It’s an exciting time to be in Toronto. This fall brought a continuous stream of announcements from emerging fintech stars and multiple events in the city highlighting local innovation.
The city has been steadily humming with the energy of innovation. The summer of 2016 felt like a week didn’t go by that some news outlet was declaring Toronto the next big thing in Fintech. A local Toronto VC firm topped the $100 million mark in capital fundraising—all of it set to fuel fintech in Canada.
For years Canada was contending with a brain drain to the US. Now, the scales are tipping and more of those bright minds are choosing to come to Toronto to build businesses or land their dream job.
- (1) Big Business Meets Big Banking
There are 15,000 tech companies in this city—it’s North America’s third largest tech hub. Pair that with 250,000 people who work in financial services and you’ve got a perfect recipe for innovation. All of Canada’s big banks are headquartered in Toronto (according to the Globe and Mail, “There are more financial institutions with a market cap over $50-billion in the GTA than there are in New York or London”) but it’s also home to major telecoms and national head offices. Where business is concerned, it’s New York and San Francisco combined.
- (2) Intentional Investment in AI
Before roboadvisors and smartbots dominated the fintech conversation, Canada was already investing in artificial intelligence. Universities in Ontario have strategically injected cash into AI research, producing a huge crop of engineers and researchers. Silicon Valley routinely poaches these bright minds right out of schools like University of Waterloo, but many are sticking around and using their expertise to strengthen new fintechs. Case in point: RBC recently partnered with Creative Destruction Lab—a campus-led accelerator at U of T, which is home to 50 artificial intelligence companies.
- (3) Robust, Resilient Banks
Canadian banks fared well in the financial crisis, and prove to be resilient even now as some foreign stalwarts are facing uncertainty. While they have a reputation for conservatism, the Canadian banks have proven that they can be leaders in tech, adopting new technologies before southern neighbours. With such a diverse, concentrated population, Toronto is also a perfect testing ground for new technologies. A single regulator and consistent standards across the country mean it’s easy for the rest of the country to then adopt those new technologies.
- (4) RIM Offshoots
Funding begets funding and talent begets talent. The growth of Silicon Valley was (and still is) exponential because when one successful venture sells or goes public, its key innovators typically branch off to begin multiple other ventures. The cycle continues. We’re seeing similar growth thanks to the so-called “RIM Diaspora” here in Toronto. Great minds from RIM have gone on to build companies, sell them, and use the money to invest in other startups.
- (5) Collaboration and openness
While other countries are pushing back against migration, Canada is continuing a tradition of openness, diversity and tolerance—making it attractive to an international audience. Toronto is recognized as one of the most culturally diverse cities in the world—with almost half of the population born outside the country, more than 200 ethnic groups and 140 languages spoken. Toronto has a global view, incorporating ideas from abroad and exporting new innovations around the globe. That diversity is drawing the eye of foreign governments who are partnering with Canadian fintechs through open-border initiatives. This month the UK Department of International Trade and British Airways are hosting a Canadian fintech mission to London, inviting companies to make ties with the fintech ecosystem there.
- (6) Design City
There’s more to fintech innovation than technology. Design and UX play a massive role, and Toronto is already a well established design centre. There’s a wealth of design talent for players to pick from—whether it’s product design, experience design or interface design.
- (7) Security
Every new technology company has been built on a good deal of risk. Canada’s social security and universal health care cut that risk—instead of settling for a safe job with benefits, Canadians may find it easier to take bigger risks and pursue entrepreneurial business ventures.
- (8) Bang for Your Buck
The low Canadian dollar is boosting the temptation for American companies to build northern offices, taking advantage of lower salaries and simpler immigration policies. And because the city isn’t yet teeming with VC, investors can get a good deal. To outsiders, it must look a bit like a diamond in the rough, full of potential and still somewhat affordable.
More than ever there’s incentive for dollars and brains to stay put in Toronto, and it’s putting this city on the cusp of an innovation boom. All the right ingredients are in place and we can’t wait to see what comes out of it.