{"id":169389,"date":"2025-09-30T01:38:07","date_gmt":"2025-09-30T01:38:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/169389\/"},"modified":"2025-09-30T01:38:07","modified_gmt":"2025-09-30T01:38:07","slug":"why-are-canadas-tech-startups-leaving-for-the-u-s-we-answered-your-questions","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/169389\/","title":{"rendered":"Why are Canada\u2019s tech startups leaving for the U.S.? We answered your questions"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

A recent study found an increasing amount of Canadian startups were leaving the country, notably moving to Silicon Valley in the U.S.Getty Images\/iStockphoto<\/p>\n

On Sept. 29, tech reporters Sean Silcoff and Joe Castaldo answered reader questions<\/a> about their feature on the brain-drain problem in Canada\u2019s tech industry and what the country can do to keep its talent. <\/p>\n

Brain drain has been a perennial problem in the country\u2019s tech sector and a recent report found that tech leaders are leaving Canada<\/a> at an accelerating rate.<\/p>\n

Readers asked how Canadian tech talent can be enticed to stay, what policies are being created to keep founders and much more. Here are some highlights from the Q&A.<\/p>\n

The funding challenges in Canadian tech<\/p>\n

Risk aversion and lack of early-stage support is the biggest issue. Canadian institutions aren\u2019t willing to invest until a business is already obviously successful, which drives founders away to a more risk-friendly U.S. <\/p>\n

Castaldo: I\u2019ve heard this from Canadian startup founders, particularly when comparing the venture capital scene here to the United States. American VCs have more money to spend, of course, but the attitude is different. Some startup founders say Canadian VCs are much more cautious, drag out the process and emphasize the ways in which a company will fail. American VCs act fast, invest big and are more willing to take a flier. There\u2019s a flip side, though. One founder told me that if a Canadian VC invests in your company, that means your idea is validated, because these VCs have really done their homework if they\u2019re putting up money.<\/p>\n

Silcoff: To add to Joe\u2019s point, there are Canadian VCs that have made early bets on some of the biggest winners in the ecosystem when they looked like outliers. A couple that come to mind include Brightspark, an early backer of Hopper, Radical, Cohere and Waabi. And Canadian investors have actually been well-represented backing some of the quantum computer developers that are now among the most promising companies in the emerging space globally. In fact, no less than three Maple 8 pension funds (OMERS, PSP and BCIM) have made direct investments into quantum computer companies.<\/p>\n

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Vancouver has a booming biotech scene, says technology reporter Sean Silcoff.Marlin Olynyk \/The Globe and Mail<\/p>\n

Whether in tech (Silicon Valley) or life sciences (Boston), the concentration of skilled and experienced executives, board directors, investors, and strategic partners is unmatched. How can Canadian startups tap into those networks and advantages while maintaining a deliberate strategy to bring wealth back to Canada?<\/p>\n

Silcoff: We\u2019ve written a lot on this topic! I tried to address this last year in a piece about Vancouver\u2019s booming biotech scene<\/a>. <\/p>\n

It takes a lot of determination and swimming upstream, to be honest. Smart, strategic people need to be committed to building here, and staying. Remember that Silicon Valley VCs wanted Shopify to relocate to there as a condition of funding. CEO Tobi Lutke said no. That was 15 years ago. It\u2019s not nearly as much of a problem anymore \u2013 there are plenty of investors from around the world willing to fund Canadian companies and founders and not pressure them to move.<\/p>\n

What percentage of the drain is due to requirements imposed by investors?<\/p>\n

Silcoff: This used to be a much bigger problem. Fifteen or 20 years ago a lot of Silicon Valley investors made it a condition of investing that a Canadian startup would have to relocate to get the money. That is probably still happening but enough Canadian founders either said no or found other sources of capital to grow that we hit a critical mass of dozens, probably hundreds, of companies that were able to reach critical mass without having to decamp to south of the border.<\/p>\n

Tech talent at the university level<\/p>\n

What role do Canadian university co-op programs play in the brain drain, especially University of Waterloo, which is focused on Silicon Valley?<\/p>\n

