Three critical levers to propel Canada’s tech ecosystem forward

Building a comprehensive entrepreneurial ecosystem can fundamentally change the world for the better.

In brief 

• Palpable energy at Toronto’s recent Collision conference buoys confidence that Canada’s entrepreneurial ecosystem is here to stay.
• Private and public organizations must collaborate now to cement Canada’s place as a tech innovation destination of choice.

Collision: the word itself evokes images of opposing forces meeting head on. As the moniker of North America’s fastest-growing tech conference, the term takes on entirely new meaning, scope and scale.

From the buzzing conference floor, the energy was palpable at this summer’s Collision conference. Nearly 40,000 attendees spanning 118 countries gathered for this unique event where ideas did more than collide. They sparked connections and fuelled collaborations that moved us to ask whether Canada is poised to become an unrivalled hub for tech talent and innovation.

EY’s answer? Unequivocally, yes.

In many ways, the groundwork is already in place. Legislative and regulatory shifts have reframed the landscape for tech startups, corporations and just about any Canadian business looking to help solve the climate crisis. Incentives abound for creative thinkers and courageous innovators who are willing to channel inspirational ideas into solutions the world needs right now.

Layer in the host of federal announcements timed to this summer’s conference and that horizon gets even brighter. As part of a national tech talent strategy, Canadian Immigration Minister Sean Fraser was on site to announce core changes to immigration policy, including:

• New, dedicated pathways to permanent residence for people working in STEM
• Streamlined application processes that yield Global Skills Strategy program decisions in just two weeks
• Updates to the Start-up Visa Program that will create 2,500 more spaces each year
• Digital nomad programs that allow people with a foreign employer to work here for up to six months
• Additional channels that will invite 10,000 US H1B visa holders to work in Canada.

These measures undoubtedly help position Canada as a place where innovative progress can and should take place. They strengthen the foundation of a tech ecosystem that’s been emerging here for some time, making it easier and faster to link the right people with the right work. Even in this highly incentivized and streamlined environment, though, it was the spirit and drive we witnessed at Collision that make us incredibly hopeful about what’s to come.

At EY, we’ve always believed there can be no lasting tech innovation without a culture of collaboration. Time and time again, we’ve proudly witnessed just how exponentially powerful a truly entrepreneurial ecosystem can be. As founding sponsors of NEXT Canada, we’ve spent 15 years connecting next-generation entrepreneurial talent with the networks, tools and capital they need to succeed. This ecosystem has generated remarkable results. True, too, for our collaborative efforts with networks like Communitech. For decades, we’ve supported similarly innovative builders by celebrating entrepreneurs through the EY Entrepreneur Of The Year® program, empowering female founders to scale through EY Entrepreneurial Winning Women™ and fostering inclusive entrepreneurship for all through our Entrepreneurs Access Network. Connecting innovators in these ways has yielded sustainable economic growth and amazing solutions.

Attending Collision reinforced what we’ve learned through each of these sponsorships and programs: building a comprehensive entrepreneurial ecosystem can fundamentally change the world for the better. Now we want to harness the momentum we felt at the conference and cultivate that supportive spirit to officially put Canada on the map as a destination of choice for tech innovation.

At EY, we’ve set the wheels in motion with programs of our own. We’ve named a Global Leader of our Emerging Technology Ecosystem who’s poised to work across service lines and curate tech relationships. We aspire to build connection points between new tech companies and investors — particularly in artificial intelligence (AI) and data platforms — to spur progress. We want to achieve that together with you.

Of course, there are challenges and barriers. At Collision, AI had clearly overtaken concepts like FinTech as the topic of the day. Even as the world experiences what one speaker coined its AI “eureka moment,” questions linger. How will AI be commercialized? Who will manage its inherent risks of bias, discrimination and harm? How will we equip humans to work seamlessly alongside machines in ways that support better outcomes for the business and the employees who bring it to life? 

Venture capital (VC) funds were also top of mind at Collision, as some investors say they’ll increase their diligence and focus on proven investments this year. Overall, VCs are failing to fully deploy in Canada. That fact remains true even though in recent years Canadian companies have been much more efficient with VC dollars than their US counterparts. By the numbers, from 2021 to 2022:

• VC investment decreased 60% in the United States from the fourth quarter of 2021 to the first quarter of 2022, as opposed to only 36% in Canada.
• At 38%, the median net burn rate in Canada was much lower for companies of the same size when compared to businesses in the US throughout 2022.

History itself proves that investing in turbulent times can yield profitable results. But despite that, and the clear indication that Canadian startups are making the most of VC investments, uncertainty is affecting VC decisions in Canada and beyond. At the same time, companies must drive growth as they were before, while more clearly describing and displaying a path to profitability. This reality raises questions about everything from how to achieve balanced growth through to a willingness to bootstrap — at least in the short term.

These aren’t easy questions to answer. But they are better answered together, at the heart of a Canadian ecosystem that we can build, strengthen and sustain by working together.

Innovation hubs in Québec, Ontario, British Columbia, Alberta and everywhere in between offer up exciting success stories and future potential. While the Collision conference represents just one moment in time, what we do next will affect us all for generations to come.