When the Covid-19 pandemic knocked the world online in March 2020, Greg Smith had an opportunity in front of him. He’d been quietly grinding away on Canada’s West Coast for eight years, building a platform to develop online course material. He had amassed a loyal following of users, assembled an excellent team, and developed a product that worked — allowing anyone to turn their special know-how, be it ballet or bookkeeping, into an online course.
Then the crisis happened and the world came knocking. Sign-ups skyrocketed, as out-of-work coaches, performers and teachers sought alternate revenue streams. The company recorded a 368% increase in new courses created just in the first two weeks of the pandemic. Smith’s technology, born in Canada, was suddenly in the global spotlight.
Smith’s story is a common one coming out of Canada these days. His company, Thinkific, is one of several in Canada to emerge as billion-dollar-plus global success stories during the pandemic. While the country’s national animal is a beaver, it might as well be a unicorn right now. Vancouver alone — often thought of as Toronto’s lesser sibling — had six companies become valued at $1 billion or more in the last six months.
The first quarter of 2021 saw record investment of venture capital into Canadian companies, with CAD $2.7 billion (USD $2.2 billion) in new VC investments across 178 deals.
Investors in the United States and around the world are taking note. And here’s the thing: while recent Canadian valuations may be turning heads, it is just the beginning.
The right ingredients
After spending the last 25 years building and investing in Canadian tech companies across the country, I’ve learned that founders like Smith are generally not overnight success stories. These companies have always been a bit like Michelin-star-quality restaurants in an overlooked neighborhood. Despite killer ingredients and creative chefs, they had a hard time attracting the attention of investors with deep pockets who could take them to the next level.
But Canada has always had inherent advantages. It routinely ranks among the top countries in the world for quality of life, social purpose, healthcare, and as a good place to raise children. It’s one of the best countries in terms of openness to immigration, and scores top marks for education and anti-discrimination.
My family, Ismaeli refugees from Uganda, came to Canada in search of a safe place. They were entrepreneurs in their home country, and what they found in Vancouver wasn’t much different than the typical “American Dream.” They worked hard to build an electronics store, while enjoying the safety and social freedoms of Canada. I followed in their footsteps, taking advantage of the entrepreneurial spirit of this country, building internet companies in the early days of the web. I now run a venture builder out of Vancouver.
No doubt, I’ve encountered challenges to growing companies in Canada, the biggest one being access to capital. Entrepreneurs would typically have to head down to Silicon Valley and knock on doors to find interest in our offerings. The major investments we were seeing south of the border just weren’t there in Canada, where the banks are more conservative and high-rolling investors are fewer and farther between. Recruiting senior talent to head north was also a hassle. We sometimes felt like Canadian Football League GMs, trying to scoop up players left over during the NFL offseason.
But it was only a matter of time.
Canada finds its killer dish
Even Silicon Valley didn’t happen overnight. It took more than 60 years to go from Hewlett Packard to Google, Tesla and Facebook, and for the flywheel to gain momentum. Ditto for Canada.
Companies like Nortel and RIM (later Blackberry) were some of the first Canadian tech companies to grow into behemoth global players. Sure, they ultimately failed rather spectacularly, but that was only after years of success, and they had numerous local spinoff effects on talent, investment and inspiration. They scattered seeds for new startups, which in turn did the same for others whether they succeeded or fizzled out.
Fast forward to the latest wave of success stories, buoyed by e-commerce giant Shopify, which saw its stock and sales soar during the pandemic. Now sitting at $180 billion, it is the most valuable company in the country, surpassing even the Royal Bank of Canada. Shopify served as proof to even the most conservative investors that Canadian tech can thrive on a global stage.
So what’s the spinoff? We’re seeing clusters of innovation emerge from coast to coast. St. John’s, a small city in Newfoundland, an island province on the brink of financial ruin, is becoming a place where education and entrepreneurship collide. Verafin, an anti-fraud tech company, was born at the local university in 2003 and worked for years before hitting the jackpot. The company sold to Nasdaq last year for $2.75 billion and got the promise that it could stay local, as well as a guaranteed $1 million to put back into the university’s innovation program. That local flywheel has already spawned several other promising startups, providing jobs to a desperate economy.
We’ve seen similar momentum in bigger cities like Vancouver, Montreal, Toronto and Kitchener-Waterloo.
What’s notable — and what U.S. giants are catching on to — is that these companies have global ambitions, indistinguishable in so many ways from their brethren south of the border. They have the same cutting-edge technologies, same talent, same vision — but are built on Canadian soil and hence less picked over by investors, so they typically have far more upside.
Canada’s secret sauce — quality of life, deep talent pool, great governance — isn’t going away. Meanwhile, the ecosystem effects are building. The Canadian flywheel will only gather momentum as successful companies and entrepreneurs reinvest in the people around them.
It’s now clear: this country has firmly arrived on the global tech stage. The success is anything but overnight, and it’s just starting to boom.
Shafin Diamond Tejani is founder and CEO of Victory Square Technologies, which supports technology startups through sustainable growth.