Silicon Valley North

The High-Tech Haven of Waterloo, Ontario
Written by Nate Hendley

It has been called Silicon Valley North – the Canadian equivalent of Southern California’s high-technology heartland. A city of 134,600 people in Southwestern Ontario, Waterloo has produced an astonishing number of successful technology companies from BlackBerry to OpenText, Kik and Watcom. Google and Shopify have offices in town, Stephen Hawking has been known to drop by to lecture, and aerospace giant Raytheon got its start here.
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So, why Waterloo?

The quick answer is that the city is home to University of Waterloo (UW), which has been described as Canada’s homegrown version of the Massachusetts Institute of Technology (MIT). University of Waterloo students and staff have launched several high-tech startups that became billion-dollar enterprises. A strong support network in Waterloo aims to nourish future innovation by providing space, cash and counselling for fledgling startups.

It is also important to realize that Waterloo has always cherished brain power. Long before the city was a technological haven, it was a popular locale for insurance companies.

Starting in the 1860s, some of Canada’s oldest insurance companies, including Ontario Mutual Life and Waterloo County Farmers’ Mutual, set up shop here. The city became known as ‘the Hartford of Canada,’ in reference to Hartford, Connecticut, home to countless insurance companies. Manulife Financial still maintains its corporate headquarters in the Waterloo area while other big insurance companies such as Equitable Life of Canada and Sun Life Financial have a significant presence.

Then, there is the fact Waterloo boasts two universities – Wilfrid Laurier University (WLU) and the University of Waterloo. WLU is older. It started as a religious seminary in 1911 and was originally known as Waterloo Lutheran University. It currently has campuses in Waterloo and Brantford, roughly 19,000 undergraduate and graduate students and a noted business program.

For all that, UW tends to grab most of the headlines due to its world-class engineering, science and math programs and reputation for fostering startups. Opened in 1957, UW has 31,380 undergraduate and 5,290 graduate students. It has been ranked the most innovative university in Canada by Maclean’s magazine for twenty-six years running and was named top Canadian university for engineering and computer science in U.S. News and World Report Best Global Universities 2017.

“Spinoff companies founded by recent graduates or moonlighting professors helped drive a software and hardware building revolution, turning this area into what many now dub ‘the Silicon Valley of the North,’” states University of Waterloo literature.

The University of Waterloo pioneered co-operative education in which students spend part of their term working at paying jobs and the use of computers for teaching purposes. UW students have been able to access leading-edge computers since the early 1960s, decades before other schools introduced such technology.

Raytheon was one of the first high-tech oriented firms to set up in Waterloo. The aerospace giant was founded in 1956 and is currently headquartered in Ottawa. This leader in its field manufactures and integrates systems for communications, air traffic control and maritime surveillance. The company describes its Waterloo campus as “the world’s foremost provider of solid-state air traffic control radars for both civil and military applications.”

The first major spinoff high-tech firm to emerge from the University of Waterloo was a software company called Watcom International Corporation, established in 1981. UW faculty were instrumental in getting Watcom off the ground. By the late 1980s, Watcom staff had produced a sophisticated compiler – a software program that transforms computer code into different programming languages. Watcom was purchased in the 1990s by PowerSoft, which merged with Sybase and was subsequently bought out by German business software giant SAP in 2010.

OpenText Corporation, which specializes in enterprise information management (EIM) software, was founded by a trio of University of Waterloo professors and incorporated in 1991. The firm owes its existence to an initiative in the mid-1980s to develop a computerized index for the Oxford English Dictionary (OED). Researchers at UW set about creating software that could search for specific phrases and words in a text. The result was a search engine that was quickly adopted for other applications. From this intriguing start, OpenText became renowned for its EIM services and software.

In 1996, OpenText introduced Livelink, which became its flagship product for a time. Livelink offered a method for companies, government departments and other interested parties to securely store, share and manage electronic documents, videos, audio and graphic files.

The company, still headquartered in Waterloo, had nearly 14,500 employees as of early 2017.

