Drawing on ideas from a game-changing bet on artificial intelligence to transportation infrastructure and even informal network-building dinners for regional enterpreneurs, Tech North’s four founders are calling on policy-makers, investors, and post-secondary institutions to get behind development of Canada’s first “technology supercluster” in the Toronto-Waterloo Region corridor.
The region has the potential to create $50 billion in new equity, $17.5 billion in additional GDP and 175,000 high-tech jobs by 2025 if an ambitious and aggressive strategy to turbocharge the area’s existing assets – including Toronto’s financial and tech manufacturing base, the startup and innovation sector in Waterloo Region, and the region’s post-secondary institutions – is undertaken, according to a new study conducted for Tech North by McKinsey Canada.
The current equity value of tech companies in the corridor stands at about $14 billion.
But while the gains have the potential to be “non-linear,” McKinsey partner John Kelleher told a packed auditorium at the University of Toronto’s Rotman School of Management on Friday, many regions around the world are pursing similar strategies, and only a few will emerge on top.
“The gains in these tech clusters go to the winners,” he said. “That’s what this discussion is all about.”
Added Rotman dean Tiff Macklem, “We either go up or we go down. We can’t stand still.”
Communitech CEO Iain Klugman, one of the Tech North founders, said players in the region should be thinking about the upheaval in the United States as a means of attracting talent and capital to the corridor. But, he pointed out that it’s increasingly apparent that the city now has a critical mass of firms and investors capable of attracting and retaining the sort of enterpreneurs drawn to regions like Silicon Valley.
“I don’t think we were ready to do this five or 10 years ago,” he added. “Toronto has evolved into truly world-class city and has capacity to scale.”
Yet serial entrepreneur Daniel Debow, another Tech North founder, noted that the region still lacks a sufficient number of very large globally competitive tech giants that can do what firms like Google or Uber do for the San Francisco/Silicon Valley corridor.
“We need to have multibillion-dollar companies with thousands of jobs, and founders who make a lot of money and go off and start other companies,” he said. “People don’t move here because there aren’t enough big companies.”
The McKinsey report includes 42 recommendations on how to operationalize the vision, among them focusing public resources, policy and institutional backing on already established local clusters with high growth and transformational potential, such as artificial intelligence and regenerative medicine.
Rather than spreading resources thinly, the report urges the federal and provincial governments to focus transformational innovation-oriented investments in a tech supercluster that will ultimately bring broader returns for the national economy.
Kelleher canvassed the panelists for their views on proposed measures, such as making coding a compulsory subject in K-12 education. Klugman pointed out that if the province makes such a change to the curriculum, education officials need to do it in a concerted way instead of adding a few short units of software programming.
Janet Bannister, general partner with Real Ventures, said the federal government should quickly move to ease visa restrictions that can make it difficult for startups to recruit and retain key people, especially those with sales and marketing experience in high-growth innovation-driven firms. “Talent is the biggest lever we can pull,” she said.
Klugman and Alex Wong, Canada Research Chair in Medical Imaging Systems, Faculty of Engineering, University of Waterloo, both noted that the establishment of a large research institute with institutional links to both Toronto and Waterloo Region has the potential to become another anchor in the development of a supercluster.
Debow, however, said that the one of the most critical elements is networking – encouraging researchers, investors, entrepreneurs and policy-makers to not only think of the region as an integrated corridor, but also seek out social and professional connections to create the sorts of dense professional networks that define Silicon Valley.
He challenged the audience to “break down the two solitudes” – academics and policy-makers on one side, and entrepreneurs on the other. “Get together and break bread. The infrastructure is pizza and beer. It brings out young entrepreneurial people every time.”
