Opinion: Why is Canada more profitable for startups than Silicon Valley?
Many startups, having launched their business in Russia, are taking the next step towards Silicon Valley. The legend and the truth that this place is a paradise for old-school explorers is, of course, justified and confirmed by many companies. Yes, and the business climate in California has a quick start and growth of ambitious Russian start-ups, and a large number of compatriots settled in California will help find the right path to an investor.
But our world is so good that it changes all the time, and new places constantly appear on the world map where it is more comfortable to do business than in the US, writes in its blog for IT Weekly businessman Vladimir Bronnikov.
There is not a single developing country where full-fledged innovation clusters are not created, and they are all looking for people with brains, in particular, from Russia. However, I want to note several factors that should be taken into account when choosing a place for your innovative business and, perhaps, for life.
Vast territories, natural resources, high standard of living, business climate, but catastrophically few people and not enough talented brains.
Many old acquaintances from Russia come to me with a request to talk about the conditions for starting a business in Canada and immigration to this country. And although I have nothing to do with immigration issues, I would venture to assess such opportunities. In the course of my work, I sometimes have to advise Russian companies in terms of marketing in the Canadian and American markets and conduct an examination of innovative solutions in the interests of investors, so I will talk about what I’ve encountered in my practice.
Having lived more than 15 years in Canada, I am becoming more and more convinced that the habitat created by the local government and people is quite comfortable and pleasant. In this country, a peculiar mixture of peoples has emerged, which makes it possible for all ethnic groups to live and work comfortably. According to the social and material level, safety, according to the brand image "made in Canada ” This, in my opinion, is one of the most pleasant countries for living.
Increasing business activity in metropolitan areas such as Toronto, Vancouver, Montreal, gives grounds for dynamic development, including the high-tech sector. Toronto today is one of the five largest cities in North America, and in terms of development rates, it is ahead of all US megacities, especially in terms of real estate and infrastructure projects. What is worth only the decision of the company Google build in the city center Google-grad.
Especially actively invested in the bio-and other clean technologies, science and applications related to the study of the brain. Innovative Cluster Ontario brain institute, for example, joins the efforts of more than 100 major university centers, companies and venture capital investors in the field of commercialization of scientific research.
Government initiatives for start-up businesses — numerous grants, incubators, and accelerators — are growing in Toronto and the entire province of Ontario, where more than 30% of the Canadian population lives, like mushrooms. But all these benefits are available to those who have Canadian citizenship.
Three Ways to the West
Obviously, depending on what stage your business is in, you can use different ways to enter the NAFTA market (Canada, USA, Mexico). Naturally, companies that produce games for phones, you can not go anywhere, and use Apple store. The only thing that is difficult to achieve from this platform is to get investments for business development. We need angels and venture capitalists, which means a business plan, a good presentation, a working prototype. And if you have all this, it's time to think about the subject of my article - Startup VISA program.
But back to the three ways to the West, in this case - to Canada.
First option - This is selling your product through the Internet, for which you can definitely not go anywhere. That is, if your product can be sold through the network, it’s easy to find the right platforms in it. But sometimes the presence of the correct site and the growth of sales of products from Russia can almost drown the business. Do not be surprised, so it happened with one of my clients. His company produced 20 high-tech devices per month and sold them in Russia for $ 350 apiece. And after entering one of the specialized online shopping sites, the volume of orders increased 20 times, and the price in the US market exceeded $ 700. It would seem, live and save money for a new invention. But when the volume of orders rose to 5000 per year, the company realized that they would not master such a scale without expanding production. As a result, with great difficulty they managed to increase the capacity by 10 times, however, some customers were lost. But the worst thing was that the trust in the trademark that had been initially received was undermined.
So sell everything online if you can. By the way, if the case were in Canada, then a special export bank of the government would immediately be connected (export to the USA is the priority direction of financing), and the money for the modernization of production would be allocated.
