Startup Hubs Around The World: Toronto
Silicon Valley has consistently ranked number one in the startup market, giving other cities in the world something to aspire towards. Few cities are as successful as Toronto, Canada. A highly livable city, along with a network of resources that are designed to support and encourage the start-up, more and more of the world’s entrepreneurs are heading to the city of Toronto to establish their company.
In this article, discover 1) the benefits of the location, 2) tax incentives in Toronto, 3) legal incentives, 4) investors, 5) local resources, and 6) specialization in the city for entrepreneurs. In addition, you’ll find 7) startups to watch in the city.
Located in the most populated province in Canada, Toronto is situated within a highly desirable area. There are geographical benefits to selecting the city, there are some key advantages to choosing Toronto as a startup headquarters.
Within the province of Ontario, Toronto is not only the capital; it is the most populated city. On the shore of Lake Ontario, it is the commercial capital of Canada. There are economic sectors headquartered in the city including education, business services, tourism, media and transportation, to name a few. The city also boasts the five largest banks and the home of the Toronto Stock Exchange. Voted as one of the world’s most livable cities, the humid climate has cold winters and warm summers.
The beautiful scenery provides a backdrop for the active business epicenter. Innovative architecture and structures offer public green spaces mixed into the modern buildings and hustle of the city. These elements combine to create a city that offers the best of the modern, busy city with an active outdoor living area that gives recreation opportunities.
Canada’s largest airport is located in Toronto, making transportation to and from the city easy. With flights to main US cities running constantly, a one hour flight can bring travelers within reach of almost half of the continent. An established system of railways and subways is well equipped to provide people within the city an inexpensive and easy to use system of mobility through the city.
Advantages of choosing the city
Within the city of Toronto, there is a diverse population that has created a thriving, moving entrepreneurial scene. Support is one of the largest areas of need that an entrepreneur has and the city of Toronto steps up to fulfill that need. Support comes in the form of local stewards and a C100 group composed of Canadians working in Silicon Valley. The experienced entrepreneurs use their expertise to provide support for the companies starting in Toronto. Additional support can be found in the accelerators and incubators located in the city.
The potential employee market in Toronto is made up of highly educated people. Over half of the population has secondary degrees, and the city is home to a diverse makeup of individuals – 51% of the people living in the city were born somewhere else. The city has dozens of ethnic neighborhoods, including several Italian and Chinese components.
The healthcare system is attractive to families and Toronto is considered a great place to raise kids. This helps to stabilize the area, drawing and keeping highly skilled workers. Toronto is the banking sector headquarters of the country, providing easy access to banking services in a highly regulated financial services industry.
A large college population ensures that there is always a steady influx of new, innovative thinkers who are willing to get to work in the city. The universities in Ontario graduate nearly 30,000 students out of the computer science and engineering departments. Compare that to California’s 21,000 graduates in the science, technology, engineering and math departments, and the potential for Toronto is astronomical. It is especially startling to realize that California has a population approximately 3 times that of Ontario.
All of the components of a thriving, innovative startup hub are found within the city limits of Toronto.
We Asked Entrepreneurs: What makes Toronto great for Startups?
Along with the geographical benefits of being located in Toronto, entrepreneurs have financial incentives for making their headquarters in the city. One of the primary incentives for choosing Toronto can be found in their start-up friendly tax credits.
At 22%, Ontario offers one of the lowest corporate tax rates in North America. In addition, the government is pushing money into development and investment, raising over $500 million in venture funds, and promising to invest another $50 million. Credits on R&D bring $100 in after-tax costs down to $57 for corporations, and startups pay only $39.
Government officials have developed an intricate system of fund development that is centered on the goal of increasing Toronto’s standing in the start-up community. The plan is simple: the government puts its money into locally operated venture capital funds. Those funds, in turn, invest in local, high-growth venture stage companies. There is evidence that their plan is working: in the last few years, the average venture capital fund amount increased by 50%. With heavy government support and an increasing amount of government sponsored tax credits and funds, Toronto is quickly becoming even more attractive to entrepreneurs in search of a location.
