Toronto is booming, and its tech scene is the engine behind it all.
The Canadian city of 3 million is the fastest-growing in North America and is home to some 2,000 startups, along with more construction cranes than San Francisco, Los Angeles, Chicago, Boston and Seattle combined. There are also some 65,000 STEM graduates annually in the region.
“It’s a real nice buzz. Tech is driving the economy here,” said Stephen Lund, chief executive of Toronto Global, an agency that promotes investment in the city. He noted, however, that this “also offers challenges [when it comes] to building out transit and keeping housing costs from rising.”
Toronto is North America’s third-largest tech hub, with about 290,000 tech workers, trailing only Silicon Valley with 379,000 and New York City with 344,500, according to CBRE, a real-estate company that tracks hiring.
Last year, Microsoft Corp.
MSFT,
opened four floors of new office space near the top of a 50-story glass tower in downtown Toronto. Apple Inc.
AAPL,
and Amazon.com Inc.
AMZN,
occupy towers down the street, and Alphabet Inc.’s
GOOGL,
GOOG,
Google has a new building just around the corner. Pinterest Inc.
PINS,
and Stripe, a payments company, are also in the neighborhood. IBM Corp.
IBM,
alone employs 6,500 people in Toronto.
In all, about 200 companies — most of them in tech — have relocated to or expanded in Toronto over the last three years, Lund said.
“Toronto’s appeal is ample funding, a diverse ecosystem, tolerant immigration policies for workers and an exploding fintech scene. What’s not to like?” said Jayme Derkson, marketing director at fintech company XTM Inc.
Krista Jones is the creator of Momentum, a program that aims to help Canadian companies reach $100 million in revenue by 2024. “Toronto has the highest concentration of [artificial-intelligence] companies in the world, but Canada breeds a different kind of entrepreneur who is purpose-built and responsible about tech use,” Jones said, noting that half of the region’s tech founders were born somewhere else, mostly in Europe or Asia.
‘Meeting of minds’
The Collision tech conference has been held in Toronto for the past five years, and this week’s event drew more than 37,000 people and is expected to contribute about $36 million to the city’s economy, according to projections from Destination Toronto, a tourism organization.
Vinod Bidarkoppa, chief technology officer of Walmart Inc.’s
WMT,
Sam’s Club, described Collision as a “meeting of minds” on responsible tech use.
“Deep learning and machine learning were a thing here 10 years ago,” said Ariel Garten, a Canadian known for her work integrating art and science.
XTM’s Derkson added that in Canada, “AI is not as frenzied as in the U.S., but Canada tries to follow a responsible approach to tech and closely watches the behavior of our neighbor to the south.”
Toronto is home to startups such as the AI-focused Cohere and TransPod, a tube-transportation company.
“The city is open-minded, tolerant to different cultures and has basic health coverage, although it has higher taxes than the U.S.,” said Sebastien Gendron, co-founder and chief executive of TransPod. The eight-year-old company is working on multiyear projects in western Canada and in Texas to help move people and freight, and it plans to add 20 people to its 50-person workforce this year.
An open border
Even as the U.S. immigration system faces political and logistical problems, U.S.-based companies with offices in Toronto can expedite the hiring of skilled workers — the lifeblood of the tech industry — from other countries. The Canadian government has introduced programs designed to attract engineering talent to a country that is already diverse: About half of Toronto’s residents were born outside the country, according to city officials. Italian, Greek, Portuguese, Indian, Korean and Chinese neighborhoods enhance the cultural landscape.
In addition, Ontario passed a law banning companies from enforcing noncompete clauses in employment contracts, which has led to employees founding startups. Toronto native Jeff Shiner, CEO of online security company 1Password, points to a rich vein of talent from the nearby universities of London and Waterloo, as well as a surge in accelerators over the past decade.
Breakneck growth does come with infrastructure challenges, as Lund and other locals acknowledge. Toronto’s roads are often choked with traffic and the city is among the most expensive on the continent. Public transportation is via electric streetcars and buses, along with a subway that is limited to the downtown area.
“This is one of the most diverse cities in the world. We have an innovative climate and great food,” said Amy Thibodeau, a Toronto resident who is chief design officer at Gusto Inc., a cloud-based payroll, benefits and human-resource-management software company. She previously worked at Shopify Inc.
SHOP,
and Facebook
META,
But, she noted, “traffic here is awful, and one of the reasons is that the city is growing really quickly. Transit hasn’t caught up.”
One unknown for the tech sector is how it will work with the city’s incoming mayor, Olivia Chow, who was elected on Monday. Unlike her predecessor, John Tory, Chow doesn’t have a particularly close relationship with the tech sector.
And funding for startups in Toronto pales in comparison with Silicon Valley, where they hauled in $67.4 billion in 2022, according to research firm Tracxn Technologies. In Toronto, that figure was $4 billion, though some local tech leaders scoff at the urgency U.S. business leaders attach to fundraising and accumulating customers in search of a business.
But venture funding is flowing into Toronto now, because “VC dollars always follow talent,” noted Kyle Stanford, a venture-capital analyst at PitchBook.
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