Many tech entrepreneurs and the mayors of Toronto and Kitchener want to transform the 114-kilometre stretch between Toronto and Kitchener-Waterloo into a hub that rivals Silicon Valley. Dubbed “Silicon Valley North,” the area is already dotted with offices for Google, Research in Motion, and thousands of startups.
According to Alex Kolicich, a founding partner in the San Francisco-based venture capital firm 8VC, the Toronto and Waterloo startup scenes are experiencing a “new Renaissance”. Students, graduates, and dropouts are establishing new companies and pioneering new technologies with an unprecedented vigour.
Kolicich grew up in Hamilton, Ontario, and wants his firm to invest in promising Canadian startups. Though he is bullish about the potential of Canadian tech startups, he acknowledges that they need to overcome numerous challenges.
First, while the Toronto-Waterloo Region Corridor is bursting with tech talent, the corridor has less executive talent. Kolicich said local entrepreneurs aren’t aggressive enough when it comes to recruiting top executive talent, as they rarely look beyond the region and outside Canada.
“There’s a lack of understanding that recruiting is the second priority of a startup [behind business development],” Kolicich said. “It might even be the number one priority.” Instead, many Canadian startups simply seek the best local talent when they should be vying for the best global talent.
“Find the best person and convince them to work with you. Don’t just give up and say ‘Oh he’s not going to move to Toronto.’ Try and make it work,” he said. Kolicich suggested reaching out to senior Canadian executives in Silicon Valley. “A lot of Canadians would be open to the idea of moving back, and executive roles don’t come up very often.”
Second, while many Canadian investors strive for billion-dollar exits, they prevent their investment companies from reaching that goal by placing greater importance on short-term benchmarks, such as early revenue targets.
This pressures companies to monetize early on and focus on short-term growth, which prevents companies from truly expanding. If Canadian tech startups want to compete with Silicon Valley and Tel Aviv, they need to focus on long-term benchmarks.
Third, relatively low salaries are driving the best tech workers away. “People view salary as an input to be minimized … but you’re competing with startups in the Valley,” Kolicich said. “The key to capturing people and retaining people is to pay people more.”
Even if some startups cannot offer premium salaries, they can balance this by offering recruits broader and more competitive full compensation packages.