May 13, 2021
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Canada has a rich history of innovation, but in the next few decades, powerful technological forces will transform the global economy. Large multinational companies have jumped out to a headstart in the race to succeed, and Canada runs the risk of falling behind. At stake is nothing less than our prosperity and economic well-being. The Financial Post set out explore what is needed for businesses to flourish and grow. You can find all of our coverage here.Shortly after Amazon picked New York to host half of its HQ2, an architect’s group published a concept drawing of a giant fulfillment centre carving through the Manhattan skyline. Purposely provocative, the image carried a clear message: The city would be good for Amazon, but would Amazon be good for the city?A similar question is being asked here in Toronto following an influx of global tech corporations that includes Uber, Samsung, LG, Intel, Microsoft and Alphabet. The only sensible response is that of course such massive inward investment — $1.4 billion in September alone — will be good for Toronto. It will directly create hundreds of well-paying jobs and also provide a substantial boost to our homegrown tech companies.Some have voiced concerns that the arrival of deep-pocketed U.S. corporations will price our own startups out of the market for top talent, thereby slowing their growth and confining us to branch-plant operations for foreign companies. Others have painted these companies as a new generation of corporate raiders, who will do a smash-and-grab for our intellectual property. Innovation Nation: How technology is reshaping the insurance industry A robot in every factory: The $230-million bid to help automate Ontario’s manufacturing sector Ottawa ‘bending over backward’ for foreign tech giants at the expense of homegrown stars, insiders say The mistaken assumption underlying these worries is that innovation is a zero-sum game — that an engineer employed by Samsung or Google is irredeemably lost to the startup ecosystem. In reality, there are countless examples of workers who cycle through the corporate world, then go on to establish their own companies with upgraded skills and more experience: I was one of those people.You see, talent is “borderless.” The best engineers and entrepreneurs will go wherever they need to go, find the best possible opportunities to build their skills, experience and ventures. And as always, the best always want to work with the best, build with the best and learn from the best. The arrival of big-name companies is a signal to the market that global companies can be built in Toronto. That will draw more talented workers and investors, particularly as competitors like the U.S. and U.K. become less welcoming to immigrants.Yes, we need to be vigilant that we have safeguards in place for our data and intellectual property. But Toronto’s tech sector is having a moment on the world stage and we need to use it — not work against it — to accelerate the growth of made-in-Canada ventures. To do this, we need to do three things:Leverage the arrival of big tech companies Toronto’s tech sector is connected and collaborative like few others. The best way to ensure that corporates bring more to this ecosystem than they take from it is by forging partnerships with them. Venture arms of big tech companies can be an important source of capital — Salesforce, for instance, is investing US$100 million in Canadian startups. They can also be vital customers and partners, enabling new technologies to be rapidly scaled on their platforms. We are already seeing the power of this approach in the financial industry, where nimble fintech startups are growing fast by building white-label technologies that integrate into the systems of large financial institutions around the world.Connect ventures to sources of strategic global capitalThe arrival of big-name tech companies has put Toronto firmly on the radar of investors. That will help close our venture capital gap with the U.S. — our ventures raise about half as much capital as theirs. But we also need to focus on the quality of that capital, especially as we are likely heading into choppier waters for the global economy. Our companies are export-driven, so we need investors who are internationally connected and can help them enter new markets. As well as continuing to draw global venture capitalists here, we should explore ways to make it easier for Canada’s enormous pension funds to invest in tech ventures while meeting their fiduciary responsibilities. Our pension funds are among the world’s smartest investors and bringing more of their talent and financial firepower to bear could rapidly accelerate growth of our innovative companies.Focus on key sectors where we have strategic advantageCanada’s inclusive approach to innovation is serving us well, but we have to be careful that we don’t spread ourselves too thin. We have to choose the sectors where we have a natural advantage and back those to the hilt. Our leadership in artificial intelligence is clearly a crown jewel — funding in that sector reached an all-time quarterly high of $169 million in Q2 2018 — but we also have natural advantages in clean technologies and health care. Our sweet spot might well come from combining these strengths. We are already seeing ventures emerge that use artificial intelligence to make clean technologies smarter and more efficient.We should take pride in the fact that Toronto is a bonafide global centre of innovation. That’s why international corporations are setting up here. The arrival of big tech companies could lift all boats in our innovation ecosystem — we just have to take steps to ensure our ventures can ride the incoming tide.Yung Wu is the chief executive of the MaRS Discovery District, a Toronto innovation hub. read more