The comment about SR&ED is somewhat incorrect. It's not exactly difficult to fill out timesheets, even for "thinking". It's just research into a specific topic. I worked for a Canadian startup for a time and I spent a few minutes each week updating my SR&ED spreadsheet for the work I did that week.

There's a pretty big pool of talent in Waterloo (as well as Toronto and Ottawa) and there's many startups in here as a result. While the pool is smaller than in SV and there's less access to capital, there's some good accelerators around and space costs far less.