Toronto, the quietly booming tech town
By Cade Metz
In late February, Microsoft opened four floors of new office space near the top of a 50-story glass tower downtown, a block from Scotiabank Arena, home of the NHL’s Maple Leafs and the NBA’s Raptors.
Apple and Amazon were already in towers just down the street, and Google was about to open a new building around the corner. Meta, parent company of Facebook, did not yet have an office downtown, but many Toronto startups complained that the social media company was driving tech salaries to Silicon Valley levels as it recruited top engineers across the city. During the pandemic, it was hiring anyone willing to work from home.
A few blocks north, construction workers in yellow vests and hard hats were finishing three floors of new office space for another social media company: Pinterest. Stripe, an American payments company, was opening an office near City Hall, where Klarna, a Scandinavian payments company, had just announced its arrival with a flashy photo op alongside Mayor John Tory.
As the tech industry continues to expand and communities all over the world compete for tech jobs outside Silicon Valley, many executives, investors and entrepreneurs are promoting warm climes such as Austin, Texas, and Miami as the next Big Tech hubs. But they are tiny tech communities compared with the new hub growing in the cool air along the shore of Lake Ontario.
Thanks to years of investment from local universities, government agencies and business leaders and Canada’s liberal immigration policies, Toronto is now the third-largest tech hub in North America. It is home to more tech workers than Chicago, Los Angeles, Seattle and Washington, D.C., trailing only New York and Silicon Valley, according to CBRE, a real estate company that tracks tech hiring.
Toronto’s tech workforce is also growing at a faster clip than any hub in the United States. And unlike many cities, Toronto is likely to have the resources needed to sustain the trend. It is the fourth-largest city in North America — with about 3 million people in the city and more than 6 million in the metro area — behind only Mexico City, New York and Los Angeles, and its roots in technology run deep.
“Everyone points to Miami as the next tech hub because it offers low taxes. But it offers little else from a tech point of view,” Mike Volpi, a partner with venture capital firm Index Ventures, said on a recent visit to Toronto. “You need anchor companies that can provide a transformative impact. Entrepreneurs come from these companies and start their own.”
These anchor companies — including Canadian e-commerce company Shopify as well as many American giants — have come to Toronto for the researchers and engineers who are already here. But they also believe the talent pool will grow.
“This is now a place to make a long-term bet — to build connections with the cluster of schools in the area and create a new pipeline for hiring,” said Tristan Jung, a Korean-born computer scientist who grew up in Toronto, spent six years working at Twitter’s headquarters in San Francisco and recently persuaded the company to build an engineering hub back home in Canada.
Over the past year, Twitter hired more than 100 engineers in Toronto, tripling its Canadian workforce. Household internet names such as DoorDash, eBay and Pinterest built similar technology hubs in the city, as did rising artificial intelligence companies such as Cerebras, Groq and Recursion Pharmaceuticals.
This corner of Canada includes two universities known for generating top researchers and engineers: the University of Toronto, a short walk from downtown, and the University of Waterloo, Jung’s alma mater, roughly an hour away by car or train. In the past, much of this talent migrated to the United States. But engineers and computer scientists trained in and around Toronto increasingly are staying put.
When discussing the Toronto tech scene, locals inevitably point to Geoffrey Hinton, the University of Toronto professor whose research set in motion the recent boom in artificial intelligence.
In 2012, Hinton and two of his students published a breakthrough paper involving “neural networks,” a technology that could power everything from self-driving cars to digital assistants to chatbots. Soon, the world’s biggest companies were spending millions — sometimes tens of millions — to hire researchers who specialized in the technology.
Google paid $44 million for Hinton, born in Britain, and his two students, both born in the former Soviet Union. For a time, he worked at Google’s Silicon Valley headquarters. But he kept his professorship at the university, and in 2016 he opened a Google research lab in downtown Toronto.
The next year, he joined local entrepreneurs and researchers in founding the Vector Institute for Artificial Intelligence, which raised $130 million from government and industry meant to keep top researchers in Toronto, attract talent from other parts of the world and push other companies to open labs in the city.
The area was already a growing tech hub. As the financial center of Canada, Toronto was home to big banks. Microsoft had operated offices in the suburbs for years. So had computer chip companies such as Intel and AMD. Google was running an engineering office near the University of Waterloo.
A month after Hinton announced his Google lab, Uber opened a self-driving car lab anchored by another University of Toronto professor, Raquel Urtasun, who had been courted by a who’s who of American autonomous vehicle companies, but she insisted on staying in Toronto.
“The one thing that was clear for me is that I did not want to go anywhere. The talent is here,” said Urtasun, who was born in Spain and immigrated to Canada in 2014.
Investment in new Toronto companies is still tiny compared with Silicon Valley. In 2021 and 2022, investors pumped $132 billion into Silicon Valley tech startups, according to research firm Tracxn. In Toronto, that figure was $5.4 billion. But ultimately, it is tech talent that drives a tech hub, said Volpi, a Bay Area venture capitalist who also invested in Cohere.
“The money will follow the talent,” he said.