The 10-Minute Take: Waterloo's Booming Tech & Innovation Scene

Speaker 1 [00:00:02] Hey, it’s Theresa. Welcome to Disruptors, the 10-Minute Take where we dive into the latest innovation, tech and economic buzz. This week’s take is on Waterloo’s tech and innovation scene, which has received an incredible influx of investment in the last year. What’s behind that momentum and what’s to come for the region? To help us understand these dynamics is Chris Albinson. He’s the CEO of Communitech, an accelerator in Waterloo for tech companies that helps founders start, grow and succeed. One of its members is ApplyBoard, which we recently featured on our regular show. Communitech was launched twenty five years ago by founders who wanted to make Waterloo a global tech leader. Today, it’s one of Canada’s largest innovation hubs, with more than 6500 members across Canada. Chris, welcome to the 10 minute take.

Speaker 2 [00:00:50] Oh thanks, Theresa. So thrilled to be here with you.

Speaker 1 [00:00:53] So recently, Communitech Waterloo was the setting for the opening bell of the Toronto Stock Exchange, the first time that the bell was rung outside of Toronto. And we have some audio of it. I would love to play. It was a big moment celebrating the IPOs of magnet forensics, not to mention, of course, the massive amount of funding raised last year. You were there. How did that feel for you and the other founders?

Speaker 2 [00:01:23] Well, I can’t give you a little, you know, the backstory and how it happened, but it was really amazing for the TSX to recognize the momentum. I think, you know, as you know, Canada is now the second largest innovation hub on the planet and the fastest growing by forex. And I think what the TSX realized is, you know, it’s time for the mountain to move to Muhammad. You know, in Waterloo, we build stuff and it’s really exciting to kind of see the momentum and we can talk some more about that. But I can tell you when the confetti is blowing all over the place and you’ve got 70 founders in the audience and John Bakers ringing the bell and saying, Hey, like, we’re just getting started. It felt awesome. It was really fun.

Speaker 1 [00:02:00] So what does that say about Waterloo’s growth and trajectory? Because Waterloo is an established innovation hub, but now I feel like we’re getting into a new phase for the region.

Speaker 2 [00:02:09] Yeah, there’s no question. I think originally when I started, we were hoping by twenty twenty five to get to twenty four thousand tech workers in the region and a billion a year invested last year. Now 2021, that seems like a long time ago. We crossed twenty six thousand tech workers fully four years ahead of schedule, and we crossed $3.2 billion invested in the last 14 months. So we’re on an exponential curve. Waterloo’s now the second largest and fastest growing tech hub in North America. We’re on the trajectory to be fifty five thousand tech workers by 2030. So just getting started.

Speaker 1 [00:02:45] Yeah, that’s awesome. So let’s actually talk about the last 12 to 14 months and especially is setting the stage for our listeners who may not be as familiar with what’s been happening. So more money. Nearly three billion dollars was raised in that period of time than, I think in the previous 10 years combined. Why was 2021 such a standout year?

Speaker 2 [00:03:04] So I think like all big successes, when you have the party with the confetti like it seems like, Hey, that just happened, it came out of nowhere. But the reality is our founders have been working really hard for a long time. John Baker has been building for 20 years. E! Center that raised four hundred and forty million dollars just announced this week has been working for over 10 years. Martin Bashir, who you had on, recently started his startup six years ago. But all of that work was done, I think, fundamentally different than we’ve ever seen before. The ambition is bigger and with ambition comes more. Talent with more talent has come more capital, which is really what we’re kind of celebrating that moment. But ultimately, you know, what success looks like is 14 companies over a billion in revenue. Our mission is clear. We want to build 14 Shopifys. And I’m very confident we’re on that path.

Speaker 1 [00:03:54] Right? Yeah, Rome was not built in a day, that’s for sure. At the start of the pandemic, your team and community spoke to hundred founders in 100 days. What were the most common challenges you heard that entrepreneurs were facing?

Speaker 2 [00:04:08] It was really grounding a ton of work, but awesome work. Talking to founders from coast to coast to coast. And we really kind of built all of the work on Cathy Priestner’s work who was the architect of own the podium. Everyone talks about own the podium, but they don’t actually look at the hard work that she did underneath it. And that’s what we base it on. And what we heard from the founders to answer your question was a couple of things. One is they don’t want to do participation anymore. You know, for those of us who remember that, like they really do want to own the podium and they’re saying, Hey, if our ambitions here, we need the support to get there. So we actually built out a data layer for the seventeen thousand startups across the country to understand what the trajectory is not only just on the capital flows, but the performance of the companies and the human capital issues. That’s problem number one, number two and number three for founders right now. So you may have seen we acquired Prospect, the largest job board in the country last year. As of this morning, there’s fifteen thousand four hundred and thirty eight job openings across our startups, and knowing that helps us know, like, what are we got to do to help them? We need to bring more talent in.

