When Techstars Toronto kicked off the demo day for its fifth cohort, the accelerator’s mission was clearly stated.
“We nurture the startup culture at a local level so that entrepreneurs have the ability to create a more sustainable and inclusive world wherever they live,” said the narrator during the introductory portion of the event, which premiered on YouTube earlier this month.
“It has never happened before that a Canadian city has become so visible in such large populations of entrepreneurs.”
– Sunil Sharma, Techstars Toronto
Certainly, since Techstars’ initial launch in Toronto back in 2018, the accelerator has made big strides in achieving that goal. According to data from a recent Silicon Valley Bank State of the Markets report, Techstars is one of Canada’s most active foreign-based investors, with its Toronto outpost making more than 50 investments to date.
Previous Techstars Toronto cohorts have featured an interesting balance between homegrown Canadian founders and international founders looking to the program to scale their business in Canada.
But the latest Techstars Toronto cohort was unique: for the first time, the entire cohort was composed of non-Canadian companies. International selections running the gamut of the newest cohort necessarily prompts the question of whether or not this is what the Toronto tech community expected when it got a Techstars accelerator.
Techstars Toronto’s fifth cohort included 12 companies from around the world, including Vietnam, Pakistan, India, Nigeria, Ghana, and the United Kingdom, among other countries. In an interview with BetaKit, managing director of Techstars Toronto Sunil Sharma noted that while Techstars is a global accelerator, a city-focused program selecting only international companies at one time is “very unusual, and very positive.”
“Was it intentional here? No, I think it was a way to respond to the pandemic and the need to go virtual,” Sharma said. “It was a reaction to that reality.”
For several accelerators, the pandemic was a major catalyst in expanding the geographic scope of their programs. In addition to launching two Canadian-focused accelerators, Google, for example, opened up a number of its US-focused accelerators to include Canadian founders.
For international founders applying to the Techstars Toronto program, the program’s benefits, including its location, are hard to pass up. Toronto has garnered a reputation as a highly diverse and welcoming city for newcomers to Canada, which Sharma said jived well with the ‘global diaspora’ theme of Techstars Toronto’s fifth batch.
Techstars Toronto has been particularly active in getting international companies to set up shop in Canada through the federal government’s Startup Visa Program. Of the 12 companies that recently graduated, Sharma said five have already incorporated in Canada.
One of these companies is Nigeria-founded digital health startup Healthtracka, led by CEO and founder Ifeoluwa Dare-Johnson. Dare-Johnson told BetaKit that throughout the program, her company formed strong connections with Canadian mentors and companies that could be potential partners for Healthtracka.
Toronto’s proximity to the United States is also a key advantage for international companies looking to expand. Another Techstars alumni on its way to Canada is Bangalore, India-based unremot, which offers a business-in-a-box solution for independent consultants.
Founder and CEO of unremot Shiju Radhakrishnan told BetaKit that the Startup Visa Program was one of the reasons unremot applied to Techstars Toronto. He noted the program allows companies to set up their entire team in Canada while allowing them to sell to the North American market, particularly the US.
For Fleri, a cohort member based in the United States and Ghana, an expansion to Toronto could be beneficial from a customer acquisition standpoint. Fleri aims to provide immigrants with a way to give their families back home access to high-quality healthcare. Fleri’s founder and CEO, Sam Baddoo, told BetaKit a Toronto presence would give Fleri access to an immigrant-dense populace and a wider pool of potential customers.
The Toronto tech community has generally praised Techstars Toronto’s work in shepherding global founders into the Toronto ecosystem. Marcus Daniels, CEO and founding partner of Highline Beta, told BetaKit he thinks it’s “fantastic” that Techstars Toronto is bringing diverse, international founders into Canada, adding that global founders are always a “huge win” for the Toronto ecosystem.