The second way - opening of the representation in the country of sale. There are many pitfalls, but the main thing is that this scenario makes sense if you could not find the right distributor for your products or create affiliate channel. It is clear that the maintenance of the representative office requires money and, most importantly, personnel.
This is where we come to the third way to the west. This is a fairly cardinal decision, which was made, for example, by Pavel Durov, simply by moving to another country and opening a new project there. True, he had with him about $ 300 million.
I think interested startups who read these lines do not have that kind of money at hand yet. On the third path went many who saw the prospects of their business outside of Russia. A large number of such companies settled in California. Why it is there, we have said. Below we discuss why this is not quite the right decision.
One way to the West for startups from Russia
So what do we have in the end? A startup invested at the initial stage or received a venture capital tranche of a couple of million dollars. If the task is to find investors for a business, then for a start-up company (and maybe already having some cash flow) it is logical to consider all the possibilities of such a step. For these companies, a pilot program was launched a couple of years ago by the Government of Canada. Startup VISA. Features of the project are described in detail on the government website, anyone can get acquainted with them. With 2018, this program becomes permanent.
Unlike California history, which does not allow foreigners to obtain citizenship in a simple way, Canada has taken a giant step towards its technological future. Namely: now any person who has an idea, a prototype, a starting business and desire, can apply for obtaining the status of permanent resident of Canada, eventually get access to investors and, importantly, Canadian citizenship. And all this applies not only to the carrier of know-how, the author of the idea, but also to members of his family and even members of his team.
How it works? Simple enough. To enter the program, it is enough to find in the list of government-certified companies (on the same site) you need a profile incubator / accelerator in Canada, get training there and get Letter of support - A document giving you the right to apply for a visa. We must be prepared that the process will take time and a certain amount of money.
Since the pilot program and the training mechanism in the incubators are not fully developed, be careful when choosing a specific Canadian incubator. Each of them has different possibilities in terms of the quality and duration of the course (from a month to a year), project expertise and access to venture capital.
The local immigration consultants (in Canada) offer counseling services and support for the entire immigration process, and you should also be careful here. First, find out the level of competence in your subject area of a specific consultant, since one of the key requirements of the program Startup VISA - product innovation for the North American market, which you have to prove.
To obtain permission to enter such a visa, you will need to register a company in Canada, have a well-developed business plan and, like any immigrant, have $ 12600 in your Canadian bank account (for the first time you stay). I'm not talking about the cost of training in your chosen certified accelerator and payment of the services of an immigration lawyer.
This is what the work on the Startup VISA program looks like:
Step 1. Preliminary examination of the company / project for compliance with the requirements of the Canadian program Startup VISA. Basic requirements: an innovative product, a potential market in Canada and the United States, proof of the performance of an idea or prototype.
Step 2. Preparation of the project and the candidate for the application process at an investment institution certified by the Government of Canada.
Step 3. Application to the investment institute and registration of all documents for a trip to Canada for a course for start-up companies.
Step 4. Training in Canada and company registration. Presentation to potential investors at the end of the course, getting directions (letter of support) from the investment institute to the program Startup VISA.
Step 5. Preparation of a package of documents for participation in the program Startup VISA, including the business plan of the project and all the necessary documents for the immigration process.
Step 6. Submission of application to the immigration service of Canada Permanent resident.
Step 7. Getting a visa and moving to Canada.
Step 8. After the move, the company works in an incubator, where it is trained for a year until receiving investment and expansion.
Do not immediately rush to the computer. First of all, soberly assess your project financial risks. Begin (yourself or with the assistance of experts) with an examination of the product for novelty. In my practice, there was an interesting case when the project was in demand in Russia, invested, developed and even had a growing market in Russia. But after the initial examination of the novelty and compliance with the legal aspects of using this invention in Canada and the United States, we advised the company for a couple of years to forget about the market of these countries and not waste time and money. Each project is unique and each requires an individual solution.
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