Start-ups are able to do more with their capital, thanks to a series of financial incentives. The ministry of research and innovation has helped to reduce corporate taxes, while providing tax credits for startups that are demonstrating innovation. These credits are among some of the largest in the world, which is one reason why so many entrepreneurs are heading into the great north to establish their startup.
In addition, there are financial incentives for joining one of Canada’s accelerators. Most graduates of the accelerators are offered a $500,000 convertible bond as startup capital that can be used to help get their company off the ground. By giving start-ups more capital to get started with, the company has more resources to establish the framework for a successful future.
To further attract companies to Toronto, there are sizable tax increment credits in the form of investment grants for businesses that are building new facilities or retro-fitting locations. These credits are eligible for up to 60 percent of the municipal tax increase for over 10 years.
Canada is serious about developing startup hubs within their borders. They have instituted a series of incentives to attract high quality talent. Their plan is working – not only are entrepreneurs establishing their first company in Toronto, people who left Canada to set up elsewhere are returning to this Northern hub.
One of the fundamental attractions to Toronto’s start-up scene is the creation of the Startup Visa. With this visa, entrepreneurs can quickly get approval for a visa if they have received investments from designated Canadian investors. A minimum of $200,000 in venture capital or $75,000 in angel funds provides a fast track to immigrant status to entrepreneurs who wish to set up shop in Toronto. Pressure from entrepreneurs, investors and government officials helped drive the Startup Visa program to fruition, and their efforts paid off. This new program has made it faster, cheaper and easier to start doing business in Canada.
Once a start-up has decided to establish a business in Toronto, the initial process is relatively quick. A simplified one-step process can be handled online through Enterprise Toronto. Once completed, only companies that fall into specific, regulated categories need to further their registration by obtaining licensure. The additional process is similarly simple, although the process must be handled in person. Companies that need additional registration include pet stores, nightclubs and restaurants, as well as others.
The costs of doing business are lower in Toronto and this includes the cost of legal work. With simplified application processes, there is a reduced need for legal guidance, saving the startup money. Additionally, the costs of legal services can be cheaper in Toronto, another benefit to setting up there. Specific law firms have been established specifically designed to focus on the needs of startups and entrepreneurs. These firms provide guidance on Intellectual Property, immigration and mobility, technology commercialization, and other issues.
Toronto Tech Startup Scene
Investors within Canada tend to be considered ‘thinkers’. They are slow to adopt new strategies and companies, but generally make informed decisions. This allows for investors to realize a higher return on their investments.
Canadian investment regulations have established a series of business acts to provide for the investment of Canadian money into Canadian companies. These funds are only available to companies that are based in Canada, and are only allowed to only fund companies that are Canadian-incorporated companies. By using these funds to invest in Canadian entrepreneurs, the government is taking a strong interest in the development of new companies within the borders of their nation.
In a cyclical pattern, people who take money as founders become seed donors for companies down the road. This generates a pattern of financial gain that serves to strengthen Toronto’s economy and increases the number of investors available.
As the finance and banking capital of Ontario, Toronto has access to the people who have money to invest. These investors, typically called angel investors or venture capitalists, are resources for funding that many start-ups need. Governmental support offering millions of dollars in funds to assist startups has ensured that the city remains a drawing point for entrepreneurs from around the world.
The growing start-up market in Toronto has already established some much-needed resources for companies who want to start in the Canadian city. A well-developed collection of accelerators and co-working spaces provide multiple locations and resources for entrepreneurs throughout the city. A long list of potential investors who are based in Toronto is another home-grown resource for this city who wishes to top the charts of entrepreneurs.
Heavy media interest in the start-up market of Toronto is another useful resource. By keeping the start-up market in the news, entrepreneurs can be kept abreast of the latest in business developments as well as discover networking events and opportunities that can offer support to new businesses.
