- Waterloo’s density enables convergence between different industries and skillsets, making it an attractive destination for foreign investment.
- The strong academic and research institutions in Waterloo have made it a hub for talent and innovation.
- The availably of high-quality accelerators and incubators has made Waterloo a hub for successful startups and scale-ups.
Waterloo continues to be an incredibly attractive destination for foreign investment, but moving forward, the Canadian business ecosystem will need to be aggressive in helping homegrown companies become global giants, as well as getting multinationals headquartered in Canada. This can be achieved by being more discerning about foreign direct investment and ensure that the companies that locate in the region are good partners.
What is Waterloo’s overall attractiveness for foreign direct investment?
I would characterize the Waterloo technology ecosystem as a globally significant brain-belt. Waterloo’s technology ecosystem is dynamic, diverse, and it is centred by being home to Canada’s top technology university. We have a very strong manufacturing base and technology base. If you think about it, the largest manufacturing employer in the region is Toyota and they are Canada’s number one automotive manufacturer. Canada’s largest software company, OpenText, is also headquartered in our region. We have very strong anchors like Google and Shopify, which are scaling significantly, as well as a strong start-up and scale-up ecosystem with companies like Faire and ApplyBoard, two new unicorns that we have in the downtown core. It is a diverse, dense ecosystem, which is very important. From a global standpoint, Waterloo is punching well above our weight as a community.
What is the value of “secondary cities” like Waterloo to international investors?
Secondary cities are increasingly becoming hubs for multinational investment, and it is because of the ability to locate in communities where there is more density.
When you think about the Waterloo region, the guts of our technology ecosystem are literally around a 10-kilometer radius, and that is actually a very dense area which is all connected by a brand new light rail system. We put in a light rail transit system a couple of years ago so it is all connected. We have the University of Waterloo and Wilfrid Laurier University, so we have a very strong base in technology, math, artificial intelligence, and quantum computing, on top of a strong business school at Conestoga College, which has the largest apprenticeship program in the country.
“Waterloo has a very strong value proposition in a world where it is increasingly less critical to be in large cities.”
Within our community of just over 600,000 people, you have a lot of density, and everything is within a short walking distance to a number of the hubs, accelerators, and research institutions. Waterloo has a very strong value proposition in a world where it is increasingly less critical to be in large cities. Multinationals are looking at secondary cities because of the density but also because of the ability for collision and convergence. When you are so close and you have this density, there is a lot more innovation that is likely.
What are Waterloo’s key sectors and what foreign investments to the region would you highlight?
Our priority sectors include technology, and within technology there is a range of different strengths: artificial intelligence, quantum computing, and more. Towards that end, companies like Google have made very large investments in the region. They are currently scaling to about 3,000 people, doubling their square footage in our region.
Companies like Shopify Plus have expanded very quickly, and that is a testimony to the talent that we have as well as our strengths in data science, smart robotics, and machine learning. In what I call applied artificial intelligence, there are over 100 companies, institutions, and research labs working in that space and that coalesces very nicely, aligning with our manufacturing strengths in areas like automotive manufacturing. We have become a very strong, globally significant automotive or autotech hub, anchored by companies like Toyota and Bosch, which are doing work on connected autonomous vehicles. Ford also has a division working in Waterloo on those types of innovations.
“We have become a very strong, globally significant automotive or autotech hub.”
In addition to that, Waterloo has a very strong financial services sector, which includes insurance companies and global giants like Manulife, Sun Life, and Equitable, which are all headquartered in the Waterloo region.
Again, given what is happening with tech, we are seeing a lot of fintech innovation in the Waterloo region. There is a mirror between the traditional sectors, manufacturing, and financial services, and the disruption coming out of the technology across the board. In areas like robotics and smart robotics, we have some great leaders like Clearpath and Avidbots, which are doing extremely well in this COVID-19 environment because of the importance of the use of robotics in advanced manufacturing. These would be our core strengths, and I would be remiss if I did not mention our academic sector.
Having the University of Waterloo, Wilfrid Laurier University, and Conestoga College makes a very strong brain belt where you have the private sector, research institutions, accelerators, and incubators supporting it all. Places like the Accelerator Centre, the Communitech Hub, and the University of Waterloo Velocity Garage, where we have had a number of great start-ups, is what our value proposition is for local companies that want to scale and foreign companies that are looking for discerning places to grow their companies.
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What is the value of foreign direct investment to Canada’s economy, communities, and society?