Sean Silcoff: We have world-class universities, not just U Waterloo but across the country, and they continually train world-class talent. And the world-leading consumer of world-class talent in many areas is the United States. It\u2019s close, it\u2019s similar and the opportunities in many areas are far greater.<\/p>\n

So I wouldn\u2019t blame universities for contributing to the brain drain. That\u2019s not the problem. The problem is that we need to do a better job creating world-class opportunities and conditions for the best and brightest to start and build businesses here. Fixing that falls in good part to government, but not completely.<\/p>\n

The future Mike Lazaradises of this world, now attending universities in Canada, are not thinking about taxes. They do think about salary, however. And lifestyle and work and research opportunities. That\u2019s where the focus has to be.<\/p>\n

Joe Castaldo: Salary is a big issue. Tech talent can earn more in the U.S. (and get paid in American dollars) if they work for U.S. companies. One founder told me that a lot of the Canadians he interviews end up taking jobs with American companies because of the salary disparity. It means that Canadian founders really have to get prospective hires to buy into their vision to accept a comparatively lower salary.<\/p>\n

Canada had \u2013 and lost \u2013 its lead in AI. Can it avoid making the same mistake in the next emerging global technology race?<\/a><\/p>\n

Sean, you wrote back in 2018<\/a> that Canada\u2019s engineering grads were leaving Canada for better jobs elsewhere. What has changed since then?<\/p>\n

Silcoff: I haven\u2019t seen good apples-to-apples numbers on this, but anecdotally I think the story hasn\u2019t changed. There are just great opportunities south of the border for the best and brightest Canadian engineering grads. Fortunately, there are probably more opportunities in Canada than there were in the past, particularly among high-growth, high-potential startups and scaleups. I was speaking recently to an engineering student about job opportunities in Canada and had little trouble rhyming off the names of five top-drawer domestic companies that would be ideal places for him to work.<\/p>\n

Retaining tech talent and the pull of the U.S. <\/p>\n

AI was practically invented in Canada. We were a leader in this new area of science, yet many of the leading AI companies are in the U.S. Has that had any influence on tech founders leaving Canada?<\/p>\n

Castaldo: Yes, Canada has played a huge role in the development of AI. The thing is, big U.S. tech companies were among the first to realize the potential of the technology and set about hiring Canadian experts: Google hired Geoffrey Hinton, Nvidia hired Sanja Fidler, etc. And it still happens. Elon Musks\u2019s xAI recruited University of Toronto prof Jimmy Ba as one of its first hires. When a lot of the AI development today (and the big money) is in the U.S., it\u2019s hard for Canadians to resist that pull. But there is work being done to reverse the trend. <\/p>\n

Stopping the brain drain: U of T professor aims to launch 50 AI companies with new venture studio Axl<\/a><\/p>\n

To remain competitive and attract talent, countries are creating national entrepreneurship strategies that address issues such as tax policies and create sovereign wealth funds and economic zones. The government has a new AI task force \u2013 should there be an entrepreneurship and talent task force?<\/p>\n

Castaldo: I\u2019m of two minds when it comes to task forces. This country loves a task force. It\u2019s important for government to listen to industry players, and they do a lot of that already. Companies and their lobbyists are also talking to government all the time. So I feel like there\u2019s no shortage of ideas out there, and the cynical part of me wonders how much task forces are just for show. The challenge is to identify good policies and actually carry them out.<\/p>\n

Silcoff: Further to Joe\u2019s point: We tend to do a lot of task forces, round tables, advisory panels, royal commissions and so on and on and on in this country. We\u2019re lucky if we get a few decent programs that result from them, luckier still if they work. More action, less talk, and more focus on outputs that actually move the needle than impressive-looking ribbon cuttings and press conferences would be a refreshing change.<\/p>\n

That said, there seems to be a real push for this AI task force to hit the ground running and come back with some recommendations that can be quickly turned into action. We\u2019ll be watching this file closely to see if that actually happens.<\/p>\n

How much of this is attributable to\/addressable with federal government policy versus just being situated next to the U.S.? <\/p>\n

