Inside the Canadian Start-Up Scene

The entrepreneurial spirit is booming in Canada, where thousands of start-ups are developing tech that could change the shape of our lives. No wonder Silicon Valley is paying attention.

The giant flatscreen shows a man sitting in a café, phone in hand. With his manicured beard and glasses, he looks like he could be a third-wave barista on break, maybe playing a quick game of FarmVille. “That’s what the farmer of the future looks like,” says Ally Monk, co-founder of Motorleaf, a domestic agriculture start-up from Sutton, Quebec. Over the next seven minutes, Monk demonstrates how the technologies he’s developing are within reach despite their futuristic mandate: to create a less fickle alternative to Mother Nature. With his app, we’ll be able to control everything from humidity levels to sunshine to rain – no dancing required.

“There are over 5 million urban famers in North America, and we know we can generate at least $1,500 per farmer. This is a $7.5-billion opportunity,” says the young entrepreneur to an impressed audience studded with potential investors.

Harley Finkelstein, CEO of Shopify

Harley Finkelstein has been CEO of Shopify since 2010. The Ottawa-based e-commerce company, founded in 2006, is now valued at several million dollars. (Photo: Dominique Lafond)

Motorleaf is one of the 73 start-ups that have been backed by the FounderFuel accelerator program in the last five years. The three-month program comes with an investment of anywhere between $50,000 and $100,000 to help get the businesses started. The Demo Day event tonight is a kind of convocation for the six newest start-ups on deck. They’re all at the beginning stages of their business, but in very different sectors. Prollster is an online education platform, for instance, while Fundmetric is a tool that helps charitable organizations generate loyalty among their donors.

“Demo Day is a chance for the start-up community to come together,” says Sylvain Carle, FounderFuel’s general manager. “It’s a great opportunity to soak up its incredible energy.” And there’s no denying it: The crowd’s enthusiasm is infectious.

If anyone can speak to the effervescence of the start-up scene right now, it’s Carle. Before he took on the directorship of FounderFuel, he worked at Twitter, in San Francisco. “When I started working there in 2012, there were a few hundred employees. Two years later there were 3,500 in 15 offices around the globe.”

Cloud computing, freeware and smart phones sprouted thousands of start-ups.” Sylvain Carle, FounderFuel

According to Carle, this second wave of start-ups appeared in the wake of the 2000 tech bubble, and owes its existence to three innovations: cloud computing and freeware, both of which democratized technologies in a way that helped companies save considerable funds; and smart phones, which opened a door on a whole new dimension.

“That combination of factors,” he says, “sprouted thousands of start-ups. In Canada, this culminated with the almighty Shopify, which went public in 2015.”

Keatext office

Human capital is what drives Keatext, a software company that analyzes customer feedback. (Photo: Dominique Lafond)

The end of competition?

With the innumerable hackathons, incubators and accelerators that now exist across the country, both green and experienced entrepreneurs can find support for their ideas – no matter how outlandish they may seem. In the belt between Waterloo and Toronto, over 1,000 start-ups generate $30 billion annually. The leading lights of this so-called Silicon Valley of the North are messenger app Kik and the online education platform Desire2Learn. Last fall, 500 businesses participated in Startup Open House days in five Canadian cities, welcoming 8,000 curious onlookers into their offices and resulting in a total of 3,625 job applications over the course of the event.

“We hear a lot about the recession and layoffs, but meanwhile many start-ups are in full expansion,” says Emma Williams, director of Notman House. In 2011, this Montreal heritage building became the headquarters for the local start-up community, hosting over 60 events a month dedicated to entrepreneurship. Start-up founders exchange ideas over coffee, meet their future clients in the meeting rooms on-site or perfect their products in the offices, which can be rented at affordable rates. “Our leases are three to six months long, just long enough to enable a company to take flight,” says Williams. “The hope is that after that period, they’ve grown enough to need more space for all their new employees.” Among the start-ups that have benefitted from the services of Notman House is Foodora – a bike food-delivery service that works with hundreds of restaurants in Montreal and Toronto. Another, BenchSci, is a platform that enables scientists to consult millions of studies online.

DMZ, Toronto

Almost 400 entrepreneurs have brought their ideas to life thanks to Toronto incubator DMZ.

This new generation of entrepreneurs prefers collaboration over the spirit of competition that has traditionally ruled the business world. A by-product of the internet era, this team spirit finds expression in different ways, says Carle: “For example, rather than create a new product and then realize consumers don’t want it, young entrepreneurs will consider the client’s opinion from the very first development stages. Most also offer their employees shares as a way to compensate them for their dedication in the event that the company goes public.”

Williams agrees. “You won’t find this level of passion in any other industry,” she says. “People are ready to give so much of themselves for the success of their business.” Which is surprising when you consider that the majority of start-ups don’t make it past the first five years. That said, fruitless results aren’t seen as failures – they’re just learning experiences to be capitalized on for the next project.

The new Klondike

Any entrepreneur will tell you: A brilliant idea isn’t enough. The key to success is money. Since banks are rather reticent to back upstarts, most young entrepreneurs depend on venture capitalists and angel investors (who may well turn out to be dragons) to loosen their purse strings in exchange for shares, though they often expect rapid growth and successive investment rounds that may exceed some start-ups’ capacities.

