Canada can rightfully claim its stake as a hub for innovation and technology thanks to its diverse talent pool, supportive government policies, and inviting nature. With all these good things about it, it sounds like an excellent place for startups to thrive, and they do. Not quite; tech startups in Canada tend to lag behind their counterparts in America and European countries.
Environments have a huge significance on the performance of businesses, so there are factors unique to Canada that are to blame for this phenomenon. This guide looks at this phenomenon from an expert’s perspective and will be helpful if you are hoping to start a tech company in Canada or are struggling with one already.
Limited Access to Capital
Access to capital is critical to a startup’s performance. While startups in Canada have access to funding from the federal government and other lenders, the level of funding accessed by Canadian startups is nowhere close to the levels enjoyed by Silicon Valley startups.
Foreign-based investors also take time to get on board an idea in its seeding stage for fear of losing their investment. So they will wait until it is apparent that the idea is feasible before coming on board, meaning that startups have to struggle a lot in the first few years, explaining the lag.
Brain Drain
Canada does a great job at attracting talent from all over the world. However, American influence as a world leader has a huge appeal to Canadians resulting in a significant brain drain for experts in the tech industry.
You also have to consider that the American tech industry is much larger and more competitive, meaning skilled Canadians have more opportunities for work and better pay.
Other countries that offer a better market for tech professionals from Canada include Germany, Switzerland, China and the United Kingdom. With skilled workers moving to greener pastures, startups in Canada have a difficult time competing with tech companies in other countries.
Slow AI Adoption
According to a recent KPMG study, Canadian companies are not as quick in adopting AI as their US counterparts. The survey found that only 35% of the polled Canadian companies incorporated AI into their workflows compared to 72% for US tech companies.
Incorporating IA makes a huge difference in getting work done quickly and for less. By failing to adopt AI as its foreign counterparts, Canada’s tech industry spends money on tasks that AI could handle, which could otherwise be used to fuel growth.
Failure to Leverage IP Rights
Startups make the mistake of not paying sufficient attention to their intellectual property, part of a business’s assets. Intellectual property includes patents, trademarks, and copyrights. Patent licenses cover innovations and last 20 years from the registration date, like in other countries.
For an invention to qualify for patent licensing in Canada, it must be new, useful and non-obvious, which is also the case in the European Union. However, the US requires that innovation be significantly different to qualify.
Trademarks refer to brand markers such as logos, names, slogans, sounds etc. Upon registration, trademarks give the rights holder exclusive rights to use the markers in their marketing and prevent others from using them.
Failure by startups to secure trademarks can have competitors eat into a startup’s market, affecting their profits and growth. In Canada and the European Union, a trademark is only eligible for registration if it is distinctive.
In the US, non-distinctive trademarks that have gained distinctiveness through use are registrable. If you have any Canadian trademark queries, it is best to talk to an IP lawyer or visit the CIPO’s website for details.
Copyrights apply to creative works such as source codes, blog posts, art, etc. In most countries, including Canada, copyright applies by default, but registering them makes enforcement much easier.
Final Words
The tech industry in Canada holds great potential. But if nothing changes, I will eventually lag behind its American, European, and Asian competitors. Solving the problems at first by identifying the problem listed above and developing solutions.
Last Updated on by soubhik
