President Trump’s imminent executive order that would place restrictions on the H-1B visa program is Silicon Valley's loss, but could be Canada's gain.
Sunil Sharma is convinced so.
His company, Extreme Venture Partners, next week plans to announce a new fund that will help up to five start-up founders and their families move to Toronto and Waterloo, Canada, and invest $100,000 in each if they are accepted to the VC's accelerator.
"Tech start-ups are a worldwide phenomenon and not limited to Silicon Valley," says Sharma, who said the companies would be headquartered in Canada but maintain operations in their country of origin. "This was an issue before the current restrictive travel ban and imminent H-1B plan."
Across the country, in western Canada, a group of co-founders have formed a company, called True North, to help American companies quickly create subsidiaries in Canada and shift workers to a new business complex in Vancouver. They're offering $6,000 in round trip expenses to U.S. companies to make their case.
Another organization, Go North Canada, urges natives to return home and extols the virtues of Canada as a tech destination..
The USA's northern neighbor — home to tech companies Rogers Wireless, IMAX, Hootsuite and Shopify — is making its strongest pitch yet for tech talent at a time when American companies recoil at Trump's first actions in office. Executives, companies and VCs are dangling money, gleaming new facilities, broadband access for all, and promises of economic stability and free health care — the latest moves by a region that for years has harbored dreams of skimming talent.
What a difference a presidential election makes. For years, Canada could not compete with Silicon Valley on salary or facilities. If one wanted to make it in tech, they trekked to California, where the vast majority of career opportunities awaited.
But with Trump's initial punitive actions, and more to come, expatriates of Canada and other nationalities are turning their eyes northward. They're considering comparable pay, universal health care and diversity in the workforce — as well as the ability to share facilities with other start-ups, according to tech CEOs and venture capitalists in Canada.
Business-management software start-up Fulfil.IO plans to relocate its headquarters in Mountain View, Calif., to Toronto this year because of H-1B visa constraints and in an effort to be closer to all of its customers throughout the U.S. and Canada, says company CEO Sharoon Thomas, who is from India.
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“There is a big opportunity here,” says Ryan Holmes, CEO, Hootsuite, a 1,000-person company in Vancouver that designed a platform for managing social media. "We have seen a number of people reach out because of concerns over diversity” prompted by Trump's travel ban and potential cuts to the H-1B program.
Canadian tech companies are being flooded with dozens of resumes from engineers, operations, marketing and others in the U.S.
Influitive, a business-to-business marketing firm in Toronto, says it's receiving 30 resumes a day. It recently landed a director of finance and operations who opted for Toronto instead of San Francisco.
“Absolutely, it’s our chance to pick up tech talent in a highly competitive environment,” says Darryl Ballantyne, co-founder and CEO of LyricFind, a lyrics licensing service in Toronto. “It is often difficult for us to match salaries in U.S. because of the cost of living there.”
More than 1,000 Canadian tech companies — including LyricFind, whose co-founder is of Moroccan descent — sent an open letter to Trump opposing his travel ban.
Executives from Shopify, an e-commerce company based in Ottawa, this week signed an open letter to the Canadian government to offer immediate entry visas.
“Canada is a country where the best talent from around the world can move here and do their life's work,” Shopify Chief Operating Officer Harley Finkelstein said. “My dad was an immigrant when Canada let in 40,000 Hungarians into the country during the Hungarian revolution in 1955. Our family is here because of Canada's inclusive policies and warmth.”
Obstacles: Salaries and housing
The prospects are dazzling for the $1.3 trillion Canadian economy: A chance to recruit more tech talent from abroad as well as recruit disaffected American and Canadian workers. (More than 300,000 Canadian natives work in tech in California alone.)
Canadian companies and government leaders are banking that the close proximity of Canada, competitive wages and universal health care are powerful persuasion. Canada's telecom regulator in December ruled that all of the country's 35 million residents must have high-speed Internet access. In the U.S., 39% of the rural population lacks broadband access, according to the Federal Communications Commission.
“You will see more Canadians stay in Canada and more Americans and other nationalities move to Canada,” predicts Parsable CEO Yanda Erlich, a former Google and Microsoft employee. “This has been a conversation in the office. We could move employees who are foreign born from U.S. offices to Vancouver. It gives us flexibility and them some comfort.”
And yet, Canada has been here before — trying to woo American tech companies, with minimal success. A lack of big-name companies and resources, not to mention pricey cities such as Vancouver, have been nagging deterrents. U.S. federal income tax brackets range from 10% to 35% for individuals. In Canada, it's 15% to 29%.
"Housing should be significantly cheaper in most of the country, with the noticeable exception being Vancouver, which will make your eyes water even if you own a house in the Bay Area," says Jevon McDonald, CEO of Manifold.co, a cloud services company with operations in the U.S. and Canada. McDonald formerly was CEO of GoInstant, an online-business software firm in Nova Scotia that was sold to Salesforce.com for more than $70 million in 2012.
Trump has promised to slash the corporate tax rate for corporations to 15% from 35% and this week signed an executive order that significantly reduced regulations. He's also dangled repatriation, which would allow companies to return treasure troves of cash overseas to the U.S. without crippling taxes.
From this playbook, VC Sharma wants to bring 10 start-ups to eastern Canada, nurture them, help them pump money into the local economy and, perhaps, see them acquired.
"We feel strongly about world-class tech operations out of Iran, South America, India and Eastern Europe that create a significant number of jobs and bringing them to Canada,” says Sharma, whose venture firm has invested in Toronto-based start-ups acquired by Apple (Locationary, a crowdsourced location data); Google (BumpTop, 3-D desktop); Salesforce.com (Rypple, human resources); and Chan Zuckerberg Initiative (Meta, artificial intelligence).
Contributing: Elizabeth Weise in San Francisco.
Follow USA TODAY San Francisco Bureau Chief Jon Swartz @jswartz on Twitter.