Canadian Tech’s Inadvertent Ally: Donald Trump
Brexit, Donald Trump, and the rise of the alt-right in Europe have been at the top of our entrepreneurs’ and investors’ minds this past year.
With shifting political realities worldwide, many entrepreneurs are evaluating how these changes may affect their business strategies. Some of the questions these entrepreneurs have are:
- How does protectionism put pressure on revenues?
- How do more restrictive immigration policies impact the talent pool?
- How does projected tax rate changes—with downward pressure in the US and upward momentum in Canada—threaten competitiveness?
From a Canadian early-stage tech investor’s perspective, I’m particularly interested in how the Canadian ecosystem can benefit from top tech talent becoming increasingly alienated by the political rhetoric and actions in the US – this is what I will focus on in this blog post.
Silicon Valley is well known for its inclusivity and diversity, as well as its reliance on technological talent from immigrants. The primary instrument for bringing these highly skilled workers to America is the H-1B visa program:
In April, President Trump signed into action executive order 13788, calling for a full review of the country’s high-skilled immigration visa program (H-1B), as part of his “Buy American, Hire American” campaign promise.
As a result, Canadian tech is well positioned to attract some of the international talent that would have headed to the US. In January, over 150 top Canadian technology leaders, including Brightspark’s Mark Skapinker, as well as executives from companies like Shopify and Hootsuite signed a letter urging the Canadian government to offer an expedited visa process in response to the US travel ban. As of June 12, Canada has launched the Global Skills Visa program. This now allows select Canadian firms and organizations (the MaRS Discovery Ditrict included) to bring in top international talent within just two weeks.
What will be intriguing is how Americans react to the capricious federal scene given that different levels of government have been diametrically opposed policy-wise. California, for example, is taking a vastly different stand from Trump’s government on everything from immigration to climate change.
What our network has to say
I spoke to Stephen Kahn, President of Condor Asset Management and member of Brightspark's investor network, who thinks that Trump’s immigration policies have the potential to hugely impact Canada’s tech scene.
“Foreigners who have gravitated to the US might not be able to get a work visa, or just might feel sufficiently unwelcome there. They might not even bother trying to work in the US. Canada would benefit from an influx of these types of entrepreneurs. Tech-based companies based in the US will also be more likely to have non-trivial satellite operations in Canada. They would base their foreign-born tech people here.”
Salim Teja, President of Ventures Services at MaRS and former Brightspark partner, recently shared his view on the situation in Time magazine.
“With Trump’s new restrictive policies, fewer entrepreneurs will be able to come to the U.S. to build the globally impactful ventures that society truly needs. But as America shuts them out, Canada welcomes them in. Global entrepreneurs can find a home in Toronto — a city that sees beyond borders, and whose tech community leads the world with solutions in cleantech, biotech, and more.”
I also talked with Alyssa, a recent Canadian university graduate who has noticed that her classmates are turning down opportunities to work in the US, instead looking at Canadian offers.
“Canada has its own great job opportunities, and the uncertainty of US work visas has only made them more attractive. I've seen how disruptive and abrupt the recent travel ban was to some of my peers who do not have Canadian citizenship status and needed to attend academic conferences in the States. While I was not affected, the possibility of that privilege being taken away suddenly seems very real.”
Interestingly, Brightspark portfolio company Hopper’s data has shown that there has been a negative impact on overall inbound travel and tourism to the US, a phenomenon they coined the "Trump Slump".
So, what does this all mean for individual investors in Canadian tech?
It’s a well-known fact that when venture capitalists invest in a startup, one of the main determinants of “fit” is the team behind the startup. And when it comes to tech, talent and innovation is crucial. With Canada now poised to attract talent that would have undoubtedly gone to the US in the past, it will be exciting to monitor what innovation this new surge of talent can contribute to the Canadian tech sector looking to increase its stature on the international scene.
As investors, opportunities to diversify into great Canadian tech deals may become more prominent. The next generation of entrepreneurs will realize the increasing promise of Canada, and how diversity is our strength and catalyst. New initiatives, government aid, conferences and other collaborations within the tech community will only serve to reinforce the "warm and welcoming" culture that Canada is known for. As more quality startups reach the stage of venture/private equity funding, this will result in more deals for investors to potentially get involved in.
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