Toronto Is Not the Next Silicon Valley — And That’s a Good Thing

Every few months, someone asks: “How can Toronto become the next Silicon Valley?”

It’s lazy, it’s naïve, and it misunderstands both Toronto and Silicon Valley.

The Valley didn’t happen because of rankings or PR campaigns. It happened because a unique set of conditions in a moment in time — with technology, policies, capital, and people ready to explore the unknown. Cold War research dollars. The adoption of emerging technologies that paid the emerging companies for their technologies. Anchor companies that spun out new generations of founders. A culture that rewarded risk and recycled talent.

That’s the lesson: you don’t copy Silicon Valley. You unlock the conditions to explore your own frontier.

You Don’t “Build” a Silicon Valley — You Unlock the Conditions to Explore a Frontier

Silicon Valley wasn’t planned. It emerged from conditions:

• U.S. research dollars: Cold War defense and space budgets poured billions into semiconductors, networking, and computing.
• Generational companies: Shockley begat Fairchild. Fairchild begat Intel. Intel begat Sun and Oracle. Yahoo begat Google. Google begat OpenAI. Each wave spun out the next through alumni, investors, and a culture of portability.
• Density and portability: When one company failed or plateaued, talent moved easily to the next. Knowledge, networks, and capital stayed in motion.
• Community and culture: It wasn’t just jobs. It was a belief in risk-taking, pay-it-forward networks, and building companies that could outlast their founders.

That’s what made the Valley: infrastructure plus people, density plus portability, compounding across generations of companies.

And here’s the real lesson: don’t try to replace Silicon Valley. Frontiers aren’t managed top-down — they’re unlocked. Ecosystems evolve when the right conditions exist for risk-taking, portability, and compounding. The goal isn’t to copy California. It’s to create the conditions where new traits can emerge and survive in our environment, and then pass to the next generation of builders and companies.

Measuring the Wrong Things

“Toronto is now the third-largest tech hub in North America.”

That kind of headline feeds our love affair with validation. We crave adjectives like biggest, first, only, world-class. And in the same breath, we accept our failures as fait accompli. It’s the Leafs effect: we celebrate the hype, no matter the outcome. We use validation and awards to justify how brilliant the city is — without acknowledging our shortcomings or putting real accountability in place to make things better today and in the future.

This is the deeper sickness: we crave validation, but we don’t build the infrastructure, accountability, or ambition to make the future better. Being on the lists feels good. But if we keep accepting failure as normal, “third-largest” will always be more about hype than substance.

Toronto draws people. It can be awesome. But too often, we mistake attention for achievement, and intention for impact. Being on the news doesn’t mean the city works. Having global offices doesn’t mean we’re producing companies that endure. And chasing the label of “the next Silicon Valley” is peak delusion — as if you could replace something that was never planned in the first place.

We don’t need to out–Silicon Valley Silicon Valley. IPL didn’t need to be UFC — it could only happen in India, built for Indian fans and scale. Rock League curling is Canadian to its core, and that’s exactly why it works. In the same way, Canada doesn’t need to replicate someone else’s frontier. We need to build for our environment, our talent, and our future.

Validation doesn’t compound. Companies do.

The Harm of the Not-for-Profit Industrial Complex

In Canada, too much energy goes into the government-funded not-for-profit industrial complex:

• Programs that burn money on contests, awards, badges and ribbon-cuttings.
• Incubators and “innovation hubs” that optimize for grant throughput, not customer revenue.
• Career program managers whose survival is disconnected from the success of the companies and builders.
• Gatekeepers who gatekeep — where personal networks matter more than market traction, and new entrants find themselves shut out.

This is what Jesse Rodgers has called Small Town Bias: when everyone knows everyone, ecosystems reward familiarity and “fitting in” rather than ambition and frontier risk-taking. The result is safe bets, recycled ideas, and founders forced to chase validation from the same small circle instead of customers.

The real problem isn’t grants themselves. It’s grants that don’t move companies along the commercialization path.

Innovation policy talks about stages:

• Basic research (new knowledge).
• Applied research (practical problem-solving).
• Translational research (bridging lab to product).
• Commercialization (customers, markets, revenue).

Canada funds a lot of basic and applied research. But too often, the money stops there. Founders are forced into endless cycles of “program participation” or grant-seeking that never crosses the valley of death into commercialization and markets.

Every ounce of energy that goes into chasing grants disconnected from customers is corporate entropy: energy lost to the system. Multiply it across a generation of founders and it creates ecosystem stagflation — costs go up, effort goes in, but output (real companies, real customers) flatlines.

This isn’t just wasteful. It actively crowds out ambition. Founders who spend months chasing non-dilutive funding often end up weaker than those who chased customers. We’ve built a culture of safe bets and slow growth, not risk-taking and portability.

Job Portability, Compensation, and Affordability

The real test of an ecosystem is what happens when a company fails.

In strong ecosystems, failure is a springboard: talent moves to the next startup, gets acquihired into a scaled company, or raises again. Compensation is high enough that people build a personal “war chest.” Housing is affordable enough that risk is survivable. Government programs like SBIR pay people to keep working on frontier problems while earning a salary.

In Canada, it feels the opposite:

• Affordability crisis: Toronto housing prices are >10× median income — far worse than U.S. hubs like Austin (~6×) or Atlanta (~5×).
• Lower compensation: Average startup salaries in Toronto are CAD $98,083¹. Engineers average ~$106,000². Their San Francisco peers often earn $260,000+³, a gap of more than 2.5×.
• Weak portability: When companies fail, talent often leaves the ecosystem — or the country.

