Canadian deep tech hub density world-leading, says new index

 Canadian deep tech hub density world-leading, says new index

Klas Tikkanen, COO, Nordic Capital Advisors. Image Courtesy: Nordic Capital.

European Centre for Entrepreneurship and Policy Reform (ECEPR) has launched a Deep Tech Index in association with Nordic Capital. The authors share with The Tech Factor how Canada is punching above its weight in the deep tech industry.

The European Centre for Entrepreneurship and Policy Reform (ECEPR) has recently launched a Deep Tech Index in association with Nordic Capital. In an interaction with The Tech Factor, the authors painted quite a positive picture for Canadian deep tech hub density. They say that successful countries tend to have lower taxes, stronger private property protection and better education outcomes, in general. The index studied 500 leading technology firms internationally, mapping which urban regions and countries these firms exist in. It also studied what characterizes those countries which have a higher share of globally leading deep tech companies per million adults.

The ECEPR Deep Tech Index is based on analyzing ten areas of advanced technology. These all have significant impact on long-term societal development as per the authors. Through the study, the leading companies in artificial intelligence, greentech, cleantech, biotech, as well as photonics and electronics were studied. In addition, it also focused on robotics, computers and quantum computers, pharmaceuticals, fintech, as well as space and advanced materials. Last year, the StartupBlink Index had ranked Canada as fourth among global startup hubs, a rating which the country has maintained in 2024 too.

Canadian deep tech sector punching above its weight

ECEPR team told The Tech Factor that the index found that Canada has a wide range of urban regions where world-leading deep tech development is occurring. Toronto hosts several leading companies in AI, quantum computing, electronics, fintech and clean tech. They added that Montreal hosts many leading firms in robotics & communication, biotechnology, pharmaceuticals and clean energy. It’s worth noting that Toronto has been reported as the best Canadian tech hub in other industry reports as well. In recent months, the city has witnessed the launch of a new generative AI startup incubator and fundraise by startups in robotics, SaaS, and cleantech, among others. [Tip: Read our daily updated coverage of Canadian startup news].

The ECEPR index further analyzed Canadian deep tech hub density compared to other nations. It finds that many advanced countries of the population size of Canada have only 1-2 urban regions that host world-leading deep tech companies. Canada is unique in having a strong geographical spreading of the deep tech companies that exist in the country. Leading firms in clean tech, including various forms of environmental technologies, can be found in Vancouver, Quebec, Calgary, Victoria, as well as Fredericton. Canada also has strengths in clean energy, with Squamish being a leading deep tech hub in this sector. Further to this, Waterloo is a leading deep tech hub in robotics & communication, while Hamilton is strong in pharmaceuticals.

Having world leading universities in engineering and technology is also closely related to success in Canadian deep tech sector. University of British Columbia, University of Waterloo, and McGill University, are all amongst the world’s top-100 universities in engineering and technology, helping Canada punch above its weight.

Recommendations for relevant reads:

Many key factors contribute to success of Canadian deep tech ecosystem

The index found that countries with a high share of world-leading deep tech companies, per million adults, tend to have strong protection for private property. Protection of physical property as well as intellectual property, is important to stimulate investments in advanced technologies. Canada property rights in general are strong, but it can improve IP rights for patents, trademarks and other immaterial values.

Additionally, countries with lower profit taxes are more attractive for development of world-leading deep tech companies. Overall tax burden is also linked to progress. Countries with low tax burden as share of economy, tend to have more world-leading deep tech companies per million adults. The ECEPR team believes Canada has relatively favourable taxes, which is an important competitive factor. Entrepreneurs, investments and talents are increasingly mobile today, typically seeking countries with a moderate or lower tax burden.

Moreover, countries where students have higher knowledge in mathematics, science and reading, tend to perform better in deep tech development. Canada has amongst the best school results amongst pupils in the world, according to the international PISA-measures. Last year, Canada even started category-based draws for STEM jobs. However, while the results are still very high, since 2012 skills in mathematics, reading and science have all fallen in Canada. The country needs to address the downward trend of education results.

“Canada in summary is very strong in deep tech, and this is linked to factors such as competitive taxation and a strong education system. It is important to remain competitive, through continuous reform. The down-ward trend in school results is alarming in the long-term though, Canada needs to stay at top of knowledge to retain the high number of world-leading deep tech hubs that exist there today “.

Dr. Nima Sanandaji, CEO of ECEPR & author of the study

A thriving deep tech industry is linked to lower unemployment levels

The ECEPR Deep Tech Index finds that those countries that succeed with deep tech, tend to have lower unemployment levels. A deep tech hub strategy can in the long term boost the technological competitiveness, which transform into better job outcomes for the population.

“Promoting deep tech development is important as it drives human progress and generates economic opportunities for the leading regions. Countries successful in advancing deep tech also tend to experience favourable labour market outcomes. For every additional globally leading deep-tech company per million adults corresponds to a 1.26 percentage point decrease in unemployment.”

Klas Tikkanen, Chief Operating Officer at Nordic Capital Advisors

Further, it says if the number of globally-leading Canadian deep tech companies is increased by half, this could be linked to a reduction of unemployment long-term by almost 100,000. A part of this is since large international companies in advanced technologies generate export revenues and create jobs directly as well as through exchange with other local businesses. More importantly, achieving more deep tech success requires improvements of the overall business climate in Canada. This would lead to many medium sized and smaller companies also succeeding. It’s worth noting that last year, a report found that Canadian tech jobs scene remained strong in general.

The authors believe that the future roadmap for Canada needs to be based on reversing the fall of school results and keep improving the already competitive enterprise policies.

Further reading:

Ankur S

Ankur is a contributing writer for The Tech Factor based in Toronto. He is a seasoned technology & business leader, having worked as a tech entrepreneur, venture capitalist and management consultant for nearly two decades. His experience includes working and investing in the Canadian, US and Indian startup ecosystems.

Related post