

Ask HN: Why is Canada startup unfriendly? - martinshen

I've always wondered why Toronto, Vancouver and Montreal were so start up unfriendly. I know that there are tax limits to outside VC investment and that there are hardly any seed/startup funds in the country. However, with SR&#38;ED as well as other innovation related tax benefits, I thought it'd get a little more love from start ups. Additionally, Vancouver, Montreal and especially Toronto are all hip tech-friendly cities...<p>The only major start ups I've seen come from America's hat are: Kontagent, FreshBooks, "RIM" and a few others.
======
cal5k
The problem is not with "startups". The problem is with scaling - there is
TONS of startup activity going on in the Toronto, Waterloo, Montreal, and
Vancouver areas. If you look for it you'll see that it's thriving as more and
more people consider startups to be viable career options.

Very few of these companies manage to break out and go big - when the dotcom
bubble burst, all of our former giants like Nortel and Corel imploded, leaving
only RIM to pick up the pieces in the tech sector.

There are reams of tech companies in the $1MM-$300MM space, a few in the
$300MM-1B space, and basically one (RIM) in the $10B+ space.

Getting capital to scale aggressively is a huge problem - it's just not as
easy or as free-flowing as in the USA. However, foreign financiers are
starting to notice that they can get better returns on Canadian companies
because of a paucity of funding, so I'm hoping that will improve things over
time.

Otherwise, Canada is a fucking awesome place to start companies. We just need
more people with the balls, the drive, and the unwillingness to accept no for
an answer when it comes to raising money.

------
pg
Canadian cities have the same problem most cities in the US have: lack of
angels.

~~~
junkfruit
That's part of the story. There are also no "anchor" companies. The massive
companies that go for a big sale in the Tech Industry are very rare in these
Canadian Cities.

There is money, but there are relatively little opportunities for companies to
source these funds.

~~~
martinshen
I suppose but I mean... I feel like Canada is a near perfect location for the
start up.... furthermore, it's not as if Anchor companies are far away (like
the US for example).

As a Canadian now in the US... I really wish that Canada would step its game
up and get a group of angels together or a proper incubator program. My family
friends have started a pseudo incubator at <http://www.thenext36.ca/>

~~~
c2
I don't think an incubator program would be enough. There's something to be
said to living in close proximity to hundreds of different angel groups and
investors, which is why most of the successful start ups come out of Silicon
Valley and why SV is the best place to be. There are start ups that can become
successful despite the distance from SV, but it's just going to be another
hurtle to overcome in a fragile start up's early life.

There are notable exceptions though, GroupOn from Chicago, and for a Canadian
example - Shopify from Ottawa, Ontario.

------
tonyarkles
I'm in Saskatchewan. Around here, it seems that there is a fair bit of startup
investment but it's not quite the same as a lot of the programs in the States.
Looking at things like TechStars or YCombinator startups, many of these
startups are Great Ideas. Investment around here isn't nearly as focused on
Great Ideas, but rather much more focused on Great Technical Secret Sauce.
This shifts the types of startups that get funded; around here, there seems to
be quite a bit of Biotech, Renewable Energy, some "hard" Computer Science-type
problems, etc.

Would Twitter have been funded here? Not likely. Freshbooks? Not likely. RIM?
Possibly.

~~~
tonyarkles
That's not to say that there isn't startup activity though. In Saskatoon,
there's definitely a push to try to make it easier for freshly-started
companies. Some examples:

* A new "affordable small office space": [http://www.facebook.com/pages/Centro-Office-Lounge/170719902...](http://www.facebook.com/pages/Centro-Office-Lounge/170719902938487)

* Coworking space with advisors (lawyers, accountants, business consultants, etc) for low cost: <http://www.saskatoonideas.com/>

* Lots of startups have offices at <http://www.innovationplace.com/index-main.html> \- This is more for companies that have already established an income stream, but is a good common place for companies to grow.

------
pedalpete
I've always thought the biggest limitation for the start-up environment in
Canada is the risk-averse nature of Canadians and particularly Canadian
investors.

In the US, angel investors and VCs are more apt to take risks and aim for the
huge rewards. In Canada, it seems the investors are looking for singles, and
even then, they expect you to already have market traction.

Check-out Basil Peters stuff to get an idea of what I'm referring to. Early
Exits, not going for the home-runs.

At the same time, there is a large Canadian contingent in Silicon Valley doing
great things. So I don't think its the entrepreneurs, it's the investment
market.

------
robee
Take the example of Waterloo,

There is enough passion and help for startups like Communitech
(<http://communitech.ca>) and Velocity (<http://velocity.uwaterloo.ca>), there
just isn't enough people willing to take the financial risk that an early
stage startup needs to expand. Inevitably, once a certain maturity is reached,
startups move to the Valley.

------
matdwyer
I think that it isn't necessarily that Canada is unfriendly, but it's more
that Canada isn't as easy to get over the certain bump (as others mention,
that bump is funding). If you're boot strapping a startup then Toronto seems
to be perfect - vocal community, good geography, lots of talent, and
affordable businesses (also OK corporate taxes >$500k)

------
robee
The virtuous circle of startups that has occured in the Valley has yet to
happen in Canada. The virtuous circle being Startups that make it big or have
large exits, helping bring money to more up and coming startups. There are no
Kevin Rose's that have startups ( arguably successful ) that are now funding
other startups.

------
wyclif
Because in Canada, milk comes in bags. [http://www.myconfinedspace.com/wp-
content/uploads/2006/09/ca...](http://www.myconfinedspace.com/wp-
content/uploads/2006/09/canadian-milk-bags.jpg)

------
champy
Fundamentally Canada is conservative (risk averse).

------
pokoleo
Don't forget Rypple.

