Having tried establishing my startup in Toronto before, I fully agree with your statement. I know at least 6 more people who got frustrated trying to start tech companies in Toronto/Waterloo and finally gave up and moved to US/valley.
Most Canadian govt funding programs for startups (I tried) are for politicians to handout to their supporters. You need to be incredibly well-connected to overcome the barriers set to get funding.
Most people involved in startup/tech wouldn't give a chance to local startup unless there was validation from someone in US or valley. It was funny that one local VC I was trying to connect with wouldn't return my calls. One evening, when I sent him an email mentioning that I have a meeting with a NY VC next day, the guy calls me 11pm in the night wanting to know more about my startup.
Without valley/NY connections, it is incredibly difficult in Toronto for a tech startup.
It's remarkably little work to do the paperwork. It's annoying, sure. Who the hell likes paperwork? But a "distraction"? Oh please.
If I wasn't getting the money I would honestly be a little annoyed at how little accountability there seemed to be to get public money.
And the whole political connections thing ... I don't even know where to start with that one. I have none and no one I know has any.
I notice no one here has firsthand experience with either. I wouldn't have commented here but I felt I had to leave something here so that other readers wouldn't come away with an opinion that's ... let's say "uninformed".
For one, the people you are talking to have zero experience in running a business, let alone a new one. They do have, however, extensive experience in drawing out meetings, death by powerpoint and producing forms in triplicate.
The grants generally come with a lot of reporting and strings attached, and generally require very large investments to be worthwhile.
We can get R&D tax concessions which are quite useful but the amount of money you need to spend in order to qualify excludes any sort of early-stage tech venture.
The entire process was a giant waste of time for me, and I get the impression they are political operations rather than genuine ones. In fact in my research I found out that infrequently do the funds ever actually give out all the money, but a good portion of the advertised spend (ie, $x00 million in new company grants) actually goes to the departments that spend their days handing out the money.
Not to say that the guys weren't genuinely trying to be helpful, they were. But they are hamstrung by their own reporting requirements and lack of understanding as to what people need money for, and when they need it.
My ultimate conclusion is that special economic zones with, say, 10 years of a tax holiday for a new company starting within that area would be a much better way to go about things. That would spur local investment and employment, have a specific end date and be much easier to administer. It would also favor bootstrapping as opposed to trying to capture large starting funds, which IMO for the outside-the-valley world is a better way to go.
I have a bit of experience with SRED in Ontario, and quite a bit with the Alberta Foundation for the Arts.
Grants are nicer for you (me), but tax credits are doing it right as far as the government is concerned. Canada wants you to create employment. If you have a business that is generating revenue and creating jobs, they'll "give back" money that equates to, sometimes, paying wages at 50 cents on the dollar.
Tax credits are an economically efficient way to distribute government funds.
Now that nepotism sounds more like something that happens where I live, funny that there's the same cronyism over there.
The main take away is to be wary of the hype in the valley. That pervades the culture. Everyone from investors to your family fill you up with hype. You don't get that in Canada. You've gotta fight harder. That, in my opinion, isn't a bad thing. You can go much further on a dumb idea in the valley. *and yes I know that some of the best startups were once dumb ideas. But I don't believe the "valley" made them succeed. I think there's more companies that die because of false positives than companies that succeed in spite of not having them.
And yes. I readily admit that you need connections in the valley. I wouldn't be starting in Canada if I didn't already have a killer bay area network.
BTW. I toured Toronto not that long ago and visited Extreme(s) as well as a few other startups. I was blown away by the quality of stuff being built there and Waterloo. I'd not hesitate to start or join something there. There's real energy in that city ... and it's growing.
I'm sure I'll see the area totally different when I return from SF and I may just find a role that I fit in very well.
I totally agree with you about the over inflated hype currently in the valley. While this leads to a lot of failed startups and 'wrong' ideas being funded, I think it's still a healthy ecosystem for promoting innovation.
Like you said in your article, shooting for the moon in Canada makes you seem insane while it's seen as commonplace in SF.
Why?
Well, let's face it, the most revolutionary things have all started sounding silly and insane. People will buy things over computers without having actually seen or touched them? Humans will fly? Will travel to the moon? Everything is actually well modelled by equations that imply that everything is a wave and has probability it exists?
So just because YOU think it sounds crazy or insane, doesn't mean it doesn't have a chance at something big.
After all, who would want to communicate in 140 characters only, or have a real time feed of everything their friends do, or want tiny square pictures on their phone?
On the subject matter, I've lived in SF for a few years now and I was born in Canada. In the US people will give you a chance, in Canada companies want to know what you have done and get you to do more of it.
This is true. I can name half a dozen billion dollar companies I rolled my eyes at when people told me what they do.
"They're trying to make money by having people tell everyone they know what they ate for breakfast? Really?"
The biggest barrier to start-ups in Vancouver is probably investment availability. There's a few active angels and VCs but you can count them on one hand. The majority who want in seem to be incredibly risk-adverse, treating a 50k angel investment as though it were the last gold bullion on earth.
On top of that, Vancouver is very lifestyle-driven, especially once spring and summer roll around. The mountains and ocean are seductive (that's why I moved out here), and make it seem like insanity to spend 16 hrs a day toiling in front of the computer when there's an entire playground out there.
So, if I were going to start a high-energy start-up, Vancouver is not where I'd pick first.
The good news is SFO is only a two hour flight, and Seattle about that far by car. I think raise in the USA, build in Canada is a great strategy, and quite a few of the successful start-ups raise from both Canada and the US.
There is starting to be a bigger start-up culture. Its not like SF and area where it seems like everyone is doing a start-up, but it is now something that a lot of young people are thinking about and is seen as a respectable way to spend your time.
There are good government programs in Canada, but my limited experience is they aren't what you want to bank on if you are a small, vulnerable start-up. I think where they do come into benefit is in growing from a 5->50+ person outfit.
Vancouver also has a good brand for the right kind of company. Its definitely a lifestyle city (great place to live, but lots of distractions from 24/7 work) - and would be a great place for health/fitness/outdoor activity start-ups because of that. There is a kinda cool video about the Vancouver tech scene from a few years ago: https://www.youtube.com/watch?v=MLQQ3w12Juc
There are accelerators like GrowLab (since 2011), but nothing like the valley. I definitely agree with the overall premise of the article though, people here see a lot of the "money-throwing" over in the valley and feel it's often way overblown/hyped.
I am currently a Canadian citizen, working in San Francisco at a company that moved from Vancouver many years ago.
The author seems to be comparing the Bay Area to the entirety of Canada. Canada is not a small area, a city or a state. It is an entire 'continent' spanning multiple provinces with very different laws and dynamics. A startup in Waterloo, Ontario targeted towards engineering may fare better than one founded in Vancouver.
Secondly, he is mentioning his connections in the Bay Area that have helped him succeed in Canada. First he is arguing FOR founding a startup in Canada but then admits that most of his barriers to entry were lifted with help from the valley. There is a difference when you're starting fresh in Waterloo without any outside help.
I think what the author should have done is draw a parallel between The Valley and somewhere in Canada (Waterloo, Vancouver, Montreal, etc...). One may not be better than the other but perhaps working WITH The Valley can help get your startup off the ground elsewhere.
I would personally love to work for a startup back home in Toronto and perhaps one day found my own but I don't see the same enthusiasm towards tech and startup in Toronto that I see here in The Valley.