That’s why Canada feels worse than the U.S. It’s not that ideas are weaker. It’s that the system punishes risk instead of paying for it. And every year we delay fixing affordability and compensation, more of our best people build their futures elsewhere.

Policy Architecture and the Frontier Mindset

If the 19th-century frontier was built with railroads and land grants, the modern frontier is built with procurement and R&D.

• Railroads lowered friction to move west. Today, procurement pathways (like SBIR/STTR in the U.S.) lower friction for startups to find customers.
• Land grants gave settlers a reason to risk everything. Today, tax incentives, stock options, and paid fellowships give talent a reason to bet their careers.
• Stations and depots anchored whole towns. Today, anchor companies spin out diasporas.

But the deeper difference is mindset.

• Manifest Destiny created a culture of inevitability and rugged individualism. The government laid rails and provided land, but individuals acted. Risk was rewarded, failure survivable, and people were paid — in land, in opportunity — to take risks.
• The National Policy was managerial. Tariffs, subsidies, rail contracts, and bureaucracy. Expansion was permission-based. People waited for approvals, programs, and safe jobs.

That split still echoes. The U.S. builds policy around inevitability and dynamism. Canada builds policy around management and oversight. One pays people to take risks. The other keeps people waiting for safe, slow growth.

If Canada wants to matter in the next frontier, we need to focus on two tiers of opportunity:

Global Frontiers — where Canada must compete

1. Decentralized Energy & Climate Infrastructure
   1. Urgency: Demand is spiking with electrification and climate commitments. If we don’t act now, Canada risks importing solutions instead of exporting them.
2. Defense & Dual-Use Technologies

• Urgency: Rising geopolitical threats mean we need startups in the fight today — not a decade from now when the conflict has already passed us by.

3. Biotech & Synthetic Biology

• Urgency: Pandemics and food security are not “future problems.” They are present, and waiting means relying on others for critical health infrastructure.

4. Financial Rails & Decentralized Currency

• Urgency: The U.S. and EU are setting standards for digital money and settlement right now. If Canada waits, we lock in permanent dependence.

5. Critical Minerals & Industrial Resilience

• Urgency: EV and green supply chains are forming in real time. Miss this window, and it’s gone forever.

Canadian Frontiers — where sovereignty is non-negotiable

6. Energy Sovereignty

• Urgency: Electrification is accelerating and grids are already strained. The next five years will determine whether Canada can be self-sufficient — or permanently vulnerable.

7. Northern Sovereignty & Arctic Infrastructure

• Urgency: Melting sea routes and foreign interest (Russia, China) make Arctic control existential. If we don’t invest now, we won’t just lose economic opportunity — we’ll lose the ability to defend and govern our own territory.

8. Orbital Sovereignty — Polar Launch & Observation

• Urgency: Orbital slots and standards are filling rapidly. If Canada doesn’t seize its geographic advantage now, we’ll be forever dependent on foreign launch providers.

9. Digital Sovereignty — AI Models & Compute

• Urgency: AI is consolidating around a handful of global players today — not in 10 years. If Canada isn’t present now, we’ll be permanently locked out of shaping the future.

How to Unlock

Unlocking doesn’t mean the government picks winners. It means policies, regulations and funding that encourage:

• Infrastructure (procurement, tax, regulation, translational funding).
• People (compensation, portability, affordability).
• Culture (risk is rewarded, failure survivable, community compounds).

Those conditions let founders and companies explore the unknown — some fail, some succeed, but the ecosystem evolves.

The point isn’t to manage our way to third place. It’s to treat the next frontier with the same seriousness as railroads and land grants — with policies that create inevitability, not entropy. Because history shows that frontiers don’t wait — they’re claimed by those willing to move first.

Final Word

Toronto doesn’t need to be Silicon Valley. Canada doesn’t need to celebrate third place.

We need policies that unlock new frontiers and enable companies to:

• find opportunities,
• create customer economic surplus,
• encourage, fund, and enable the next generation of founders and diasporas,
• and recycle talent into the ecosystem.

There has to be something about a place that makes the best companies — and the best people — want to stay, live, foster, and succeed.

This is not about PR campaigns or slogans.It’s not about borrowing words from others without understanding their meaning.It’s not about innovation rankings.

It’s about building a unique set of beliefs in the future — and then deploying the fullest force of government and capital to make it happen. Technology. Policies. Training. People who are curious and restless. An environment that rewards urgency and risk.

Not because success is guaranteed. But because failure to try is worse. And because the frontier doesn’t wait.

Through companies — and the people who build them.

References

1. Benkert, J-M., Letina, I., & Liu, H. (2023). Startup Acquisitions: Acquihires and Talent Hoarding. arXiv. PDF
2. Bar-Isaac, H., Jullien, B., & Nocke, V. (2021). Acquihiring for Monopsony Power. PDF
3. Boyacıoğlu, E., Hsu, D.H., & Zhou, Y.M. (2023). Acqui-hires: Redeployment and retention of human capital. Strategic Management Journal, 44(3).
4. Bouchard, M., et al. (2019). Global labor flow network reveals the hierarchical organization and dynamics of geo-industrial clusters. arXiv:1902.04613.
5. Miguélez, E., & Moreno, R. (2015). The Network Picture of Labor Flow. arXiv:1507.00248.
6. OECD (2022). DynEmp Project: Measuring job creation by start-ups and young firms. OECD report
7. Gurley, B. (2019). Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth. Above the Crowd.
8. Wellfound (2025). Toronto Startup Salaries. Link
9. The Logic (2023). U.S. vs Canada tech salaries. Link
10. CanInnovate (2024). Government procurement as a driver of innovation. Link
11. SSTI (2023). Canadian SBIR-like program faces cuts. Link