Entrepreneur

3 reasons why Canadian startups should stay put

This is a guest post by entrepreneur Derek Ting

If you’re a software startup, people assume you want to be in Silicon Valley, to be immersed in the hub of high tech; surrounded by other like-minded entrepreneurial spirits; and delighted by the normally mild California weather and scenic Pacific coastline.

But we haven’t, and there are multiple reasons why Canadian startups like us shouldn’t flee — this despite Waterloo’s average December low of minus five degrees Celsius.

The Canadian software startup community is experiencing a renaissance in technology innovation generated by companies such as FreshBooks, HootSuite, TribeHR, BufferBox, Shopify, and more. Growing at a fast rate, these and other Canadian startups are staying put. By doing so, they increase their own chance of business success and help further fuel the Canadian startup scene, and here are the big reasons why:

Reason 1: Access to awesome engineering talent

Canada boasts some of the finest engineering schools in the world, including the University of Waterloo — with the country’s largest engineering faculty — as well as the University of Toronto. Being in close proximity to these schools, startups can recruit the best and brightest engineers from these renowned programs.

Additionally, by establishing internship programs through the universities, startups can build relationships with some of the top students before they’ve even finished their degrees. We’ve been able to recruit some incredible engineers this way, and it feels good to cultivate and mentor Canada’s next generation of engineering talent.

Reason 2: Lower costs and tax advantages deliver more bang for a startup’s buck

Everyone is aware of the high cost of living in the Bay Area, but a recent Coldwell Banker report is still eye opening. Six of the top 10 most expensive housing markets in the U.S. are located in the heart of Silicon Valley, in either the San Francisco or San Jose metropolitan areas. The average cost of a home in these six communities ranges from $1.2 million (San Carlos) to $1.7 million (Los Altos). Did I mention that’s for a four-bedroom/two bath?

In Ontario Canada, the average cost of a home is less than $300,000. With a lower cost of living, startups can be more competitive with salaries yet not spend as much money if they were located in Silicon Valley. However, staying in Canada delivers cost savings that extend much further than real estate.

Consider the tax advantages. Canadian companies enjoy very generous R&D tax credits and refunds. Even if a startup’s business is not yet profitable, the Canadian government will still subsidize some of the engineering costs. Further, despite high personal income tax rates in Canada, corporate tax rates are relatively low, allowing startups to invest profits directly back into the company. Every penny counts when you’re a startup. The ability to reinvest funds is a huge advantage in growing a company.

Reason 3: Thinking outside the box, outside the Silicon Valley bubble

Being outside of the Silicon Valley bubble, there are fewer distractions, and startups can focus on the core technology problem that they’re solving. Rather than continuously worrying about how they can pay the bills to stay in business and keep going for another six to 12 months, startups can focus their creative thinking on market need.

In Canada, the fact that the government pays for healthcare represents a huge asset for startups. Founders can bootstrap their startup without worrying about providing medical care for themselves or their families. Plus, with secured healthcare, it’s much less risky for employees to join a non-funded startup – making it easier to staff up.

By alleviating some of these worries, entrepreneurs can devote their energies to thinking outside the box, developing original solutions that both provide value and fill an unmet need.

O Canada! It all makes sense now, eh?

Derek Ting - HeadshotDerek Ting is the CEO and cofounder of Enflick. Ting holds a degree in Computer Engineering from the University of Waterloo and has a history of entrepreneurship, having founded two web startups while still in high school. He is committed to delivering next generation connectivity technologies that transform how people communicate with each other.

Follow him on Twitter @derekting13


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