Tech sector boom in Ontario
INCUBATORS LIKE MARS CREATING JOBS AND HELPING PROVINCE GET OUT OF DEBT
Things are looking bright for Dan Leibu and League Inc., a digital health and benefits platform he founded with three friends two years ago in Toronto.
League plans to triple staff to as many as 200 by the end of the year and start offering services in the U. S. The company provides an alternative to traditional benefit plans offered by insurers, targeting small and medium-sized businesses that appreciate its flexibility and easy access. It received $25 million in venture funding last year from one of Canada’s largest pension plans, among others.
“We’re just racing to catch up with the demand,” Leibu, 43, said during in an interview in the company’s office in the MaRS Discovery District, an innovation hub that fosters technology and medical startups like League in the city’s hospital row, where much of the country’s publicly funded science research is carried out.
Canadian Prime Minister Justin Trudeau unveiled an “innovation budget” last month designed to help improve the country’s historically poor record at bringing ideas to market. The shift is already under way. Ontario joins Quebec as the country’s two most- populous provinces to see a boom in startups and digital-job creation.
That growth is expected to help the Ontario Liberal government of Kathleen Wynne balance its books for the first time in a decade when it releases its budget this spring for the fiscal year starting April 1. The province expects a $1.9 billion deficit for last fiscal year, down from a projected $4.3 billion gap in the 2015-2016 budget.
Computer- design and related jobs rose 26 per cent in Ontario over the past five years to 162,000 in 2016, driving a 13 per cent increase in technology-services employment, as manufacturing fell 2.9 per cent over the same period, according to Statistics Canada.
Job growth in computer-design was even faster than the 16 per cent increase in finance, insurance and real estate, which has been fuelled by a housing frenzy. Ontario’s economy will grow 2.3 per cent this year, outpacing all other provinces, according to the average forecast compiled by Bloomberg. That hasn’t happened since 2000.
“The prospects for growth are excellent,” said Jan De Silva, chief executive of the Toronto Region Board of Trade. As “the tech community scales up, you’ve got employment growth coming from that, the people need to live somewhere, they’ve got service demand, so there’s a ripple effect throughout the whole economy.”
MaRS could be a metaphor for Ontario’s climb out of deficit, a slow start that’s finally accelerating. The centre required $395 million of loans from the government in recent years after a private backer hit difficulties. But it secured new private funding from Manulife Financial Corp. and Sun Life Fi- nancial Inc. in February, allowing it pay back the bulk of the loans early.
It now supports more than 1,000 companies, which have created over 7,000 jobs, and attracted big global innovators such as Facebook Inc., IBM Corp. and Johnson and Johnson. While the focus has been on startups, that’s now shifting to “scaling,” said Salim Teja, an executive vice-president at the incubator.
“There’s incredible excitement about what’s happening in Toronto and Canada right now,” he said. “The breakthroughs we’re seeing in science and technology and the ambition the entrepreneurs are bringing to build global businesses has never been stronger. We’re in that perfect storm now.”
The revival in the province’s fortunes isn’t helping Wynne, whose approval rating fell to a recordlow 12 per cent, according to a poll released March 24 by the Angus Reid Institute, amid complaints about soaring electricity and house prices, and job losses in car manufacturing.
Still, manufacturing is an important part of Ontario’s economy, employing 12 per cent of the province’s workforce. Computer- systems design accounts for less than three per cent.
“The government’s focus should be on building up a fiscal cushion now when things are strong,” said Doug Porter, chief economist at Bank of Montreal in Toronto. “The external environment for Ontario was about as friendly as one could realistically imagine.”