July 20, 2020
Silicon Valley has long been recognized as a global hub for technology innovation. To the detriment of Canadian technology innovation over the past decade, the Bay Area has attracted highly skilled Canadian university graduates and technology professionals as a result of the region’s higher salaries, international reputation, enhanced access to capital and deep pool of technology expertise.
While the US continues to be a prime destination for technology development, the effects of COVID-19 have provided Canada with a unique opportunity to enhance its technology ecosystem. Given the US’s H1-B visa restrictions, Canadian tech professionals and graduates entering the technology market immediately prior to and during the pandemic are physically restricted from seeking out opportunities in the US. As a result, top Canadian talent will, in the near term, be required to pursue employment opportunities here in Canada.
This unique circumstance may serve to bolster the already growing technology ecosystem in Canada. Over the past five years, Canada has seen an increase in the opening of offices from US-based technology firms, including: Google, Facebook, Twitter, Amazon, Lever and many more. With sophisticated engineering graduates working at more modest wages, the leading international technology companies are taking advantage of what the Canadian technology industry can offer in human capital. As a corollary of this trend, Canada has seen a rapid increase in its venture capital (“VC”) activity in the technology sector. In 2019, the Canadian VC market had one of its most successful years, recording the most deals (539) and the highest deal value ($6.2 billion CAD) since 2015.
Canada’s sophisticated university graduates are not the only reason for its increase in technology innovation. Canada has also been consistently recognized as a global leader in its research & development tax incentive programs. In 2017, the Organization for Economic Co-operation and Development reported that Canada ranked sixth among all countries in providing the highest percentage of R&D tax incentives relative to a nations’ GDP.
Although COVID-19 has had significant ramifications on the global economy, it may yet provide a unique opportunity for the Canadian technology space to retain its homegrown talent. With all of its resources, talent and opportunities, Canada stands in a great position to realize its true potential as an emerging international leader in tech innovation during the pandemic.
Author: Andre Damata