Alariss Insights

Canada’s Tech Scene Is Growing, and It’s a Good Time to Expand to the U.S.

November 22, 2021

Canada’s tech scene is growing, and given Canada’s proximity to the U.S. and the size of the U.S. market, it’s a good time for Canadian startups to expand into the U.S.

The Canadian startup scene is currently on fire. In the first half of 2021, Canadian startups raised more than double the amount of money that they raised in all of 2020, according to CB Insights data cited by TechCrunch. There are more than 43,200 tech companies with operations in Canada with 1.65 million jobs, according to Invest in Canada. Canada is particularly strong in software, AI, and cybersecurity. There are advantages for technical teams to be based in Canada. Canada provides tax incentives for R&D. Top Canadian tech companies include Shopify, the online store platform; Constellation Software; CGI; OpenText; and Descartes Systems.

Canadian tech hubs include Toronto, Ottawa, Vancouver, Waterloo, Montreal, and Calgary. Toronto is Canada’s top tech hub, with 250,000 tech workers and a 37 percent increase in the number of tech workers between 2014 and 2019.

Although Toronto is Canada’s primary tech hub, there also has been strong startup growth in the province of Alberta in Canada. The number of tech companies in Alberta has tripled since 2012, according to a report by Alberta Enterprise. 72 percent of them are B2B, and most of the companies are in software and AI.

U.S. companies including Google, Facebook, Amazon, and Lever have opened offices in Canada to take advantage of Canada’s skilled and diverse tech workforce and the fact that it’s easier to bring in foreign workers in Canada than in the U.S., according to CNBC. In 2017, Canada launched the Global Talent Stream, which reduced visa application times to 2 weeks for tech-related fields. Canadian startups also are attracting substantial U.S. venture capital.

Opportunities in the U.S.

If you’re building a Canadian tech company, this is a good time to expand into the U.S. You don’t have to open an expensive office in San Francisco. With Alariss, you can hire top U.S. sales and business development talent from across the U.S. and work with them remotely.

The U.S. is just across the border, and it’s an enormous market that can grow your revenue substantially. The U.S. has a population that is nine times larger than in Canada and a total GDP that is 13 times larger. There also is no language barrier.

If you expand your tech company into the U.S., you’re more likely to be able to raise venture capital funding from U.S. venture capital firms–venture capital is still overwhelmingly concentrated in the U.S.–leading to significantly higher valuations for your company. The U.S. had $136 billion in venture capital funding in 2019, compared to $3 billion in Canada, according to the OECD.

Another advantage of selling to the U.S. is that once you enter the U.S., you have access to a large unified market. It is as easy to sell to someone in Texas as it is to sell to someone in California or New York.

While Canadians have a huge advantage over other international companies expanding into the U.S. because there is no language or time zone barrier, there are still massive structural, cultural, and legal hurdles to overcome. The U.S. is comprised of 50 states, with unique local labor laws and practices. And the culture, especially in sales and marketing, differs significantly. Working through a trusted, local partner is key to success, and Alariss has experience helping Canadian companies enter the U.S. market. Alariss can help you gain access to the right customers in the U.S. at an affordable rate, with very little time required on your part.

If you’re ready to hire U.S. business development talent to expand your Canadian tech business into the U.S., you can request a proposal from Alariss today.

Toronto. Photo source.

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