Silcoff: It\u2019s an excellent question. We live next to the world\u2019s biggest economy, which has been a draw for ambitious people from around the world for many decades, and Silicon Valley is full of such people who have built giant companies, including many Canadians (Databricks, Cloudflare, Roblox, Slack, to name just a few). Until this country can match the U.S. for opportunities, markets, tax policies, et cetera, that will always be an issue.<\/p>\n

But we have a lot of founders who have stayed and built thriving companies<\/a>. Many of these are global companies and the best in the world at what they do.<\/p>\n

Is our tech scene underrated? Probably. I don\u2019t think it resonates with the average Canadian. Our corporate leaders, in general, are not well known to the public here, while in the U.S., Elon Musk, Steve Jobs, Jensen Huang, Bill Gates are household names. but when you see sharp, giant global investors doing a lot of deals here \u2013 like KKR, Thoma Bravo, Vista, JMI, Hg Capital \u2013 I wouldn\u2019t say we\u2019re exactly below the radar.<\/p>\n

Having come out of the All In conference last week, my question is why do the government and, at times, tech leaders themselves deny there is a retention issue and startup issue in Canada? <\/p>\n

Castaldo: I was also at All In, and I don\u2019t disagree with you. There is definitely a tendency in Canada to hype ourselves up (how many times did you hear Canada invented AI at that conference?) and play down some of the inconvenient questions. But what I also found at All In was an acknowledgment that Canada needs to do better. AI minister Evan Solomon has been pretty clear that government needs to support Canadian scale-ups and give founders more reason to stay in Canada. That\u2019s a start.<\/p>\n

Welcome to the $100-million club: With dozens of scaled-up tech companies, Canada is poised to deliver a wave of quality IPOs<\/a><\/p>\n

What is the one thing Canada can do to get startup entrepreneurs to consider staying in Canada?<\/p>\n

Castaldo: Helping companies scale \u2013 as in, let\u2019s say, getting to $100-million in revenue or something like that \u2013 is challenging in Canada. One thing the federal government is talking a lot about these days in procurement. They intend to buy products\/services from Canadian companies, particularly in AI and defence, two important sectors. The logic is that the government can be a customer, support domestic companies, and signal to other countries and firms that Canadians are worth dealing with. A lot remains to be seen, but entrepreneurs are excited by this idea. Everyone wants that sweet government cash.<\/p>\n

Visas targeting tech<\/p>\n

How might the latest changes to the U.S.\u2019s H-1B visa benefit Canada? Would tech workers actually come here to work?<\/p>\n

Castaldo: It could help Canada, but there\u2019s some context to note<\/a>. Experts say the big U.S. tech companies can afford the new $100K fee and will continue paying top dollar for talent. Also, Canada launched an H1-B equivalency program in 2023. It got 10,000 applications but only 1,200 people ended up coming in the first year. Tech workers viewed Canada as a backup option. (Still, that\u2019s 1,200 tech workers we didn\u2019t have before.) One expert I spoke to recently pointed out that Canada has existing immigration programs geared toward tech workers\/entrepreneurs. The expert said we should really make sure those programs are working properly before launching a bunch of new ones to capitalize on the changes in the U.S. <\/p>\n

Should we consider a much more proactive Start-Up Visa Program<\/a> as part of our total immigration approach?<\/p>\n

Castaldo: The problem with the program, as I understand it, is that it has been horrendously backlogged. One founder we spoke to applied for a startup visa in Canada, and a different visa in the U.S. The processing time in Canada was three years (!). He got his U.S. visa in 13 days. So that guy is no longer in Canada. The issue is making sure our existing programs are working, so that we don\u2019t lose people over things like wait times.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: A recent study found an increasing amount of Canadian startups were leaving the…\n","protected":false},"author":2,"featured_media":169390,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[73994,14370,68050,68051,68049,84,4203,14367,56,54,55],"class_list":{"0":"post-169389","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-entrepreneurship","8":"tag-ac-community","9":"tag-appwebview","10":"tag-aud-growth","11":"tag-aud-headline","12":"tag-aud-url","13":"tag-business","14":"tag-entrepreneurship","15":"tag-noastack","16":"tag-uk","17":"tag-united-kingdom","18":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/169389","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=169389"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/169389\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/169390"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=169389"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=169389"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=169389"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}