Canada’s Technology Sector Energizes the Economy
Canada’s technological industry is a major economic driver and continues to expand immensely, surpassing many sectors along its way. As the world moves closer towards a digital economy, technology-based companies have become essential to driving gross domestic product (GDP), providing high-paying jobs, and innovating a new world through the research and development of advanced technology.
Canadian tech sector projected to receive at least $20 billion towards innovation in 2020.
Of the top tech markets in all of North America, four Canadian cities appear in the top 20, with Toronto coming in fourth place. Toronto has been able to add 66,900 technology sector jobs in the last five years, the second-most of any North American city at the same time. This can directly relate to the fact that in 2019, Canada’s Information and Communications Technology (ICT) sector brought in $210 billion in revenue.
Canada’s Technology Industry: By the Numbers
According to CompTIA’s Cyberprovinces 2019 Report, Canada’s tech industry employment has increased by an estimated 249,000 new jobs since 2010. The report also reveals that the tech sector employed an estimated 1.66 million Canadian workers at the end of 2018, a 3.8 percent increase over the prior year.
The CompTIA’s Cyberprovinces 2019 Analysis continues to report that:
- Canada’s tech sector provides high-paying jobs, with an average salary of $78,070 compared to the average private sector salary of approximately $51,794.
- There are approximately 70,189 tech business establishments across Canada.
- Nearly two-thirds of Canadian tech firms are based in Ontario and Quebec.
The report also notes that the Canadian tech sector’s job growth rate has outpaced that of the U.S with its 2019 numbers, and projects that critical technology occupations will experience double-digit growth between 2018 and 2026.
Canadian Technology’s Innovative Research and Development
The Canadian tech industry is the largest sector for research and development (R&D) spending for the entire Canadian economy. Yet despite the investments that go into tech innovation, there is still significant room for growth when it comes to driving advancement on a global stage.
The World Economic Forum (WEF) ranks Canada 16th in innovation worldwide, and the Conference Board of Canada, a not-for-profit think-tank dedicated to researching economic trends and issues, gives Canada’s tech sector a ‘C’ grade in innovation.
“If you look at the most successful innovation ecosystems [across the globe], they always have an anchor academic institution, a leading global university, and they always have multinational corporations [investing] in the thriving startup ecosystem.”
– Vivek Goel, Vice President of Research, Innovation, and Strategic Initiatives at the University of Toronto
The 2019/2020 Global Entrepreneurship Monitor, a global consortium of researchers, shows that 1 in 20 Canadian adults have started or are currently running a new business that they claim brings innovative products, ideas, and/or services into their community. This is an encouraging sign for tech innovation. However, Canada has a reputation for not adequately supporting startups to help them evolve into long-lasting, stable, and profitable firms. This is an issue that must continue being addressed with additional funding support so that Canada can continue progressing as a global leader in innovation.
Future Growth Opportunities for Canada’s Tech Industry
Despite not fostering innovation as well as other countries around the world, Canada continues to rise at a significant rate in the tech sector with each given year. And since many tech companies in Canada are relatively new startups, there is potential for significant revenue growth within Canada’s tech industry.
“We continue to see strong expansion of the tech industry across Canada, with year-over-year job gains in eight of 10 provinces, wages rising, and the number of technology businesses growing. This presents an outstanding opportunity for job seekers looking to join our industry as the demand for tech talent continues to grow.”
– Gordon Pelosse, Head of HPE Pointnext and Chairman of the CompTIA Board of Directors
Accenture Consulting, a global professional services and consulting firm, reports that Canada’s tech sector is outperforming the rest of Canada’s economic sectors. Growing faster than any other sector on the Toronto Stock Exchange (TSX), ICT sector revenues have grown from $158 billion to $210 billion from 2013 to 2019, a substantial 30% increase.
Second and third-round funding is accelerating as well; whereas additional rounds of venture capital funding usually take 7-8 years to materialize for Canadian tech startups, that gap is decreasing to 2-3 years, a similar time period which is leveraged by tech startups in California’s Silicon Valley.
Accelerated venture capital investments made to Canadian tech startups is a clear sign of the increasing potential for long-term profitability among these companies, and generating a higher chance of success.
Canadian Government Funding for the Tech Sector
There are many sources of funding for Canadian tech companies, not just from venture capitalists, but also from provincial and federal governments. Canadian government funding programs focused on supporting innovation and tech industry growth include:
Industrial Research Assistance Program (IRAP) Tech Funding
NRC-IRAP: Business innovation funding to accelerate the research and development of large-scale Canadian technology sector projects, covering up to 60-80% of overall expenses relating to the development and/or commercialization of innovative products, processes, or services.
Sustainable Development Technology Canada (SDTC)
SD Tech Fund: Technology development grants covering up to 33% of expenses related to late-stage development or pre-commercialization strategies for clean technologies. Projects should focus on environmental concerns such as clean air, clean water, and climate change.
Ontario Centres of Excellence (OCE)
OCE TalentEdge Internships/Fellowships: OCE TalentEdge Programs seek to maximize the utility of industry-academic research partnerships. The program has two streams:
- TalentEdge Internship Program (TIP): Funding to engage a college or university student, post-secondary graduate, or Master’s graduate for a 4-month internship. Businesses may receive up to 50% of expenses to a maximum $10,000 per internship provided.
- TalentEdge Fellowship Program (TFP): Funding to engage a PhD graduate or post-doctoral fellow for a 12-month period. Businesses may receive up to $35,000 per fellowship and a maximum of $70,000 in total funding.
National Sciences and Engineering Research Council (NSERC)
There are two streams of NSERC research grants for Canadian businesses to leverage. They include:
- NSERC Engage: This research funding stream predominantly focuses on short-term research projects that can be completed within 4-6 months. Businesses may access up to $25,000 per academic researcher requested.
- NSERC Alliance: This funding stream can support up to $1 million of eligible research project costs per year. Funding directly offsets the research fees charged to a business by the university, reducing the fees a company must pay.
Mitacs Research Grants for Canadian Small Businesses
Mitacs Elevate: Businesses hiring a PhD fellow may access funding to reduce the cost of their labour. The Elevate program provides up to $30,000 per year for a maximum of two years. Mitacs also helps to match PhD fellows to industry partners, reducing the time and human resources staff needed to recruit.
Connect with the Mentor Works team to learn how your tech business can help drive the economy by benefitting from government funding support, and sign up for our Weekly Mentor Works Funding Newsletter to stay up to date with government funding programs.