The Path for Canadian Tech Startups to Become Multibillion Dollar Companies
Alex Kolicich grew up in Hamilton, Ontario. Since graduating from the University of Waterloo in 2008, Kolicich was employed by Google and Palantir Technologies before partnering with billionaire venture capitalist Peter Thiel at Mithril Capital Management.

In the eight years he has worked in California, Kolicich believes the Toronto and Waterloo startup scenes have undergone a “new renaissance.” According to Kolicich, students, graduates, and even dropouts are pursuing opportunities with new startups like never before.

The venture capital firm 8VC, where Kolicich is now a partner, has plans to capitalize on the increased startup fervor in his home country. 8VC targets companies that specialize in enterprise software, data, and software-as-a-service, and the company invested in five Canadian startups last year.

This may be just the beginning of the firm’s involvement in the Canadian startup scene. “We want to be more active in the region,” says Kolicich. “We don’t (predetermine what percentage of the fund is going to Canada, but there’s no limit to it. It really depends on what opportunities we find.”

For Canadian startups in their infancy, capital can be hard to come by. That’s why establishing a partnership with a venture capital firm like 8VC can be so vital to the long-term development of young Canadian companies.

According to Kolicich, one strength of the Waterloo-Toronto corridor lies in the density of “technical talent” available in the area. However, he believes there is a shortage of executive talent in the region, and points to local entrepreneurs’ inability to recruit executives from outside of the region, and even outside Canada, as a significant barrier to development.

“There’s a lack of understanding that recruiting is the second priority of a startup (behind business development),” says Kolicich. “It might even be the number one priority.” While most companies search for the best candidates in their region, Kolicich believes many are failing to broaden their search parameters.

The other factor that Kolicich identifies as hurting the Canadian tech industry is low salaries. Kolicich himself left Canada to work for Google after college, as opposed to working for Waterloo-based Blackberry, because Google offered nearly twice the salary.

“People view salary as an input to be minimized…but you’re competing with startups in the Valley,” he says. “The key to capturing people and retaining people is to pay people more.” Kolicich goes on to disagree with the idea that Canada should be a great place to build a cheap development team.

“That is the way to drive a jobs program, but it’s no the way to build a multi-billion dollar company in technology,” he says. “Cost is not a competitive advantage in startups. If engineering salaries go up in the Bay Area, then we’re just going to give our companies more money.”

Although Kolicich identifies recruiting stances and salary issues as two primary disadvantages of the Canadian tech startup scene, he remains confident in the positive momentum that has been growing now for the better part of a decade.

“It’s hard to put into words how different it is,” he says. “I see a lot more shots on goal and a lot of ambitious people who want to create really big companies. If you pair that with the talent in the region, it’s a unique situation that doesn’t exist in many places in the world.”

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Posted by: DSR
Monday, January 2, 2017
Tag: Business Start Ups
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