Investing in Canada: the Silicon Valley of the North
The fastest-growing tech hubs are no longer limited to the San Francisco Bay Area. Canadian cities have emerged as ideal ecosystems for nurturing technology companies.
In particular, Toronto, Edmonton, Montreal, and Vancouver are well-known hubs for innovation, attracting some of the world’s top tech talent.
Today’s graphic from the Canadian Consulate in San Francisco highlights why Canada’s booming tech industry is attractive to foreign companies, and where the new avenues for growth are located.
Investing in Canada’s Tech Sector
Canada is an attractive market for foreign investors and corporations.
- Free Trade: Canada is the only country that freely trades with every G7 nation
- Innovation: The tech startup ecosystem in Canada ranks 3rd in the world
- Stability: Canada’s social and political climate ranks in the top 20 most stable worldwide
Foreign direct investment (FDI) into Canada is fueling this growth. In just a year, FDI grew by 70%—from $32.2 billion in 2017 to $54.7 billion in 2018. There are three primary types of FDI:
|Horizontal||Same type of business established in a foreign country||Cell phone provider in the U.S. opens stores in Canada|
|Vertical||Different but related business established or acquired in a foreign country||U.S. manufacturer acquires a Canadian supplier of parts or raw materials required for its products|
|Conglomerate||An investment made in a business unrelated to the foreign investor’s existing business||Joint venture between a Canadian Artificial Intelligence (AI) company and a U.S. company with no experience in AI|
For many years, Canada has maintained an open flow of trade, investment, and talent with other nations. That’s why many well-known foreign companies are flocking to the “Great White North” to attract world-class talent.
Who’s Got Talent: Hiring the Best
Canada is an emerging leader in talent attraction. The influx of FDI and skilled immigrants has sparked the “brain gain” throughout Canada’s tech sector.
The Global Skills Strategy (GSS) is a recent federal program that fast tracks immigration for highly-skilled workers applying directly to Canada or through U.S. companies. In 2018 alone, the GSS received over 10,000 applications─with a 96% success rate for approved work visas.
Shorter processing times for Canadian work visas are enabling more efficient immigration. Canadian visas are now processed within 10-14 days, compared with the typical U.S. timelines of 6-10 months.
Locally, Canadian tech talent has also grown formidable. Notable experts in AI, deep learning, and technology have pursued lucrative research and career opportunities in Canada.
Canadian Tech Pioneers
- Yoshua Bengio: 2018 Turing Award, University of Montreal
- Richard Sutton: Google DeepMind, University of Alberta
- Joelle Pineau: Facebook AI Research (FAIR), McGill University
- Geoffrey Hinton: Google, 2018 Turing Award, University of Toronto
- Donna Strickland: 2018 Nobel Laureate, University of Waterloo
- Doina Precup: Canadian Institute for Advanced Research (CIFAR) Senior Fellow, McGill University
- Sanja Fidler: NVIDIA Director of AI, University of Toronto
- Hugo Larochelle: Google Brain, CIFAR Associate Director, University of Montreal
Notable accolades include the Turing Award, which is given annually to selected individuals for their contributions “of lasting and major technical importance” to the computer science industry.
Highly skilled professionals such as those listed above are working closely with both renowned academic organizations and major tech companies to foster innovation in Canadian tech.
Show Me the Money: Setting up Shop in Canada
Companies that choose to invest in Canada’s technology sector also have access to several key financial incentives.
- Tax Incentives
Foreign companies can receive corporate tax breaks for investing in a Canadian office. Any research and development (R&D) work may also be eligible for Scientific Research and Experimental Development (SR&ED) tax credits.
- Lower Labor Costs
Lower costs of living throughout Canada allows foreign companies to pay lower wages to staff without impacting quality of life. The rent-to-tech wage ratio─the ratio of a tech worker’s monthly housing costs to their monthly wages─is significantly lower in Canada compared to major U.S. tech hubs. For example, Montreal’s ratio is 12.6%, compared to San Francisco’s ratio of 26.4%.
- Lower Operating Costs
Setting up a physical office also offers more value per dollar for foreign companies, as most operating costs are significantly lower in Canada.
The Canadian tech industry is consistently boosting job growth, tech innovation, and wealth creation─all important considerations for foreign companies and investors.
Attracting Foreign Companies to Canada
Many view Canada as a land of opportunity─ the country consistently ranks highly on global happiness, thanks to its stable politics, social factors, and strong economy.
With quality talent and lower costs, Canada is fertile ground for U.S. and foreign tech companies seeking to grow their businesses and global reach.
Gold in the Abitibi: The Chimo Mine Project
Cartier Resources (TSX-V: ECR) is advancing the Chimo Mine Gold Project in the Abitibi region of Quebec, showing its potential with past producing mines.
Gold in the Abitibi: Cartier Resources Chimo Mine Project
Cartier Resources (TSX-V: ECR) is deploying the right strategy in the right region, with the right backers to find gold faster at a lower cost.
