CEO at Advanced Intelligent Systems, a practical autonomous robotics company with software and hardware modules.
Breakthroughs in communication make the world seem smaller. Each advance in the production and distribution of energy inspires new media and greater technological innovation, bringing people together and leading toward Marshal McLuhan’s Global Village.
The internet offers almost universal access to humanity’s assortment of knowledge. Virtual reality immerses users in lifelike simulations that blur the line between fact and fantasy. For aspiring entrepreneurs, such existential ambiguity demands answers to a new kind of question — will their young enterprise require a physical presence, or can it thrive within an exclusively online environment?
An important decision for tech startups is where to locate the business. Virtual workspaces are becoming more common as professionals embrace work-from-home (WFH) opportunities, and although most venture capital firms remain cautious about investing in remote-only companies, some are warming to the idea.
The What, The Where And The How Much
Not all tech startups can forgo a physical presence. Many innovators need laboratories and production facilities and even old-fashioned storefronts. Beyond finding the right balance of real and virtual facilities, there is still the matter of choosing a suitable jurisdiction for incorporating or otherwise establishing a legal entity to represent the startup.
An entrepreneurial track record might be crucial for opening doors to financing, but it seems apparent that location is still of equal importance to both business owners and investors. Being located in or near a major tech hub is no longer imperative for launching a successful startup.
Compared with many other regions around the world, tech startup valuations in the United States and Canada appear to be relatively healthy. Innovations aimed toward resolving public health issues are becoming a focus of investment interest, and those investments are driving more entrepreneurial activity.
During the pandemic, venture capitalists and investment angels began to schedule more virtual pitches. Time will tell how many continue to accept a substitute for face-to-face startup assessment that limits their analytical reach into body language and business plans. In the meantime, bankruptcies are surging, although tech companies seem to be breathing easier than most during the economic downturn.
Is the United States still the most desirable location for networks of people, offices and servers? In recent decades, many other regions have started attracting larger slices of the tech entrepreneur pie, although the USA still has a significant advantage in absolute numbers. Perhaps tellingly, many companies now seek a presence, at least in terms of servers for virtual offices, within multiple countries around the world. Business owners increasingly choose one area of operation over another because of an overriding consideration: access to financing.
Throughout most of 2020, the border between Canada and the USA remained closed to all but essential traffic, most of it commercial. Comparisons of startup environments among the two countries remained similar to recent years, with the United States ranking first in the world and Canada coming in at number three.
The tech sector in North America seems to become more important every year for the overall economy. In Canada, tech companies are leading the way toward post-Covid-19 recovery, while in America tech stocks recently surpassed the value of the entire European stock market.
Even though the absolute values of the American and Canadian tech sectors vary by a wide margin, there are signs that Canada is gaining on its southern neighbor. Industry professionals are immigrating to Canada at an increased rate, and some companies are pulling up roots from Silicon Valley to relocate in the Great White North.
Don’t Forget About The Who
Increasingly, infrastructure, operations and even financing are within reach of virtual offices and remote entrepreneurs. Whether a business is located across the street or across the internet, consumers and investors alike want to know that there are talented and conscientious people ready to deliver quality goods and services.
The trend is toward remote collaboration. Team members can associate from different time zones without worrying about international borders and work visas. Startup founders can be distributed among various locations and a wider source of potential funding.
Investors must still assess personalities, though. They are counting on people even more than they count on the technology those people are developing. They need to recognize certain personality traits within business owners and gauge whether those traits are likely to be reflected in the attitudes and contributions of others on the team.
Creativity is a must-have for any enterprise, yet it is the most difficult element to quantify. This makes in-person assessments even more important for potential investors. The key to a successful relationship between entrepreneurs and their benefactors is to have trust in each other’s strengths. A company without a creative side might measure itself into a corner, while too much focus on aesthetics can kill a startup’s valuation faster than a spreadsheet formula.
If the proverb is correct about doing what you love, it stands to reason that doing a business right means loving everything about it. The location, the team, the partnerships and the financial backers must share a passion and a drive to achieve the goals that inspire those on the outside to place a high enough value on the startup to encourage its growth into a global leader.
Communicate and collaborate. The world only looks big until you become a unicorn.