Canada's "Five-Alarm Fire"

"The numbers make it clear that Canada's founders and entrepreneurs are leaving in droves -- and they are taking the future value they will generate with them."

"Not only is it a 'today' problem. But this is a leak in one of our most valuable resources, and the compounding effects over time, I think, can be incredibly devastating for the Canadian economy."

"We talk a lot about positioning, we talk a lot about sovereignty, about making ourselves stronger internally."

"If the U.S. is raising walls and raising tariffs and doing more and more to put America first, I think the smartest response for Canada is to make Canada the obvious place for the next 517 founders to stay and build here." 

Lucy Hargreaves, co-founder Build Canada business advocacy group 

Clockwise from left, Ilya Sutskever, University of Toronto (OpenAI); Garrett Camp, University of Calgary (Uber); Chris Olah, University of Toronto (Anthropic); Jeff Skoll, University of Toronto (eBay); and Elon Musk, Queen’s University (SpaceX).

 

Canada is losing its best and brightest entrepreneurs as they pull up stakes after getting their education in their place of birth and head to greener pastures. Those greener pastures in the world of tech exist in the United States. While tariff threats issued to Canada from the current Washington administration  has moved the Liberal government to attempt diversification and rescue from Canada's traditional reliance on coasting along with the American economy as Canada's largest trading partner by far, no one in public office appears to much notice that tech brain drain.

 

A number of tech entrepreneurs, politicians and economists this week have weighed the data demonstrating just how large the problem of siphoning Canada's bright minds off to a place where a larger economy, more lenient tax rates and greater entrepreneurial opportunities exist, and finally that problem gained some needed focus. There are at least 517 U.S.-based tech firms, according to recent figures, with Canadian founders; entrepreneurs educated in Canada but high-tailing it to the U.S. Together they have raised over US$400 billion.

 

The pace of innovators who leave Canada for the United States doubled since 2023, with U.S. tech giants on a hiring spree to fulfill their ambitions surrounding artificial intelligence. Previously, just over 20 founders left for the U.S. annually. That figure rose to 60 in 2023, and 93 in 2024. 88 percent of those founders graduated from Canadian universities, University of Waterloo, University of Toronto and McGill University among them. 

 

 

Open AI co-founder Ilya Sutskever who attended University of Toronto, and Uber founder Garrett Camp who was raised in Calgary, are among them. Space X's Elon Musk, who has Canadian citizenship, as well as Anthropic's Chris Olah and eBay's Jeff Skoll are others involved in the exodus. Efforts to retain its most innovative people and ideas from moving to the U.S. where entrepreneurs can take advantage of the much larger capital investment pool and more committed pro-business policies, have failed to succeed. 

 

Drawing from the Dominion List, a database of U.S.-based companies with founders born or educated in Canada, Waterloo-based tech investor Jesse Rodgers studied the latest numbers indicating the number of founders who had left for American cities. His blog post surfaced recently just as voices began to weigh in on social media. According to Conservative Leader Pierre Poilievre, this loss of talent is "driving entrepreneurs out of Canada with taxes, red tape and inflation", even as the Liberal government gives "handouts bailouts, and carveouts to the club of corporate insiders". 

 

Where observers are aligned, it is with the belief that Canada is losing strategic talent and ideas to the U.S. -- with less agreement on the reasons why, counterbalances the reality. Some are convinced that it is the huge pool of investors available just south of the border, hubs like New York City and Silicon Valley, in particular. Others are convinced of a lack of pro-business policies in Canada to compensate for the lack of scale in comparison to the U.S.

 

Ms. Hargreaves beliees that more generous capital gains taxes or reduced income taxes on top earners could help the retention of entrepreneurs. Andre Charoo, management partner at Maple VC, a San Francisco-based venture capital fund, feels that entrepreneurs simply move to the U.S. to be in the company of other successful people. Canada, says Mr. Charoo, lacks the density of people striving to build the next $1-billion success story.

 

"We produce some of the most ambitious people in the world, but ambitious people want to be around other ambitious people", he stated. Educated at the University of Toronto, Charoo helped launch the Canadian division of Uber, but moved in the early 2000s to California for the opportunities that could advantage him there. Of the 517 companies that Canadian and Canadian-educated funders started in the U.S., 287 are based in San Francisco, while New York hosts the next most, at 61.