Proven Endowment: The Abitibi Greenstone Belt
There are many prolific past-producing gold districts in Canada, but the Abitibi is one of the largest and best understood gold-bearing regions with readily available exploration infrastructure.
This region extends from Wawa in Northwestern Ontario to the east near Val-d’Or Quebec – a landscape that hosts some of the most productive gold mines in Canada.
The company’s Chimo gold mine project located in the historic Abitibi Greenstone belt of Quebec builds on a legacy of gold production with a project ready for investors.
The best place to find gold is where companies discovered and mined it in the past. Between 1964 and 1997, three companies produced 379,012 ounces of gold at the Chimo Mine property.
This type of strategy is known as brownfield exploration. Brownfield exploration looks for gold in areas known to host gold mineralization. It offers investors less risk, reducing the amount of uncertainties a company faces.
Ounces in the Ground: 2019 Resource Estimate
The company delivered within three years its first-ever resource estimate and proved the value its Chimo Mine Project. In November 2019, Cartier published its first mineral resource estimate of the central gold corridor on the Chimo mine property:
Measured Resources: 481,280 ounces of gold
Inferred Resources: 417,250 ounces of gold
Cartier has proven a resource in one third of the Chimo property, and there is the north and south gold corridor which it is currently drilling.
Cartier Resources has built on the foundations of a proven past producer with a new resource estimate, to put the Chimo Mine project back on the Abitibi gold map.
The 26-Year History of ETFs, in One Infographic
This graphic timeline highlights how the exchange-traded fund (ETF) came into existence, as well as the 26-year history of ETFs as an investment vehicle.
The 26-Year History of ETFs, in One Infographic
In recent decades, there have been many breakthrough technologies that have re-shaped the nature of entire industries.
In finance, perhaps the most notable disruption has come from the rise of the exchange-traded fund (ETF) — an investment vehicle that has quadrupled in size over the last decade alone. But how did the ETF originate, and how has its use evolved through to today?
Today’s infographic comes to us from iShares by BlackRock, and it shows how the ETF has gone from an obscure index tracking tool to becoming a mainstream investing vehicle that encompasses trillions of dollars of assets around the world.
The Origin and History of ETFs
ETFs emerged out of the index investing phenomenon in the late 1980s and early 1990s, and there are two early examples that can be referenced as a starting point:
- Index Participation Shares – 1989
This initial attempt to create an ETF was set to track the S&P 500, and garnered significant investor interest. However, it was ruled to work like a futures contract according to a federal court in Chicago, so it never made it to the exchange.
- Toronto 35 Index Participation Units – 1990
These were a warehouse, receipt-based instrument that tracked Canada’s major index, the TSE-35. They allowed investors to participate in the performance in the index, without owning individual shares of stocks in the index.
Since these pioneering ETF endeavors, the investment vehicle has caught on in popularity — and it is now clear that ETFs provide a range of important benefits to investors, such as: low costs, liquidity, diversification, tax efficiency, flexibility, accessibility, and transparency.
Key Milestones in U.S. ETF History:
- 1993 – The First ETF launches in the U.S., tracking the S&P 500
- 1998 – Sector ETFs debut, tracking individual S&P 500 sectors
- 2004 – The first U.S.-listed commodity ETF is formed, offering exposure to gold bullion
- 2008 – Actively-managed ETFs get the green light from the SEC
- 2010 – Term-maturity ETFs debut, holding bonds that all mature in same year
- 2015 – First factor-based bond ETFs are launched
- 2019 – U.S.-listed ETFs hit $4 trillion in AUM, and global bond ETF AUM crosses $1 trillion
How ETFs are Used Today
Today, the U.S. ETF industry has $4.04 trillion of assets under management (AUM), covering a wide spectrum of assets including equities, bonds, alternatives, and money markets.
ETFs are now the go-to index vehicle for 78% of institutional investors, according to a study by Greenwich Associates. Here are the 10 most popular applications for ETFs based on the same data:
|Tactical adjustments||72%||Over- or underweight certain styles, regions, or countries on the basis of short term views.|
|Core allocation||68%||Build a long-term strategic holding in a portfolio.|
|Rebalancing||60%||Manage portfolio risk in between rebalancing cycles.|
|Portfolio completion||57%||Fill in gaps in a strategic asset allocation.|
|International diversification||56%||Gain efficient access to foreign markets.|
|Liquidity management||54%||Maintain exposure in a liquid investment vehicle to meet cash flow needs.|
|Transition management||44%||Facilitate manager transitions with ETFs.|
|Risk management||42%||Mitigate undesired portfolio risk and hedge asset allocation decisions.|
|Interim beta||37%||Maintain market exposure while refining a long-term view.|
|Cash equitization||37%||Put long-term cash positions to work with ETFs to minimize cash drag.|
In the 26 years since the introduction of ETFs, they have grown and evolved to cover almost every aspect of the market. The next stage of growth for the ETF will be driven by investors finding even more uses for these versatile tools.
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