The value of FDI is significant but we need to be more discerning about the quality of the FDI and things like the distinction between “made in Canada” versus “owned in Canada” becomes very important.
I understand that multinationals can play a huge role in building up an ecosystem in a community. We invest a lot in our post-secondary education and the most important thing that I like to highlight is that any ecosystem requires a diversity of members, so that includes homegrown companies and multinationals. If we were not welcoming to good corporate citizens and foreign direct investment, I worry about the reciprocity. Our scaling companies have to be successful in other markets including the US and Europe. Imagine if the environment were not reciprocal? We want people that integrate in the community and we want companies that are focused on having a social impact as opposed to just grabbing up all the talent, and the way to address that is not to hide, it is not to be a low ambition globalist or worst, a nationalist, it is to be aggressive and focused on growth and the value proposition. The more companies we have that want to become global giants, and want to acquire companies in the United States and around the world, the better.
The last thing I will say is as a country, we have a unique opportunity now to use our beacon and our brand of reliability and stability to not just set up or support tech outposts but to move entire headquarters.
“Our goal is to ensure that entire headquarters are established in the Waterloo region and that should be the goal for Canada.”
When we are talking to multinationals, especially these days given the H1B Visa situation, the Global Skills Strategy, and the Global Talent Stream, which we have been using, we are convincing Americans to move their entire operations to Canada, and not just to get work permits but to grow here. A good recent example of that is Odyssey Interactive; this is a company out of Los Angeles founded by a University of Waterloo student who became very successful at a company called Riot Games. I am not a gamer but they made games like League of Legends and others. He brought his two co-founders, both Americans, into Canada and as a referral partner, we used the Global Talent Stream to get them here and to get them work permits. Where the money comes from matters but our goal is to ensure that entire headquarters are established in the Waterloo region and that should be the goal for Canada. We actually want these companies to move here permanently so that is part of the goal.
What supports are available to foreign investors to the Waterloo region and what additional supports would you like to see?
If you are a foreign company looking to invest in the Waterloo region, your first stop should be my organization, Waterloo EDC. It is the first point of contact for companies wanting to locate, relocate, or expand in the Waterloo region. In addition to providing you a targeted investment welcoming kit, we help with site selection, talent attraction, and introduce you to all kinds of intermediaries such as law firms, accounting firms, and real estate site selectors. We provide those services and referrals but once you are here, that is when the real work starts.
“If you are a foreign company looking to invest in the Waterloo region, your first stop should be my organization, Waterloo EDC.”
It is just like any sales proposition—you get the purchase order, and you are happy, but then the real work starts with the customer in terms of gaining their trust and helping them to grow. After that point, we start introductions to our support partners in the ecosystem like the Communitech Hub, Velocity, the Accelerator Centre, and our research institutions, which are all really strong organizations that are designed to foster innovation.
In terms of the areas where I think we could do better, it is in regard to partnerships with the provincial and federal governments in particular, which are helping more homegrown companies scale abroad. Foreign direct investment is like two sides of the same coin, while we welcome talent, we also have to remember it is important, especially because Canada is such a small economy, for companies to be successful globally. I would like to see more Shopifys, more Faire Wholesales and more ApplyBoards. These are companies that have, and certainly in the case of Faire and ApplyBoard, attained multibillion-dollar valuations and it is great to have them in our community. We need more homegrown companies that are global giants and the only way to do that is to ensure that we are very discerning about foreign direct investment, and that we make sure that companies that locate in the region are good partners, support talent, and focus on social impact.
“We need more homegrown companies that are global giants and the only way to do that is to ensure that we are very discerning about foreign direct investment.”
Going forward, some of the recommendations about what universities and organizations like mine can do to really stand up local companies and help them grow internationally is something that is going to be strategically important for the country. Our ability to be successful in the intangible economy and a focus on strong intellectual property rights are all things that are changing the landscape in real time and it is incumbent on us to do that because the competition continues to be fierce and it continues to be widespread. All cities, secondary cities, and major hubs across Canada really have to focus on that value proposition.
Why should foreign investors prioritize investment to Canada over other countries?
Canada is a beacon of stability and reliability in this very hurly-burly global environment. My message would be if you want peace of mind, order, and social cohesion, look no further than north if you are an American. It really is a great value proposition for Canada, and it is our time. That is what I would say to foreign investors. The quality of the talent, the strength of all of our communities—the Waterloo region included—and organizations like Invest in Canada and the Province of Ontario are shining a spotlight on Canada at a very unique time, in a year like no other.