The pros and cons of Canada's tech sector
Where do we go from here?
GM. Back from a jam-packed week at Collision in Toronto.
Today we're taking a bit of a diversion from Web3 and looking at the state of Canada's tech sector following some discussions at Collision—back to Web3 next week.
Today's newsletter is 715 words or a five-and-a-half-minute read.
The robustness of Canada's tech industry was a major theme at the 2022 Collision Conference. The tradeshow had booths from governments across Canada of varying jurisdictions, including the Government of Canada, promoting the ways in which they support their own local economies, and some panels were focused solely on what it would take to make Canada a tech powerhouse.
This growth in Canadian tech is due, in large part, to an increase in VC funding which grew exponentially over the course of the COVID-19 pandemic (of course, totally unrelated to the rich getting richer in Canada) leading to 2021 seeing $4 billion in venture pouring into BC along with the minting of a dozen unicorns.
In 2021, Canada's tech sector created over 15,000 jobs, however, this demand far out-paces the ability to produce homegrown talent which means that Canada needs to compete for this increasingly scarce resource (though we should take skills development more seriously, too) with the rest of the world.
Thankfully, this is relatively easy due to Canada's immigration rules being strict than its southern neighbour—with the number of US residents entering Canada on skills-based visas increasing 75% between 2017 and 2019. Plus, Vancouver is consistently named as one of the top move liveable cities in the world, despite the high cost of living.
However, both Vancouver and Toronto are facing housing and affordability crises while being Canada's tech hub (depending on who you ask and on what day). These problems are not new and replicate what happened in Silicon Valley. The question becomes, when the cost of living is too high in spots like Vancouver and Toronto, what are the downstream effects in smaller tech hubs like Waterloo or the Okanagan? Are municipalities prepared for, or even thinking about, those impacts?
There are, of course, other options outside Vancouver and Toronto. Calgary is making a big push toward the tech sector (Mayor Jyoti Gondek spoke at Collision) and Premier Kenney is trying to push the province into crypto.
Then there's Montreal, which has had a strong video game creation industry since Ubisoft opened an outpost in the 90s. Since then, the city has had a growing startup scene, hosting the annual StartupFest, but will likely begin to experience some challenges.
As a province, Quebec has much more stringent immigration requirements, which can act as a deterrent to would-be new residents. While Quebec has been able to make its own immigration rules under Canadian law, the current CAQ government adopted a bill in May (Bill 96) that will make recruitment to the province that much more challenging.
The goal of the legislation is to strengthen the French language and has new and expanded rules for businesses, harsher penalties for violations, and limits on who can access certain government services in English. Specifically, immigrants who have lived in the province for longer than six months will only be able to access public services in French.
Previously, businesses with 1-50 employees were exempt from French language requirements, but the new law will further segment that and those with more than 25 employees will be subject to checks from the language police.
Roughly 8.2 million Canadians speak French, so understandably the Quebec government wants to work to preserve it. However, heavy-handed approaches such as this could have far-reaching consequences that could benefit other places in the tech sector, such as Ottawa and Toronto (and everywhere in between). This is definitely a concern of tech industry folks who were at Collision.
The elephant in the room is, obviously, the economy. Despite the tech sector being hot right now, inflation is going to begin to show its impact. Companies such as Netflix (not not a tech company) have begun to lay staff off, and so have Web3 companies, including Coinbase (Goldman Sachs said that the company itself ($COIN) is a bad investment) as the so-called "crypto winter" deepens. But what happens to the venture capital and who suffers the most?