Canada’s tech sector is targeting Europe – does it have what it takes to compete?

Declining industries

Canada’s historic industrial strengths in oil and gas, commodities mining and agriculture are slowly declining and the government is looking to invest in new growth sectors, particularly technology and life sciences.

With a young, liberal, media-friendly prime minister in Justin Trudeau contrasting with the belligerence and nationalism of US president Donald Trump, Canada hopes to take advantage.

“Trudeau is our best salesman – Trump is our second-best salesman,” said one Canadian economic development executive, during a visit by Computer Weekly to Montreal to meet some of the tech sector’s emerging leaders. Several people echoed the “Trump effect” as a timely driver for Canada’s plans.

Trudeau is our best salesman – Trump is our second best salesman

For example, Vancouver, on Canada’s Pacific coast, is less than two-and-a-half hours’ drive from Seattle, home to Microsoft and Amazon. Both tech giants are building sizeable development centres in the city because it is easier to bring in overseas tech talent thanks to Canada’s visa regime.

In the US, Trump’s immigration crackdown means some foreign workers aren’t allowed in, and even for those who are, the number of H-1B visas typically used for high-level tech jobs has been reduced over time.

By contrast, the Canadian government is operating a two-year pilot programme to attract global talent, whereby anyone with the requisite tech skills and a job earning at least C$80,000 can get a work visa in just two weeks.

Also, through a combination of federal and regional tax credits for businesses, the government will fund up to 50% of salary costs for e-business and research and development (R&D) activities.

Samsung, Google, Facebook and Apple are among the global tech companies looking to take advantage by investing in Canadian operations.

Innovation superclusters

In February 2018, the Canadian government announced a C$950m investment in five “innovation superclusters” – with private sector funding to match – aiming to create 50,000 jobs and grow the economy by C$50bn over 10 years.

Two of those projects cover IT. The digital technology cluster based in British Columbia will look at big data, analytics, cloud, augmented reality and machine learning, while the Scale:AI cluster in Quebec will focus on building intelligent supply chains using artificial intelligence (AI) and robotics.

The superclusters bring together companies of all sizes in collaboration with academia and not-for-profit organisations. In line with Trudeau’s inclusivity policies, the clusters will also target increased representation for women and minority groups in the programmes.

Montreal, Canada’s second biggest city, is already seeing progress from the close links between its universities and investors, with a particular focus on AI and digital media.

Ubisoft Montreal claims to be the largest computer games development studio in the world, with 3,000 employees, while visual effects company Rodeo FX worked on Game of Thrones and 2018 Oscar winner Blade Runner 2049. This talent base is attracting interest from related sectors such as virtual and augmented reality (VR/AR).

“There is a real crossover of skills between gaming and VR/AR content,” says Sebastien Ebacher, a producer at Ubisoft Montreal and founder of Arnoovo, which produces immersive content for virtual reality providers.

AI expertise

Montreal benefits from the global reputation of Yoshua Bengio, described as the “Mick Jagger of AI”. Bengio is a pioneer in machine learning and neural networks, who worked alongside Yann LeCun – now Facebook’s director of AI research – and Geoffrey Hinton, now one of Google’s top AI researchers.

Bengio is a professor at Université de Montreal and leads the Montreal Institute for Learning Algorithms (MILA), which claims to be the world’s biggest academic research centre specialising in deep learning. Many top international academics and PhD students in AI come to Montreal because of Bengio, and go on to form startups to commercialise their university research.

According to Naomi Goldapple, programme director at Montreal AI incubator, Element AI – which was co-founded by Bengio – there are only about 7,000 deep learning experts in the world, with most hoovered up by the big salaries on offer at Facebook, Google and other internet firms. As such, any advantage in the market for top skills is an important consideration.

Soodeh Farokhi, for example, is an Iranian computer scientist who came to Canada in 2016 to set up C2RO, a cloud-based AI platform that uses software as a service for real-time control of robots.

C2RO is part of a cohort of researchers-turned-entrepreneurs operating under the auspices of TandemLaunch, a startup incubator that provides investment, office space, expertise and contacts to take academic AI research and develop it into commercial products.

“We search for solutions at universities,” says Omar Zahr, technology coordinator at TandemLaunch. “Our technology scouts review over 4,000 deep technologies each month. Academics and technical people are not always so good at running companies, and we can help them.”

Tech startups

Other startups in the TandemLaunch portfolio include Soundskrit, which is developing smart microphones to improve audio and speech recognition for devices such as smartphones and home assistants, using technology inspired by the audio characteristics of insects.

Another firm is SpillAd, an advertising technology firm that uses sensors in smartphones to deliver “context-aware” targeted ads and track behaviour. For example, the product can tell whether a user is looking at an on-screen advert, rather than simply having an advert visible but not taking any notice.

Deeplite is another example, developing ways to optimise deep-learning algorithms so that neural networks can run on smaller, more energy-efficient devices, rather than relying on large-scale, cloud or datacentre-hosted servers.

Outside of the TandemLaunch portfolio, Nexalogy is another Montreal startup that provides deep analysis of social media data – to the extent that it has developed its own bespoke parallel processing server technology to handle such huge amounts of data.

Founder Claude Theoret – a former astrophysicist who researched black holes – claims Nexalogy’s technology was the first to predict a Trump victory in the US presidential race. He says the firm also worked on Justin Trudeau’s leadership campaign, helping to understand how the future prime minister was perceived by voters and how he needed to change his image.

Regional expertise

But Montreal is not the only city or region investing in its technology ecosystem. Every Canadian province has a story to tell, and local specialisations on which to draw (see below). The country’s geography helps too, with cheap hydroelectric power available to build low-cost datacentres, and cold winters helping to reduce cooling needs.

In other emerging technologies, such as autonomous vehicles, photonics, fintech, quantum computing and 5G, Canada is developing regional expertise and research capabilities it hopes will attract talent and help to export its products and services.

The country also pushes its relatively low cost of living and high quality of life as a further attraction for top tech talent to relocate. Ottawa likes to mention that citizens can sometimes ice-skate to work.

Competitive market

Canada certainly has a lot going for it, but it is starting from a lower base than the EU rivals it hopes to compete with, and against European governments that are also looking to boost their digital economies.

“The Canadian tech sector has some significant strengths, with a highly educated workforce and good digital infrastructure,” says Thomas Goldsmith, policy manager for Brexit and trade at UK IT trade body TechUK. “It has a growing AI sector and could be well placed to benefit as these technologies, and the market for them, develops more widely.

“But its biggest challenge is that it is entering a highly competitive market. Take Google’s DeepMind – it might have opened its first overseas centre in Canada, but the HQ is in the UK, with most of its research activity here. Likewise, many other companies have significant R&D activities in the UK and Europe, and the British and French governments are also actively investing significant sums to promote their domestic AI industries.”

For the first time, Canada is sending a delegation to London Tech Week this year, to promote its IT sector and to raise awareness of what it can do for European tech and digital leaders. There is a lot of work to be done, but Canada has a clear opportunity to develop a greater presence in European technology markets.