-last among its peers in venture
capital investment and business R&D spending, according to The Conference
Board of Canada’s ranking of innovation among the world’s leading economies.
And the rest of the report card doesn’t get much better, as Canada ranks 13th
in the 16-country How Canada Performs benchmarking."

Google the report if you have any dillusions about doing a startup up in
Cantada

~~~
dquail
The state of local VC is only one of many elements to measure startup
prospects in a market. Given "the market" is becoming more global, I'd argue
"local VC" is becoming moot

~~~
j_mack
The inability to access vc in Cantada is moot, maybe if you're 16 and living
with your parents.

I suppose Canadian bootstrappers could always mine for bitcoins... that's
pretty modern, global too!

------
kevingadd
I'd love to choose Canada, but the last time I looked at the immigration
'points' system, they only want me if I have $500k+ USD worth of money to
invest in the country (hah, as if I'd need to move if I did) or I'm a fluent
French speaker...

~~~
fn
Enter the Canada Startup Visa, released last week:

[http://venturebeat.com/2013/04/02/silicon-valley-north-
canad...](http://venturebeat.com/2013/04/02/silicon-valley-north-canada-
startup-visa-program-could-cost-u-s-in-war-for-talent/)

[http://www.cic.gc.ca/english/immigrate/business/start-
up/ind...](http://www.cic.gc.ca/english/immigrate/business/start-up/index.asp)

~~~
kevingadd
That's incredible! Thanks for the link :)

EDIT: Bah, too bad they demand proof of secondary education. Sucks for people
who couldn't afford college...

~~~
derefr
The same problem occurs for a Canadian with no college degree (but tons of
freelance dev experience) wishing to move to SV. Anyone here know a good way
to get around that?

Some details: I took two years of university so far, but ran out of money to
keep going. I'm now living month-to-month (averaging about "feed myself and
pay rent for a room") doing severely underpaid web-app development (think
ELance rates.) Apparently my skillset (Ruby, Erlang, systems-level/embedded C,
Clojure, some Cocoa Touch experience) would be making me at least $100K/yr in
SV, but nobody wants it up here in Vancouver; it's all ASP shops and C++ game-
dev, and most of the gigs I do get end up being in PHP, even though it's not
my forte.

I really don't want to spend however-many more years it would take to pay my
way through school at this rate, struggling out in the software "hinterlands",
when a better life is just one border-crossing away.

And technically, If I'm asking for a pony, I don't really want to get hired by
a Microsoft or a Google and only work in the US _for them_ ; I want to go to
the US because I want to participate in SV startup culture, which both
includes working for a startup, and starting my own. It seems like _that_
possibility is just locked out for anyone but permanent residents of the US,
though.

~~~
stormbrew
If by diploma you mean a 2 year (which is usually what it means in Canada), it
won't be enough on its own.

You can actually get an exemption if you can demonstrate equivalent knowledge
and a career progression towards it. What that usually means is having a
professor of your field vouch for your knowledge and being able to prove work
history for 3 or 4 years of each of the four years of university you didn't
take. A two year diploma may cut that amount in half, but I wouldn't
necessarily count on it.

If your work history is hard to prove you may want to try other types of
visas. TN-1s aren't so difficult, but re-entry can apparently be a pain. You
can also get an equivalent to an H-1B by working for a Canadian subsidiary
(of, say, MS or Google) for about a year and then getting a transfer to the
American head office. I believe these are much easier to get.

And then there's the traditional ways, like being sponsored by family etc.
Unfortunately, no matter what, a degree will make it much much easier.

~~~
derefr
> If by diploma you mean a 2 year (which is usually what it means in Canada),
> it won't be enough on its own.

I really did mean a four-year; I just said "diploma" because "degree" implies
education was involved. The diploma is the piece of paper. :)

> prove work history for 3 or 4 years

Does that mean _employment_ history? I don't have much of that. Completed
contracts, certainly, but I've not been "on payroll" anywhere for more than
six months at a time.

~~~
stormbrew
Well, in Canada it's very unusual to call a bachelors a diploma. The piece of
paper is a degree. Diplomas are for two year colleges and high schools.

I think the work history requirements might have relaxed in recent years a
bit, but not by much. 10 years seems to be the point where most American
employers start to seem optimistic about being able to get you an H-1B without
a degree. But if it's not employment experience you'll have to work twice as
hard to document it, and that can be very difficult. Most of my work history,
for example, is tied up in companies that no longer exist or as contracts, as
with you.

<http://careers.microsoft.com/careers/en/ca/home.aspx>
<https://jobs.ea.com/locations/canada/>
<http://www.google.ca/about/jobs/locations/waterloo/>

I also think there was an article here recently about Facebook setting up a
Vancouver office just to bring graduates through the subsidiary employment
process. It's a one year thing specifically for that purpose.