A large student population is vital to the vibrant tech market as employees, consumers and entrepreneurs. Highly educated and innovative, having direct access to the students who emerge from surrounding colleges and universities is an advantage many cities lack.
Canada isn’t shy about stating their objective: they want the world’s newest and largest tech company to come out of Toronto.
One of the largest areas of specialization within the Toronto startup scene is a relatively new concept that has taken the world by storm. Wearable technology is an up and coming field, and Toronto seems to be attracting a large percentage of these entrepreneurs. Wearable technology can include the Nymi wristband, HUD goggles designed for downhill skiers and snowboarders, as well as Myo – a wearable biometric device.
As the leading city in a variety of industries, Toronto has the potential to specialize in a variety of ways. The fashion industry is seeing a resurgence of attention in the startup market of Toronto, and can vary from men’s makeup to men’s yoga pants. One of their companies is revolutionizing the plus-size menswear market by starting with larger, more comfortable underwear for men. Through market research, the company was able to discover what the needs of the marketplace were, and then worked to meet those needs. It has proven successful and the company hopes to add another product line to their offerings soon.
Another specialization that is finding common ground in Toronto is digital media and technology. Through wearable technology, advances in film and audio recordings and other tech products, the start-up market is making huge strides in channeling entrepreneurs to enter their field. Through training, experience and innovation, entrepreneurs are tackling some of the most complex issues of the day and solving the problem through design and structure.
By taking advantage of some of the resources within the city, startups can begin to realize their dreams and establish themselves as a relevant, up and coming company. These advantages include specifically designed incubators and workshops all geared towards attracting and keeping entrepreneurs in the city.
A long list of companies that offer venture and capital funds, as well as meetings with others where entrepreneurs can mingle, make connections and offer support is available on the Startup Toronto website.
STARTUPS TO WATCH
Whirlscape: Qwerty has become a part of the cultural landscape of the world. Keyboards are used on computers, laptops, cellphones, tablets and a variety of other places with startling consistency: the Qwerty style. Whirlscape’s newMinuum keyboard, however, is the next big thing in typing for the mobile generation. The beta version was downloaded by over 25,000 Android users, paying for the chance to try out the new keyboard style. This minimalist approach to keyboards is paving the way for using products such as Google glass as well as reduce the amount of needed screen space for a full size Qwerty keyboard.
Nymi: This wearable wrist band seems straight out of a science fiction movie. Bionym’s Nymi is a wristband that identifies the wearer by analyzing their cardiac rhythm. This wristband uses technology features to connect with apps and other devices, using their own heartbeat as the password. The company is testing their model for retail and hospitality uses, where customer preferences and history can become part of their identity.
TellSpec: Developed as the result of one founder’s experience with doctors, TellSpec is designed to help users track their food intake. More than a dietary tool, TellSpec combines technology with a scanner, algorithm and app and identifies the contents of that food. This technology shows great potential in identifying food allergies, promoting positive eating habits and more.
Revelo: LifeBike, developed as a school thesis project, this super sleek bike promises riders to not only improve their health, but they’ll look cool with the easy to unfold (10 seconds!), ultra light, ultra sleep, ultra emissions free transportation. The Revelo model is the latest in the line of bikes that LifeBike offers, and is preparing to be shipped shortly. A successful crowdsourcing story, the bikes are in part, the result of many people’s dream.
Parkbench: Bringing the idea of the neighborhood market online is the driving force behind Parkbench. Giving local businesses within the Toronto community the opportunity to offer their services and products to their local market, all within one convenient location, Parkbench is also branching out into the real estate market. More homes can be found in listings on the Parkbench website than on any one realtor site, a feature that has been driving business to the site.
The Toronto startup community is growing. The winning combination of location, resources and entrepreneurship is helping to push this Canadian city higher up the list of the world’s top startup cities. Through their governmental support and encouragement, business friendly tax and visa regulations and the benefit of the nearby universities, Toronto is headed in the right direction for the future.