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Why Canada is where smart VC money is going in 2014

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VB | Katherine Barr, Mohr Davidow Ventures | Feb 2, 2014

Canada smart VC money 300x225 - Why Canada is where smart VC money is going in 2014While well established startup markets outside of Silicon Valley such as New York, Boston, and Seattle are already on venture investors’ radars, a key market for technology investment opportunities that has often been overlooked is Canada and its tech hubs, including Toronto, Waterloo, Vancouver, and Montreal.

Over the past five years, significant changes have taken place in the country’s technology ecosystem and regulatory environment. They have fueled a new era of innovation, nurturing standout companies like HootSuite, Kik, and Indochino and making Canada a key market to watch.

Where Canada is leading

What makes many Canadian technology startups so attractive to investors is that the companies have sustainable business models, with real revenue and a focus on solving very large, albeit sometimes unsexy, problems.

Material exits of globally recognized Canadian technology companies have occurred over the past few years — Eloqua to Oracle for $871 million, Taleo to Oracle for $1.9 billion, and Radian6 to for $326 million, among others –- with minimal awareness that these were all Canadian-founded companies.

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Canada is home to many quickly growing Software-as-a-Service companies like Vidyard, a Y Combinator alum, and FreshBooks, in addition to e-commerce players such as Kobo (acquired by Rakuten for $315 million), Beyond the Rack, and Frank & Oak. Desire2Learn and TopHat are disrupting the education market, and companies like, Shopify, BuildDirect, and Tulip Retail are disrupting retail infrastructure by creating new technology platforms and data-enabled distribution systems. Software-enabled hardware startups like Bionym and Thalmic Labs are leveraging the software-enabled hardware talent from Nortel and BlackBerry to create innovative devices and services.

In fact, the recent decline of BlackBerry has released a plethora of talent –- experienced technology executives and junior engineering talent alike –- into the Canadian tech ecosystem. The fall of this one giant will plant the seeds for hundreds of others to grow.

Home-grown tech talent

Conventional wisdom in Canada held that once you were ready to scale your company, you needed to move to Silicon Valley, or just get acquired by a larger technology company.

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However, that dynamic is rapidly changing, and Canada is now seeing large American technology companies setting up shop to take advantage of the country’s rich engineering talent, lower operating costs, and thriving entrepreneurial ecosystem. For example, Facebook, Amazon, Google, Twitter, and Square all have offices in cities such as Vancouver, Toronto, Waterloo, and Montreal. The presence of these world leaders in technology in Canada injects additional energy and seasoned, as well as cutting edge, expertise into the startup ecosystem.

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share save 171 16 - Why Canada is where smart VC money is going in 2014

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