Despite the risks, the members of Canada’s National Angel Capital Organization (NACO) invested $133.6 million in start-ups in 2015, a hike of 47.6 percent from the previous year. And according to PitchBook, 103 Canadian start-ups earned the record sum of $881 million over the course of the first trimester of 2016. That growth coincided with a lull south of the border, which suggests that some American investors may have ventured north, seduced by the value of our dollar – a hypothesis confirmed by the Financial Post last May when they reported on the gold rush Canadians were inspiring in Silicon Valley.

Among the American players who’ve come northward in search of talent, there’s the risk-capital fund 500 Startups, which finances over 1,600 companies worldwide. Over the last year, this Californian organization sprouted a Canadian branch with offices in Toronto, Montreal and Calgary to find young, promising companies to connect with their seed accelerators in San Francisco and Mountain View.

Louis-Victor Jadavji and Shamil Hargovan of WIIVV

Louis-Victor Jadavji and Shamil Hargovan of WIIVV.

David Dufresne is a partner at 500 Startups, and he believes there are more of these sorts of investment funds than ever since the pop of the tech bubble in 2000. “Individual and governmental investors have changed their approach and often prefer to place their money in diversified portfolios like ours rather than directly in the corporations,” he explains.

Innovation 101

Investors aren’t the only ones to have their sights set on Canada. In a huge, 3,700-square-metre space in downtown Toronto, over 400 visionaries are currently perfecting technologies that might just change our lives. Founded in 2010 in association with Ryerson University, DMZ is the biggest academic incubator in North America. Thanks to a federal visa program, it attracts entrepreneurs from around the world, including the United Kingdom, India and South Africa. “Some countries have technical expertise, but their start-ups have trouble breaking into the market,” explains Abdullah Snobar, executive director at DMZ. “Here they’re within reach of the New York and San Francisco markets, the cost of living is low and they have access to support, financing and grants.”

Universities are realizing the extent to which entrepreneurship can motivate innovation.

More and more universities are, like Ryerson, realizing the extent to which entrepreneurship can motivate innovation. “The computer revolution has engendered a multitude of other  revolutions, including in synthetic biology, nanotechnology and artificial intelligence,” says Xavier-Henri Hervé, executive director and co-founder of District 3, Concordia University’s incubator in Montreal. “These are exponential technologies that are developing at an incredible rate. Our institutions can no longer rely solely on the traditional academic context – they must reinvent themselves in order to keep up with the times.”

Over the last three years, over 200 start-ups have received a helping hand from District 3. Among them is Heddoko, the makers of a “smart garment” that helps athletes perfect their movements, and Ananda Devices, which produces a piece of tech that facilitates research in cell cultures. “They’re researchers above all, but they want scientists around the world to be able to take advantage of the tools they offer,” says Hervé. He believes it isn’t enough just to help start-ups get on their feet, they must be encouraged to contribute to the economy. “Many of them won’t find clients in Canada and are recruited by American corporations.” That’s why these days he’s focusing on the Early Adopter program, whose mission is to incite large Canadian companies to use the tech developed by Canadian start-ups. Who knows? Maybe they, too, will be lured into the collaborative economy.


Shopify

Founders
Tobias Lütke and Daniel Weinand

Founded
2006

Offices
Ottawa, Montreal, Waterloo, Toronto and San Francisco

Employees
Over 1,750

“Shopify was created for entrepreneurs by entrepreneurs,” says Harley Finkelstein. The current CEO of this Ottawa-born start-up can boast that he was one of its first clients. “In those days, I was a law student who sold T-shirts.” He bought into the e-commerce website Tobias Lütke had designed to sell snowboards online, quickly dropping his first business and focusing instead on perfecting his e-commerce platform. “Since then, Shopify has helped over 325,000 businesses sell products worth many thousands of dollars in 150 countries.”


Keatext

Founder
Narjès Boufaden

Founded
2010

Offices
Montreal

Employees
15

“Research holds a special place in my heart,” says Narjès Boufaden. After finishing her second post-doc, the artificial-intelligence specialist chose to invest her expertise in the business sector. “I grew up in a family of entrepreneurs, so it was a natural transition for me.” That’s how she developed a piece of tech that can analyze consumer comments, both by e-mail and on social media. At a much lower cost and with greater ease of use than similar products on the market, Keatext can be put to work not only to detect critiques and suggestions, but also to identify their meaning and motives. It’s a precious tool for businesses seeking to optimize their consumer experience.


WIIVV

Founders
Louis-Victor Jadavji and Shamil Hargovan

Founded
2014

Offices
Vancouver and San Diego, California

Employees
Around 30

He may only be 23, but this isn’t Louis-Victor Jadavji’s first start-up. This might well be the big one, though – it has the potential to revolutionize the footwear industry. Since he injured his knee in a long-jump competition, Jadavji has been forced to wear orthopaedic soles. “I consulted my podiatrist and realized the materials used to make my soles are compatible with 3-D printers. Usually, the difficulty with 3-D printing is how few materials are compatible.” The WIIVV app allows users to get a perfectly bespoke – and affordable – pair of orthopedic soles based on a simple photograph of a foot.

Mercedes-Benz Canada Fosters the Next Generation

Last year, Mercedes-Benz Canada and Groupe Compass Canada launched the CXI Contest, rewarding Canadian start-ups whose innovations enhance the customer experience. In January, Mercedes-Benz met young entrepreneurs for “speed dating” at the ResolveTO conference.

Comedy Curator
Read the next article

Comedy Curator

Bruce Hills may not be a household name, but the Just for Laughs COO has been called “the most powerful man in international comedy.”
×