by Kevin Bracken & Alex Gold
Having lived in Toronto for many years, Canada is always top-of-mind for us. From a business perspective, Toronto is always looming in the distance as a huge market. It’s the fourth largest city in North America, is quite wealthy and diverse, and Canadians are some of the most wired people on the planet, so we’re willing to say it’s an even bigger city than Chicago in a way.
Despite the obviousness of Toronto being a massive market, it is sorely neglected when it comes to consumer startups trying to get traction. Most startups begin trying to get traction in the Bay Area, then expand to New York (or vice versa) and then a handful of top-tier American cities before they even think about Canada. (Or emigrate to Silicon Valley, like our friends at Couple.) As Alex says from time to time, “There have been numerous American startups that have entered the Canadian market to much success. Sometimes even greater than their homegrown counterparts.”
This actually presents a Canadian entrepreneur with a unique opportunity: the ability to copy the business model of a popular SF startup that has no immediate plans to expand to Canada.
Lyft comes to mind as something that Toronto desperately needs, and a company that is going to expand into Toronto eventually, after they have tackled a bunch of second-tier American cities first. If a Toronto company can own the “unlicensed drivers with fun fur on the car grille” market, it is quite possible Lyft (or whoever wins the unlicensed driver space) will simply acquire the Toronto company to gain the traction they need. A good example of this is Airbnb’s acquisition spree following their Series D funding, including acquisition of London-based Crashpadder.
We would even go as far as saying there ought to be entire Canadian seed funds based around this concept: it’s good for Canada because Toronto, Montreal and Vancouver will get to play with new consumer tech earlier, and good for business, because it will present exit opportunities when these larger American startups raise massive later rounds or IPO.
If we were starting a new company in Toronto and weren’t sure exactly what problem we wanted to tackle, this is exactly what we would do.