Join the conversation:

What You Need to Know About Moving Your Startup to Canada

What You Need to Know About Moving Your Startup to Canada

Posted by PanamericanWorld on March 08, 2016

When Donald Trump and Hillary Clinton emerged as the victors of last week's Super Tuesday polls, the number of Google searches for "moving to Canada" spiked considerably.

Social-media activity--including Twitter users announcing their great migration--was centered on Trump's political ascendance. The prospect of his presidency has spooked liberal American voters into considering a move up North, entrepreneurs included.

There are many things that make Canada an attractive place to live, like a universal health care policy and an array of government-funded education programs. But startup founders looking to relocate or start a business in the area should note a number of caveats. Seed funding, for instance, isn't as accessible as it might be in Silicon Valley, New York City, and Boston. 

The process of becoming a permanent resident of Canada could take a few years. In some cases, you could operate a startup on a work visa, and apply for residency later down the line. (You would still need to register your company as an "extra-provincial corporation," and regulations vary depending on the region.)

Cédric Jeannot is a French national who immigrated to Canada from the U.S. to launch his cyber-security company, APrivacy. Prior to moving up north in 2010, he attended the University of Louisville in Kentucky for a PhD in applied security.

"I liked that Canada has the drive and mentality of the U.S., but it has a lot of the social sentiments of Europe," says Jeannot. He estimates that his company ran almost entirely on government grants on the order of "hundreds of thousands of dollars" for the first two years. While he was able to acquire a Canadian work visa within two months before launching APrivacy, it took two years for Jeannot to become certified as a permanent resident. 

If you're serious about moving to Canada, here are some important points to consider:

1.  It's a comparatively small test market

Companies that incorporate in Canada generally have a global scope, and frequently set up offices in the U.S. While the Canadian market is small and has fewer networking opportunities compared to the Silicon Valley, it's still a good place to try out new products.

Facebook and Twitter have launched beta products in Canada before entering into the "more important markets," noted Sunil Sharma, the managing director at Extreme Venture Partners, who is gearing up to launch a startup boot camp for international entrepreneurs in Canada. 

2.  Favorable tax incentives

The Canadian SR&ED tax program lets founders get back much as 35 percent of what they spend on R&D costs, for a maximum threshold of $3 million.

"That kind of program does not exist anywhere in the U.S., and that's a huge amount of money," said Brett Shellhammer, a former Silicon Valley tech worker and serial entrepreneur. Currently based in Waterloo, he re-located to Canada while working for OpenText in 2005--just after George W. Bush was re-elected as U.S. president.

"I had a lot of friends who said, 'If Bush wins again, I'm moving to Canada,'" he recalls. "I'm the only one who did it."

Federal taxes will also subsidize many of the costs that U.S. citizens are used to paying out of pocket, such as health care and education.

"I couldn't have done what I did here in Silicon Valley because of two things: Labor costs and health care costs," Shellhammer added. His most successful company so far, called Organimi, tabulates organizational charts for third-party businesses, and sees revenues under $100,000 annually.

3.  Access to highly skilled tech talent, though it tends to migrate stateside.

The University of Waterloo has a widely recognized co-op program. It gives students two years of full-time work experience at any of 120 companies, some of which are located in Silicon Valley. As of 2012, an estimated one-third of Waterloo's graduating software engineers were offered jobs by U.S. companies.

"The University of Waterloo is among the top few universities Google recruits from around the world," said the school's Dean of Engineering, Pearl Sullivan, in an interview with Bloomberg.

The stream of talent is a boon for tech entrepreneurs, but alas, many of those would-be hires are taking the jobs stateside.

Shellhammer puts it in not so glib terms:"It's fucking cold here. The guys who graduate from Waterloo don't necessarily want to stay."

4. How can you start?

Launching your Canadian branch may be tricky, but a new initiative aimed specifically at international entrepreneurs may help to streamline the process.

Launched in 2013, the Startup Visa program sets aside 2,750 visas annually to bring foreign startups to Canada. Along with the CEO, the government will immigrate up to 5 co-founders from a single company on permanent residence, along with their families. The caveat: Your company must be handpicked by a Canadian VC, incubator, or angel investor. 

Sharma's Extreme Ventures Partners is one of 30 such funds that are licensed to bring startups to Canada (though he estimates that since 2013, fewer than 100 of these visas have been allocated). He looks for companies with strong teams, a good product, perhaps a Kickstarter campaign, and some technical expertise and patents. Strong sales and public traction are bonuses.  

Link To Full Article: 
Tags: 

Facebook comments



Monthly newsletter featuring articles hand picked by our country managers from the best content across PanamericanWorld.



Monthly newsletter featuring articles hand picked by our country managers from the best content across the Caribbean Region on PanamericanWorld.

PANAMERICANWORLD COUNTRIES