Though Daniels said Techstars has done “great work” in supporting Canadian founders, he noted that the lack of Canadian representation in its latest cohort doesn’t sit right with its mission to cultivate startup culture at a local level. “I actually think it’s disrespectful to have zero local startups in a Toronto cohort program,” Daniels said.
“If you’re building a [cohort] of a city-based, Toronto program, how do you not have at least a few local, diverse founders who are pre-seed?” he added.
It should be noted that Highline Beta runs its own, possibly competitive, Canadian accelerator programs and that past tensions exist between Sharma and Daniels related to the founding history of Highline, following the dissolution of Extreme Startups.
Beyond Daniels, the reaction from Toronto VCs who spoke with BetaKit on background was mixed, while noting that an all-international cohort was odd. One VC noted that a lack of Toronto-based deals could indicate reputational issues locally, while another stated that the arrival of new startups to Toronto (if they stay) could be a boon for local investors looking to source new deals and the ecosystem as a whole.
Another VC took the news as a signal that Canadian companies are seeking out more competitive deal terms outside the country. Y Combinator, which has attracted a significant number of Canadian companies as of late, announced this month that it would quadruple the amount that it invests in participating startups.
While Techstars Toronto did receive applications from Canadian startups, according to Sharma, 59 percent of all applications to the fifth cohort came from outside of Canada. He said the total share of international startups considered for the program is likely closer to 65 percent, given the program also accepts companies through referrals.
“It has never happened before that a Canadian city has become so visible in such large populations of entrepreneurs [that] are now seeking out the opportunity to come and experience Toronto and Canada,” Sharma added.
Though the all-international cohort is unusual, Techstars hinted at its global ambitions when it launched the Toronto program. In April 2017, David Brown, then-co-CEO and founder of Techstars, said Toronto’s openness to immigrant entrepreneurs was one of the reasons for the organization’s expansion to the city.
Later in 2017, when Sharma was tapped to lead Techstars Toronto, he stated the program would have a “truly global thesis in large part predicated around Canada’s progressive and open immigration programs that support the growth and mobility of entrepreneurs and startups, no matter their country of origin.”
“If you’re building a [cohort] of a city-based, Toronto program, how do you not have at least a few local, diverse founders who are pre-seed?”
Techstars Toronto launched in partnership with Montréal-based Real Ventures as a co-funder (that partnership is over; the accelerator is now supported by Techstars’ $150 million USD global fund). When the partnership with Real Ventures was announced, John Stokes, general partner of Real Ventures, told the Financial Post that a “more intense, three-month, classic accelerator program” didn’t exist in the region at the time, adding that Techstars would fill that gap in the ecosystem.
Sylvain Carle, now managing partner of Objectif 13 Ventures and former venture partner at Real Ventures, worked alongside Stokes to bring Techstars to Canada starting in 2017. Carle recently told BetaKit that Techstars Toronto’s value proposition for international companies looking to come to Canada was not necessarily by design but is instead a product of how the program has evolved over the years.
“When Techstars Toronto first launched five years back, the applications were predominantly from the local Toronto ecosystem,” Sharma said. “With more awareness of Techstars, I noticed an increase in applications from across Canada.”
“In recent cycles, the applications have been trending much higher from global cities, and now international applications have surpassed Canadian ones, which makes sense given our tiny population in comparison to the rest of the world and the global reach that Techstars has,” Sharma added.
Though Daniels praised Techstars Toronto for its efforts to usher new, global startups into the city, he said many local startups still have a deep need for institutional funding and premium, tailored support, like the kind Techstars provides.
Applications for the next Techstars Toronto cohort closed at the beginning of January, and the sixth class will begin in the program in early April. Sharma, as well as Techstars Toronto’s program manager Gabrielle Rudd, are currently selecting the next batch of companies.
Sharma indicated the next cohort is likely to include more of a mix between Canadian and international startups. He noted that the program is “very interested in local Canadian tech companies,” adding that the balance between Canadian and international firms will ultimately depend on the calibre of companies that apply.
Feature image via Unsplash courtesy Dave Xu.