No, Toronto’s Startup Ecosystem Isn’t Broken

toronto startupsI’m an eternal optimist. I see the glass as half full, not half empty. I believe good things are around the corner.

It’s an attitude I have about Toronto’s startup community, which is slowly starting to mature and flourish. Having been around the high-tech scene since the mid-1990s, this is the most exciting the startup community has ever been.

It is interesting, however, to see the growing number of critical articles and blog posts about Canada’s high-tech and startup sectors.

This started with the Globe & Mail, which suggested Canada’s high-tech sector is “vanishing”, while ignoring the burgeoning number of startups. And earlier this week, Zak Homuth suggested Toronto’s startup ecosystem is “broken” and it has some “serious problems under the covers”.

With all due respect, it’s a strange post because many of his arguments either don’t make sense or they’re wrong.

For example, he suggests most entrepreneurs are “very young” and most of them aren’t tied to Toronto. True, Toronto is full of people who were born and raised in other places, but I’m not sure why this is an issue. And while there are many young and smart startup entrepreneurs, I can tell you there are also many experienced entrepreneurs.

Homuth also suggests “we don’t brag about or lean on our native networks in Toronto”. I completely agree Canadian startups, in general, need to be more cocky, but the suggestion we don’t lean on our native networks is off the mark. From my experience, Toronto’s startup community is extremely supportive and people are generous with their time. DemoCamp and HoHoTo are great examples of the community’s cohesion.

Homuth is also critical about how Toronto is dominated by “small ideas” and how they aren’t “world changing”, and we have “almost zero entrepreneurs and early employees experienced at scaling”. Seriously? Try talking to people such as Dan Debow, Mike McDerment, David Ossip, Bill Tatham and Ron Dembo.

And Homuth also claims the mentorship ecosystem in Toronto is weak due to a lack of experience. Wrong. He should take a look at the mentors at MaRS, Extreme Startups Labs and INCubes to see the kind of depth that exists.

I’m not suggesting Toronto’s ecosystem is perfect because there are some significant holes, including the lack of capital – a situation that is improving but has a long way to go.

But I think it’s inaccurate and unfair to suggest Toronto’s startup ecosystem is broken. My take is it’s evolving, progressing and maturing. There is a large and growing entrepreneurial network and an infrastructure of suppliers, partners, mentors, investors and employees being developed around it.

There is a lot to be excited about, although more work needs to be done to seize the opportunity to become a world-class startup community.

I’m bullish on Toronto’s startup ecosystem so it rubs me the wrong way when someone criticizes it. What do you think? What parts of the ecosystem are thriving, and what parts need to be fixed?

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  • Jesse Rodgers

    I agree it is getting better but I see quality/quantity of mentors and the attitude/skills of founders to be a challenge. There is no point focusing on the things that are lacking but I hesitant to go all the way to bullish just yet ;)

    • VahidJozi

      I agree. For a Canadian ecosystem, we are great but there is much room for us to grow to become great globally.

  • Acorg Inc

    I can’t comment on Toronto but do see problems from Waterloo and London.
    Mars has some really good resources online and some talks they have given are extremely valuable.
    The problems I see stem from the explosion of startups recently. A couple of years ago, only really serious entrepreneurs were doing startups. Today, everyone thinks they can run an internet company. This is spreading the resources of the One network too thin.
    I see things improving over the coming years as these new minds get some experience and start to give back to the community. Mixed in will hopefully be some exits to boost the cash available.
    So from my perspective, things are not broken but just scaling right now.

  • Dan Morel

    In comparison to NY or the Valley then all the things Zak says are true. Its painfully obvious when you are in NY and the Valley that there is a much higher quality of mentorship, capital and ppl, especially on the business side.

    Buuuuttttt… in comparison to London, Paris, Delhi, Beijing, and the rest of the technology centers in the world, all the things Zak says are false.

    And thats why we’re ranked 4th, not 1st.

    • An observer

      As a Canadian who lived in the Valley and worked for startups, Toronto is a midget in comparison. But is that a fair fight / comparison? Probably not. But be realistic, the number of people who founded and grew a startup in the GTA into revenue with $25M+ is a small number. The community is not re-building…it is building…and building slowly. It takes time and hard work….cheerleading and confidence aside.

  • Rob Drimmie

    I hate to get all semantics-y but to me “broken” suggests that something that was working no longer is. To me it’s more that the startup ecosystem (in Toronto, Waterloo, across Canada really) is still developing. There are a lot of gaps but it’s building and getting better, not descending from a previous high state.

  • Adam Epstein

    One aspect that both Mark and Zak touch upon as a weakness, is early stage investments. I wholeheartedly agree, and in my view, it really begins with angel investment. In NY and the Valley, former founders publicize their angel investments, and the fact that they are active angels with a great deal of pride. They do so, because they recognize that as much as angel investment is an actual investment, it is more so a gesture of good faith to the community that allowed them to succeed. They accept this inherent risk. This does not happen in Toronto, or Ontario for that matter. Getting funded by VC’s is difficult in any city and in any environment. What allows those ecosystems to succeed so profoundly is they have angels that actively invest in companies within the ecosystem with a great deal of pride. We need these successful Canadian tech entrepreneurs to give back to the ecosystem through investment if we are to ever flirt with NY and the Valley as an international tech hub.

  • Michael Assad

    The startup community is alive and well from where I sit. What’s broken is the venture community.

  • max cameron

    Funny how for the most part, the pundits are the ones saying the scene in Toronto is strong. I put more weight in the opinions of the founders (of which I am one), the ones actually trying to build startups.

    Building a startup in Toronto is like building an igloo in the desert. Lots of factors playing against you. It’s not that it’s impossible to identify a handful of successful entrepreneurs (by the way has McDermot actually invested in any TO Startups?), it’s just that the community is hard to break into.
    But once you’re in, it’s not that bad. People like Zak are doing amazing work addressing some of the problems he so accurately depicted.
    Here’s the point: We don’t need to be Canadian cheerleaders just because we’re Canadian. Zak is just as proud as being here as the rest of us – in fact if any of us can succeed, it will feel that much better knowing we overcame the odds.

    • Mark Evans

      Max: Having co-founded and worked for startups, I can appreciate the challenges. I think Zak made some good points but I don’t think the situation is as dire as he make it out to be. It’s not that we need to be cheerleaders, we just need to be more bullish and confident. Thanks for the comment. Mark

  • William Mougayar

    If something is not perfect, it doesn’t mean it’s broken. Toronto’s ecosystem and it’s participants need to grow-up and they are growing up gradually. This is a place that’s been rebuilding itself seriously for only the past 3 years. Give it more time. What’s more important is to ask – are we getting better?

  • Abdallah Al-Hakim

    I agree Mark. Also, we need to start not thinking of Silicon Valley every time we discuss a startup ecosystem. Toronto has it is own advantages and the cultural difference can allow it to develop its own type of startup system with different values than the Silicon Valley. For example, looking at the startup scene in Scandinavian countries – one can appreciate how they developed their own unique startup scene that reflects their social values.