Canada is rapidly becoming a favorite incubator for technology and other startup companies. This country has benefited from recent restrictions on certain visas in the United States. Some experts estimate that British Columbia and Canada have seen its technology professionals grow by 30 percent from 2017–18 – largely from immigrants unable to make their careers in the United States.
But that’s only part of the story. Canada has plenty of home-grown talent. Canadian universities still boast some of the finest engineering programs in the world. Major tech giants in Silicon Valley and beyond are going out of their way to recruit talent from our colleges and universities – but many of our best and brightest are choosing to work right here in Canada.
1. Funding is available
Canadian startups are receiving tremendous support from Canadian backers, financiers and lenders. Over the last 13 years, the amount of seed and venture capital available to Canadian startup companies has exploded. Our startup companies in Toronto are receiving investment on a par with those in London and San Francisco. There is no longer a meaningful disadvantage in locating a startup in Toronto compared to most of the U.S.
2. Government Support
The Government of Canada is actively looking to provide incentives for new startups to locate here in Canada. Startups can qualify for a scientific research and experimental development tax credit, which can help offset investments in technology and product development.
Additionally, you may be able to qualify for local and provincial incentives such as FedDev Ontario and the Industrial Research Assistance Program (NRC-IRAP), an initiative of the National Research Council.
Among other benefits, the NRC-IRAP may provide assistance in covering the costs of hiring young talent right here in Canada.
3. Favorable Exchange Rates
Right now, a relatively weak Loonie means Canadian exporters are much more competitive in the United States, while U.S. firms are less competitive in Canada. This bodes well for Canadian exporters – especially those don’t rely on raw materials or components imported from the U.S.
Over the past five years prior to May 2020, the CAD/USD currency pair traded around 0.75 to 0.80 for the most part. But the Loonie fell off the table in March, slipping to levels not seen since 2015 and reaching a low of 0.69 before recovering somewhat.
Economists project the U.S. will be keeping their own interest rates low for some time, which helps keep the U.S. dollar relatively weak and gives Canadian exports to the U.S. more of an edge.
4. Low Interest Rates
Interest rates right now are very near historic low – meaning the cost of capital for promising ventures is extremely low. Today’s startups can generally borrow money at very attractive rates.
Put together, this is one of the best times in recent memory to own a Canadian startup company.
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