As an investor in the tech scene who has to travel between Vancouver and San Francisco, I get asked this question a lot: “So what are the differences in the tech community between here and the bay area?” As you may have guessed these questions are mostly asked by Vancouverites! Founders and engineers living and working in the heart of Silicon Valley rarely wonder about the merits of their neighbors north of the border.
There are several aspects to this general question and one can look at it from the point of view of an investor, an entrepreneur or a budding engineer recently out of school and looking for the best opportunities available.
One of the core founding principles of 7 Gate Ventures has been to identify the opportunities that exist in the Canadian start-up eco system (and more specifically in Vancouver) and to leverage its strong network in the Valley in order to create a path forward for our Vancouver-based ventures. To this day, this path forward has included a successful acquisition, strong Angel and VC networking for those that needed to close their seed rounds and securing series A and B rounds for our portfolio companies.
After living in SF Bay Area for more than 7 years and having lived in many parts of Canada for more than 10 years of my life, I can attest to some fundamental and extremely revealing differences one comes across in the business world in general and the startup eco system specifically. Countless articles have been written about what has made Silicon Valley the hub for innovation and venture development. While it is hard to pin one element to this phenomenon, one can assume a confluence of contributing factors namely; a strong academic network (Stanford, Berkeley) producing highly skilled and motivated individuals, an ingrained culture of risk-taking and a maverick attitude towards conventional wisdom (think the 49ers, counter cultural movement of the 60s and 70s, etc.). In addition, San Francisco has historically been one of the most culturally diverse cities in the US with a large Asian community to name just one.
This openness is a major contributing factor for attracting top talent from around the globe. Of course, the presence of venture capital and their attitude toward risk can hardly be overestimated and without (relatively)easy access to funding none of what I have talked about so far would have been possible. But in my view, it is mentorship that is the unsung hero of this tale.
As an investor and having spent many hours with founders throughout various stages of their firms, I can confidently say that having a strong network of advisors and mentors can be the difference between going astray and finding the right path forward.
This leads us to the question at hand: What distinguishes the startup culture of Vancouver from that of Silicon Valley and what would need to change to make tech-entrepreneurship a true calling for the young workforce of Vancouver?
The mythical rise of such stars as Mark Zuckerberg and Steve Jobs in the Valley contributes every day to a vision of what is possible by creating a firm from nothing and as such in Bay Area, there is a much greater sense of sacrificing the comforts of today for the greater gains that will surely come tomorrow.
What I see in Vancouver is a stronger desire on the part of recent graduates and engineers to be gainfully employed in an established enterprise that promises job security, more lenient working hours and access to benefits. While it may be harsh to characterize this as a lack of ambition, I think with more success-stories starting to come out of Vancouver and the Canadian eco system in general, this attitude is beginning to change.
Vancouver benefits from having at least one top-tier university in UBC with a strong science and engineering program and an influx of highly skilled engineers and programmers from around the world. Recently, there has been an even stronger flow of talent to Canada given the uncertainty around US immigration policies and its culture of openness.
Couple that with local government-supported incentive programs that encourage investment in science and technology startups and the city is ripe for a surge in startup activity. It has been in this climate that 7 Gate decided to utilize an apparent gap that prevented many startups from breaking through and reaching their next stage of evolution. I am referring to a lack of mentorship from investors with operational experience that can add value well beyond simple financial support.
I have seen many startups in Vancouver successfully raising pre-seed and seed rounds from a variety of interested parties, including friends and family and some angel investors. However, when the time comes to turn to a seasoned investor for both strategic and financial support in the later stages of their ventures, they find it a much harder process. The presence of high-net worth family offices and successful real estate funds provides many entrepreneurs with the initial round of financing to get them off the ground, but a lack of true VC expertise and mentorship from that class of investors, forces many to look for investments from south of the border or a quick exit as cash flow begins to tighten.
7 Gate successfully bridges that gap by having a strong group of partners with operational experience, as all have been entrepreneurs in the technology sector. Moreover, in mentoring our portfolio of companies on strategic landmarks and best paths forward, we use our strong network of VCs and Fortune 500 executives in Silicon Valley and beyond to help with Series A and B round of financing and to help negotiate attractive alliances and acquisitions in their respective space.
There are many reasons to be optimistic about changing the startup scene in Vancouver. British Columbia currently employs more than 100,000 people working in the tech sector. Events such as UBC’s Startup Weekend and Traction Conference are doing wonders by helping startup learn actionable ways to accelerate their business. While Slack is technically based in San Francisco, there is no denying that everyone’s favorite coworking application stands as a true unicorn coming out of Vancouver. There will surely be many more in the years to come.