Kik, a company that developed a hugely popular smartphone messaging application, was launched in 2009 by University of Waterloo students. These students created a common chat platform for smartphones. The company recently raised over $120 million in funding from various players.

The true monster success story in Waterloo – at least until recently – has been BlackBerry. The once-dominant cellphone firm was founded in 1984 as Research in Motion (RIM). While the shine has come off, it has been phenomenally successful. Best known for its line of smartphones and tablets, the company was founded by Mike Lazaridis and Douglas Fregin, engineering students from University of Waterloo and the University of Windsor respectively.

The BlackBerry smartphone was the company’s crown jewel. This mobile device, which came in different models, was widely hailed for providing excellent security – the phone was said to be ‘unhackable.’ For a time, the BlackBerry became the ubiquitous smartphone for corporate and government officials, and President Barack Obama was frequently photographed using his. By 2010, BlackBerry had over forty million users.

Competition, from Apple iPhones and Google Android phones, knocked BlackBerry off its pedestal, but the company remains a going concern, introducing new products and forging ahead.

BlackBerry has put its stamp on Waterloo in several ways. The company was a huge funder of RIM Park, a 500-acre city park site packed with indoor and outdoor recreational facilities that takes its name from BlackBerry’s earlier moniker. Among other features, RIM Park offers opportunities for ice-skating, golf, basketball, pickleball and more. There are also public art displays, parties, international sporting events and other gatherings, such as the mayor’s New Year’s Levee.

Money from RIM co-founder Mike Lazaridis also helped establish the Perimeter Institute for Theoretical Physics (PI) in Waterloo in 1999. The Perimeter Institute conducts research and educational programs in physics and includes a building called the Stephen Hawking Centre. Appropriately enough, Mr. Hawking himself has done research and held lectures at the Institute.

In addition to all of this activity, Google has operations in the Waterloo area and highly successful startup Shopify has a Waterloo office.

Academic and civic leaders have been careful to nurture Waterloo’s high-tech sector.

In 1980, the Canadian Innovation Centre was founded at the University of Waterloo and was spun off as an independent operation a few years later. The CIC is currently a national, non-profit organization that assists entrepreneurs, inventors and innovators of all stripes attain market success. The CIC worked with BlackBerry back when it was RIM in the mid-1990s and has supported roughly 20,000 other companies and individuals.

In 2006, CIC became a primary tenant at a newly-opened operation called the Accelerator Centre (AC) located in Waterloo’s David Johnston Research and Technology Park. The AC, in its own words, “is dedicated to building and scaling sustainable, globally competitive technology firms; and to commercializing advanced research technologies emerging from academic institutions.”

To this end, the AC offers research space, funding, mentorship and guidance to fledgling tech firms. Other services provided include high-speed internet access, accounting assistance and networking opportunities.

Since it was launched, the centre has helped over 250 fledgling technology firms which, in turn, have created more than 1,500 jobs and earned over $2 billion. Currently run as a non-profit organization, the centre was funded by the Region of Waterloo, province of Ontario and government of Canada.

The CIC and Accelerator Centre are not the only facilities of their kind in Waterloo. In addition to these ventures, the University of Waterloo has established Velocity, a high-tech hub and “largest free startup incubator in the world” according to university literature. Velocity offers a 37,000-square-foot facility with workspace, meeting rooms and a science lab in downtown Kitchener, a city connected to Waterloo. It also provides $375,000 in annual grants to local startups, a Velocity startup coach to provide business advice and an overall supportive environment.

As of early 2018, over 100 companies were toiling away in workspaces provided by Velocity. The Velocity network has spawned over 215 companies which have generated more than $700 million in investments and created roughly 1,800 jobs. Kik, among many others, benefited from Velocity’s offerings in its early days.

A quick look at the Velocity company directory reveals firms such as H2nanO (which aims to use a solar-powered process to treat contaminated water), UHWK (which sells a high-definition helmet-mounted video camera system for athletes) and Pebble (a company that makes smartwatches and was bought by Fitbit in 2016).

Keep an eye on these companies. They may turn into the next BlackBerry or OpenText as the city of Waterloo continues to accelerate into the future.

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