July 3, 2017

Investing In Startups In Toronto

Considering investing in startups in Toronto?  It’s a great time to invest in startup companies in Toronto.

With tech talent moving back home in recent years from Silicon Valley and elsewhere, Toronto is growing to become nothing less than a world-class hub for tech startups. Josh Guttman, wrote for Tech Crunch that Toronto’s innate creativity and entrepreneurial flair are among the things that enable the city to provide a strong foundation for new companies. On top of that, with the city being one of the biggest in North America, it also produces the highest number of university graduates each year who have studied engineering.

As the number of companies emerging or setting up camp in the city is expected to grow, this huge pool of promising talent is definitely poised to stay home. Both the Canadian federal government and Ontario’s provincial government seem to see tremendous value in this, pouring effort and resources into various ways that they encourage and support innovations in technology. On top of federal tax incentives and financial support, existing companies, startups, and employees also serve to benefit from the Canadian universal healthcare system, a ready solution to a problem tying down both employers and workers elsewhere.

An article by CNBC considers Toronto to have a really good environment to make an investment, especially for those looking to diversify their portfolio by making investments in startups. While TeraMusu states that trading commodities remains a simple method for regulating risks and enhancing gains, thus investing in entrepreneurs and startups offers an entry into a different world altogether. Toronto’s ecosystem, where there are currently between 2,100 and 4,100 tech startups, attracts motivated investors from across the border who acknowledge that Toronto’s high concentration of talent means the chances are higher of finding some really great companies.

Martin Zwilling, in an article for Forbes Magazine, gives investors an idea of what to expect in investing in the companies. Compared to commodities trading, investing in startups means more of an investment in people than in a business—a startup is usually an idea that’s still a work-in-progress when companies start asking for money. In addition, since as many as 90% of startups fail in their first five years, investing in them carries with it a huge amount of risk.

It is within these unpredictable circumstances, however, that “big bang” returns of initial investments could happen, where investors could make somewhere between 10 – 100 times more money than they put in. Companies that change entire industries often begin as startups, as these are the ones that afford more freedom in terms of testing new ideas. Investing in these companies provides a significant opportunity to get in early, especially within a scene like Toronto’s, which is said to rival nothing less than Silicon Valley. What makes the city special is how a lot of these startup companies, although new, benefit from the breadth of experience and knowledge shared by professionals and entrepreneurs who have already proven their worth elsewhere.

And this is crucial to the success of startups, which lies mostly in the execution. “My advice to new startup investors is to start slowly, stick to business areas that you know well, and put more weight on your assessment of the entrepreneur and the team, than on the idea,” said Zwilling. With the risks that come with having so little control over so many unknowns, this gives investors something to hold on to. Given Toronto’s current influx of skilled professionals and constant production of competitive talent, this area—its people—is where the city promises to be the most rewarding.

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About the Author

TorontoStarts now supports over 22,000 active entrepreneurs in the GTA and has grown to the largest startup community in Canada. With a reach of over 120,000+ followers across our platforms, The Startup Coach has hosted over 700 startup events, courses and workshops and spoken in front of over 70,000 entrepreneurs. Working with startups all day every day Craig has personally coached over 600 startups, judged over 100 pitch competitions, and helped companies raise over $60 million.

The Startup Coach

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