Canada’s technology industry is a major economic driver that is rapidly expanding, outpacing many sectors along the way. As the world moves closer to a digital economy, technology-based companies have become critical to driving GDP, providing high-paying jobs, and innovating a new world through advanced technology research and development.
The year 2021 was undoubtedly a milestone for Canadian tech. Keep reading to learn more about the future of the Canadian tech industry.
Canada’s Thriving Tech Sector
Canada’s technology sector is booming. Cities like Toronto and Vancouver have consistently broken venture funding records this year, while megadeals and unicorn designations abound. In a report released by the commercial real estate firm CBRE, Toronto is ranked third among North America’s top technology markets, while Vancouver, Montreal, and Ottawa round out the top 20.
Canadian tech seems to be at an inflection point—owing mostly to circumstances that couldn’t have been predicted a few years ago.
The last decade has seen a series of game-changing exits from Canada, many of which have taken place in the past year. Exits indicate Canadian companies are veering away from the age-old trend of being acquired early by US incumbents in favour of scaling to better valuations.
Research and Development in Canadian Technology
For the entire Canadian economy, Canada’s tech sector accounts for the majority of its R&D spending. In spite of the investments that go into tech innovation, there is still significant room for growth when it comes to driving advancement on a global scale.
According to the World Economic Forum (WEF), Canada is ranked 16th in innovation worldwide, and the Conference Board of Canada, a non-profit think tank dedicated to studying economic trends, has given Canada’s tech sector a ‘C’ grade for its innovation.
According to the 2019/2020 Global Entrepreneurship Monitor, a global consortium of researchers, one in every twenty Canadian adults has started or is currently operating a new business that they claim brings innovative products, ideas, and/or services to their community. This is a positive sign for tech innovation.
The Future of Canada’s Tech Industry
Even though Canada does not foster innovation as well as other countries around the world, it continues to grow rapidly in the tech sector each year. Additionally, many of Canada’s tech companies are relatively new startups, so there is potential for significant revenue growth within the sector.
International Data Corporation (IDC) Canada recently unveiled its technology industry predictions for 2022, and its latest release of the Canadian ICT Forecast 2021–2025, which anticipates Canadian ICT market spending to reach C$132.6 billion by 2025, with growth dominated in the areas of cloud computing, core business applications, security, and customer experience.
Second and third-round funding is also accelerating. While additional rounds of venture capital funding typically take 7-8 years to materialize for Canadian tech startups, that gap is shrinking to 2-3 years — a time period that tech startups in California’s Silicon Valley are leveraging.
The increasing number of venture capital investments made to Canadian tech startups is a clear indicator of these companies’ potential for long-term profitability and success.