------
busterarm
It seems disingenuous for the OP to advocate Canada because of the US
immigration policy when hiring non-Canadians to fill jobs usually requires a
Labour Market Opinion proving that you couldn't find a Canadian to fill the
job.

~~~
untog
The US system requires the exact same thing.

~~~
busterarm
Yeah, that's my point. OP criticized the US policy and presented the Canadian
system as an alternative when it isn't.

In fact, the only benefit here seems to be for founders, but given the
comments about the lack of angel/VC money in Canada, fulfilling the
requirements looks to be difficult.

------
dquail
To those complaining about raising money as a Canadian startup. Overly
simplified steps: 1\. Stop whining. 2\. Build something awesome. 3\. Spend
time on angelist angel.co 4\. Spend time on hipmunk.com booking your trip 5\.
Be thankful you're starting your company in 2013 and not before 2009 when tax
laws made it painful for foreign investment, there wasn't a frothy environment
in the valley, when fundraising was actually hard, when starting up was way
more expensive. 6\. Watch the money roll in.

------
SilconValleyVC
As a VC in Silicon Valley I have tremendous respect for the Valley, but I must
say (having formerly lived in LA) it sometimes feels like a 1 industry town.
In L.A. every and his brother "had a screenplay." "Oh man, can you read my
screen play? We're looking to raise a million for this indie film." In Silicon
Valley say you're a VC and my lord the way people change, from talking to you
casually to looking at you like an addict and you're a bag of heroine they
desperately need.

Startups CAN actually survive and meet early milestones without us VCs you
know. In Canada I'll bet it would be refreshing to "have" to meet those early
milestones without being made to feel like a failure just because you're not
already "funded." "Are you funded? Yeah, by who?" "You're not funded? Oh
bummer." (Person walks away.)

So eventually a Canadian entrepreneur may need/want to move to Silicon Valley,
but I'll bet they learn alot - and find it alot more refreshing - to start out
at first without the non stop "you got a screenplay? you got an agent?"
equivalent I see and hear every day and every hour in Silicon Valley.

We VCs aren't the be all end all.

Happy to take any questions from entrepreneurs.

~~~
dquail
Absolutely agree (I wrote the post). It's amazed me (but not shocked me) to
see so much of the commentary focus on the state (or lack thereof) of VC in
Canada. VC _can_ be a means to an end. But it certainly isn't the end ...

------
nasalgoat
Being in Canada also means flying under the radar, which can be a good thing
for long term viability of your product.

My company does 100x the traffic of our nearest competitor but you'll never
see a TechCrunch article about us, since we're in Toronto. So there's no
pressure for overnight success and you can work diligently towards making a
better product instead of meeting unreasonable expectations.

~~~
wmoxam
Being in Toronto has nothing to do with seeing (or not seeing) a TC article
about your company.

TC covers plenty of Toronto based startups, including the last two that I've
worked for.

Also, seeing your company on TC isn't all that useful anyways...

~~~
dquail
I think he was using techcrunch write ups as an example. In Canada, there
seems to be less time spent focusing on the tech elite echo chamber ...
keeping up with the startup benjamins.

------
rdl
If I were doing something legally challenging in any way related to copyright
or privacy/security of consumers (particularly w.r.t. finance), I'd seriously
consider (in no particular order) CA CH NZ HK SG various-EU.

Curious where Chile and Brazil fall for privacy/security stuff, including AML
and general financial regulations. Costa Rica and Panama are the traditional
Central American options, and there are the Caribbean or other island/tax
haven options, but a lot of those are too small to have developers (and
expensive), and will bend over for the US officially or unofficially,
particularly if a small business is involved (without political connections);
I made the mistake of doing stuff in Anguilla before.

------
lubujackson
To be clear, this is specifically aimed at telling Canadian startups to stay
in Canada. YMMV.

------
mmmelissa
I wonder if cheaper health care costs give Canada any kind of advantage
business-wise?

~~~
rupertm
Absolutely they do. Employers don't have to chip in for basic insurance...
that's already paid for. Employers end up taking part of that money and
throwing it into extended benefits: in Vancouver I get $200 every 2 years for
eyeglasses, $400/y HCSA (covers massage, acupuncture, nutritionist, etc.),
$1500/y dental, fantastic Rx coverage, 1x/annual income life insurance, etc
etc etc. - all of which costs the company _less_ than what it costs the same
company to provide basic insurance to their employees in the USA.