Speaker 1 [00:05:13] Yeah, exactly. And that’s what Martin Basiri said to us when he was on. And of course, his company is about finding those people around the world and bringing them bring that talent into Canada. How have things changed since those conversations? Two years now into the pandemic,

Speaker 2 [00:05:28] we did some pretty cheeky things like we bought a billboard in Times Square in the middle of the pandemic when it was really cheap because no one was in Times Square. And it basically said, you know, if you got H1-B problems come to Canada. That billboard got forty five million media impressions across the United States and Congress itself in the US still had a hearing about little community trying to steal away talent from the United States. I can’t believe that that actually happened, but it did. But you know, that’s what we got to do. We’ve got to be aggressive. We’re competing globally for talent. People are going to know about if if you want to build something awesome, you want to build something big and something that’s good for humanity. Canada is the place to go, build it, and we just need to say that over and over again. And like I said, we crossed our twenty. Five target for talent in the region four years ahead of time, and we just got to bring more awesome people. Martin went from no employees six years ago to now 1500 employees, just as one example.

Speaker 1 [00:06:23] So, so be aggressive, be bold. Don’t be these polite Canadians that the world knows us for. So last year, I read that only eight seed stage deals closed compared to 26 in 2019. And for those of us who don’t live in the region outside observers, it’s surprising, given that Waterloo is known for being an early stage tech hub. You know you have two universities and a robust network of accelerators such as community tech incubators, innovation hubs. Of course, the pandemic bear some responsibility for the decrease and deals. But how is this affecting the ecosystem overall? What trickle effects might there be?

Speaker 2 [00:06:58] So on the one hand, just to kind of set the record straight, I don’t think the data is correct because they’re basically just using Pitchbook and Crunchbase data. And so what you have to assume is somebody did a C deal and then actually reported it to Crunchbase. What we’re seeing a lot from our founders, so we actually know what the volume was when they’re doing seeds. A lot of them are staying in stealth, so they didn’t want to kind of say, Hey, what am I doing? So they don’t actually report that it got done. So just know that the volumes are a lot greater than that. But I think what is a fair comment to say is there’s a lot of competition for talent. And so when the Googles in the Shopify size are paying 20 30 percent more year on year for really great engineers, that’s putting pressure on our earlier stage companies and it’s harder for them to compete for talent. So I think they’re we’re kind of in that cycle where the competition for talent is making it harder to start a new company. I think that’s clear. But the volume of startups actually that we’re seeing through the door is actually right beside me doesn’t show any slowdown.

Speaker 1 [00:07:58] I wanna ask you about some of the solutions and what’s being done to help continue the momentum of the region and especially the true north strategy, which you had alluded to earlier. Can you tell us more about what you’re hoping to build with that 200 million other fund?

Speaker 2 [00:08:12] Yeah, so really quickly there’s four parts of on the podium. So just like Cathy Priestner, we’re going to go find the companies that have the probability of success, not the possibility of success. And we’re going to slap the Maple Leaf on their back. And that’s going to be Team Canada because it’s great to say we’re awesome, but like they need to know the stories of Martin for sure, and they need to know about Clearco and Cleo and seven shifts and bold commerce, these amazing companies across the country. So we need to tell those stories that needs to connect to talent, as we’ve talked about. The other part is we need to buy our own stuff. I think coming out of the pandemic, there’s a realization of when mass couldn’t get shipped from Minnesota. We need to have awesome innovation solving Canadian problems, and that’s a big part of what we’re doing with our true north. And the last part is the fund. We don’t have what I call them water station in mile twenty one in the marathon these founders are doing. It’s a pretty standard part of company building in the valley in the US, but it doesn’t exist here. And what does that mean? Like, think about running a marathon yourself if you got two mile twenty one and there was nobody cheering you on and nobody giving you water and the things you need to finish the marathon, then you know, it’s a lot harder to finish. And so that’s really what the true nature fund is designed to do is help founders invest in each other, build big and build awesome companies right here in Canada.

Speaker 1 [00:09:29] Think that sounds like a fantastic goal to work towards because I really appreciate you joining and taking the time to chat with us about this.

Speaker 2 [00:09:36] Me too, your you and all your listeners are welcome to Waterloo Region any time a break. Some news here. October Fest is happening and 2022 we are going to be cracking kegs in October fast and we’re going to do to October fast and bring all the founders awesome investors from around the world. So come

Speaker 1 [00:09:53] on over. That is awesome. I will see you there. Oh my goodness, that is a wrap for this week’s 10 minute take. I am Theresa Do. Join us next time for a special International Women’s Day episode where we’ll dig into the lack of diversity in Canada’s VC industry. Talk to you soon.

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