Maple Valley

At its peak, Nortel accounted for about a third of the value of the Toronto Stock Exchange, employing nearly 100 thousand people worldwide. The telco manufacturer was enormously important for the innovation system, accounting for more than a third of Canada’s total BERD (Business Expenditure on R&D).

Rocked by scandal, the Toronto based company came to a sudden and resounding crash in the early 2000s. Nortel’s stock price, which was $124 in September 2000, fell to $0.47 by August 2002. Sixty thousand workers were laid off in 2001 alone, and billions of dollars of assets were written off. The company would eventually file for bankruptcy in early 2009.

A short drive down the Macdonald-Cartier Freeway, Waterloo’s RIM was enjoying a meteoric rise. BlackBerry sales had grown from $300 million to $20 billion in less than a decade. But like Nortel, this wasn’t to last. Today, while the company is still limping along (now as BlackBerry Limited), revenues are a twentieth of what they used to be.

It’s hard to imagine that after incurring two major blows that the Toronto’s tech industry would now be described as one of the “20 strongest startup ecosystems in the world”, “booming”, “a breeding ground for… innovative technology” and “Canada’s answer to Silicon Valley”.

But, from the ashes…

The 100km long Toronto-Waterloo tech corridor today boasts 200 thousand tech workers and 15,000 high tech companies with strengths in financial technology, artificial intelligence, life sciences and advanced manufacturing-robotics.

The collapse of Nortel and RIM left behind fertile ground that was seeded with silicon and entrepreneurialism. Like other “innovation super-eco systems” across the world, Toronto-Waterloo features a “culture where geeks are gods, deep talent pools, great research universities, abundant risk capital, enormous scalability of new innovations and the brand power to continually refresh themselves from globally mobile capital and talent.”

But the rise of the corridor hasn’t happened without help. It’s been spurred along by a concerted effort by Federal and Provincial Governments, along with the universities, that has facilitated its development. For instance:

• MaRS Discovery District — the jewel in Toronto’s innovation scene. MaRS is a dense innovation district that collocates universities, start-ups, corporates and investors on a mega scale. It’s a space roughly the size of the Pitt St Westfield, where Johnson & Johnson, Facebook, Uber and PayPal, together with the Vector Institute for AI, the Ontario Institute for Cancer Research and the University of Toronto mingle with grad students, entrepreneurs and venture capitalists. The energy here is palpable.
• ONE — a “mesh” network of regional business advisors, mentors, incubators and accelerators, supported by the Ontario Provincial Government. ONE leverages support services offered across the province, to provide streamlined services to tech-based entrepreneurs, companies and researchers seeking to commercialize an idea.
• The DMZ — Ryerson University’s business incubator for tech start-ups is the top-ranked university-based incubator in North America and third in the world. An initiative of the university’s former president to make digital innovation synonymous with Ryerson, the incubator has fostered over 300 start-ups and raised nearly half a billion in seed funding.
• The University of Waterloo — made headlines recently when a study found that 60 per cent of Systems Design Engineering students had secured jobs in the US (typically with Amazons and Googles types) before graduation. The university is considered the Canada’s MIT, and has the world’s largest co-op education program (21 thousand students) that facilitates up to two years of relevant work experience during the degree.

Putting the glass of Kool-Aid down for moment, it’s worth noting that Toronto is yet to birth a homegrown unicorn. There’s something like 4,000 active start-ups in the city, none of which are valued at over a billion dollars, nor are there any of them household names. Policy makers are also still grappling with how to retain and grow companies in Canada, and stop them from selling out to bigger US ventures.

That said (picking the Kool-Aid back up again), a cursory count of the cranes poking through the cityscape is a sign that the city’s economy is clearly bustling.

Something’s clearly happening in Toronto.