Sure, the employee pays more in income tax, but there's no lifetime maximum on
claims, no 'taking a chance' and hoping you don't get sick, no gambling with
your health period. For me that extra 6% I pay in income tax is well worth it.

~~~
wisty
Also, everyone pays the same price (through taxes), so big companies don't get
any advantage from their stronger negotiating power.

OK, there's also private insurance (for stuff like dental, and private
hospitals). But since companies aren't expected to pay it, it's more
competitive.

------
dougrenert
Not sure if this has been picked up anywhere else in the comments, but I find
the Canadian university coop system prepares students there to be
entrepreneurs better than anything I've seen in a U.S. university. This
requires them to work in an actual JOB. As mentioned, Waterloo grads tend to
be stellar, and our best intern to date came out of UBC in a coop (thank you,
David Q, for placing him with us!).

Why don't U.S. universities run coop programs? My school fought like hell to
keep students on campus. I guess they viewed work as destroying the "art" of
liberal arts...

~~~
dquail
Thx Doug. For context, Doug runs TandemEntrepreneurs.com - The valleys leading
mobile incubator/investors - which was extremely successful in it's first
fund. So this is high praise.

------
imack
On the main point of the article, I do agree that a lot of ideas fly higher in
San Francisco than other parts of North America. I see "Highlight" as a good
example of this where an app finds a lot of early adopters in a small area but
it becomes harder for that kind of ubiquity to happen somewhere people aren't
as fascinated by new technology like people outside of the valley are.

I believe that a number of communities like this end up being "geek ghettos"
on account of this.

------
thisisnotatest
The author says he chose to start his company in Canada because, "In the Bay
Area, investors, friends, and early adopters are so embracing and supportive
of new ideas," and this can actually have bad consequences. It's an
interesting notion. I have no startup experience, so maybe this is a dumb
question, but isn't the solution just, "Take what investors, friends, and
early adopters say _with a grain of salt"?_

~~~
dquail
Absolutely, that's fantastic solution, and what great entrepreneurs in the
valley do. Unfortunately that's easier said than done ... especially given how
pervasive the "buzz" can get.

------
schiang
> At the end of the day, my advice to Canadian startups is to stay in Canada

I think this can apply to many cities outside of the silicon valley bubble.

~~~
dquail
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 ...

~~~
schiang
I agree with so much of what you said in your article. I'm trying to make it
in LA for a lot of the same reasons why you're working in Canada.

------
PixelPusher
Not to be mean, but the author looks really young.

Maybe I'm getting old, but I find it really hard to take advice from such
young people. My personal take is that they're bypassing a lot of the
experience it takes to make a well rounded business person.

I personally feel like a douche trying to give advice to other people,
particularly people older than me.

~~~
dquail
* Disclaimer - I wrote the post Thanks for suggesting I look young :)

I have a hard time taking advice from young people too. Well ... until Brian
Wong, schooled me during a tech conference we were both panelists for.

A lot of super smart valley entrepreneurs "bypass" what it takes to be a well
rounded business person ... I guess. But I doubt that has anything to do with
age, and more to do with the current frothy acquisition and funding
environment.

~~~
PixelPusher
Thinking about it, I'm sure they can be just as good. Regardless of age. I
would guess it's like anything else. Constant exposure and practicing will
breed excellence. I would just be scared of all the mistakes they haven't made
yet.

It's funny you mention Brian Wong, his company is a competitor of the company
i work for. He's a smart guy, from what i can tell, but he would actually be
one of the examples i'd use to cite lack of experience.

In software development, lack of experience can be a really big issue. For
example, with lack of experience you may choose core piece of technology based
on hype. _cough_ mongodb and kiip _cough_

But, I digress, thanks for the article. Learned a bit about the Canadian start
up eco-system.

~~~
viame
"In software development, lack of experience can be a really big issue" can
you explain this one to me? I hope that someone who calls themselves a senior
developer with 20 years experience will know a lot about different
technologies. On the other hand if you are a co-founder who needs to code,
design, network and do many many other things, software development has
nothing to do with it. Your demo will not be using the right technologies.
Companies grow and new developers get hired. Code gets re-written and
technologies you use, will be changed.

~~~
PixelPusher
What is there to explain? As a software developer, experience matters.

If you're building disposable demos, you probably have more problems than
building software.

------
dmourati
"Why Canadian Startups Should Choose Canada over Silicon Valley."

------
dear
So the moral of the story is: if you are a first timer, do it in SV. Once you
make enough connections from SV, do it in Canada.

------
softbuilder
s/Canada/Portland/

Our visa is easier to get. :) (if you're in the US)

~~~
shmerl
Why not s/Canada/New York/ ?-)

~~~
softbuilder
Because I'm not in New York! :)

Also, I originally wrote it out as s/Canada/(Portland|Austin|Raleigh)/ and
then felt like NYC was conspicuously left out. And further realized those
other cities could post for themselves.

~~~
stormbrew
Also you'd confuse sed, it would have no idea which one to replace with. ;)

~~~
softbuilder
That's true, I was taking literary license with sed. :)

