What does the Toronto Startup Ecosystem look like? (V3)

This document focuses on the high-tech and software startup ecosystem, and outlines the different types of organizations comprising the ecosystem, whose scope is global.  This is not a detailed listing of every ecosystem member. So far, I have identified 25 different types of organizations.

The core of the ecosystem is the founders.  Founders start with an idea.  They create a MVP (Minimum Viable Product) which satisfies some early customers.  Then, they refine the MVP until there is product/market fit. (Current customers recommend the product and there is a large pool of potential customers who have problems that can be solved by the startup’s solution.)

#1 Incubators and accelerators

There are a broad range of incubators and accelerators and almost every one is different.  The areas of difference include: target startups, whether the startup must be Canadian or may be global, target startup problems to address, admittance criteria, admittance process, target outcomes, process to address the startups’ problems, resources deployed, whether the startup must be in a working space or can be remote, whether financing is provided in return for equity, or if there’s no fee, etc.  As a startup evolves, it may move among several different types of incubators and accelerators.

#2 Venture studios

A venture studio comes up with an idea, assembles a team of founders, and provides capital for the startup.

#3 Angel investor

There are individual angel investors as well as angel investor groups. Angel investor groups have government supported infrastructure (e.g. staff, office space), but the government does not provide capital to startups applying to the angel investor groups.  The capital comes from the angel investors.

#4 Crowdfunding

Investors make small online contributions.  Typically, the investor does not get equity, but their return is recognition and receiving a product/or service.  The funds raised range from low $1,000s to low millions.

#5 Seed or pre-series A investors

At this point, the startup does not have product/market fit.  In the case of pharma, medical, and new technology the startup may still be in the research and development stage.

#6 Series A, B investors

At the series A stage, the founders believe they have product/market fit, and the investors believe the startup has the potential to scale.  At series B stage, the startups have been successfully scaling. Debt financing becomes available from debt investors.

#7 Post-series B investors

Both equity and debt funds exist.

#8 Niche market investors

There is at least one investor targeting profitable startups focused on a niche market they dominate.

#9 Investment dealers/underwriters

Sartups can raise equity by listing on the CSE (Canadian Securities Exchange), or on the TSX Venture Exchange.

#10 Selling your startup

These organizations will help you sell your startup, once it’s achieved some success.  They can also help you buy other companies.

#11 Talent development programs

Some organizations train people, to enable them to be hired by startups.

#12 Talent outsourced or offshore

Many startups have offshore software development teams or use outsourced resources for part-time or specialized needs.

#13 Talent acquisition

This includes job boards and companies which enable Toronto startups to hire people from outside Canada and relocate them to Canada.

#14 Associations

There are associations focused on specific types of members e.g., VC (Venture Capital), accelerators, startup CEOs, startup CTOs, etc.

#15 Advisors – legal, financial, functional

Every startup requires a range of advisors.  For example, financial software can collect and report on a board range of information.  An accountantc an advise on how to set the software up.  Lawyers are key to providing advice on the range of legal and regulatory requirements and how best to meet them.

#16 Startup operational services

These SaaS (Software as a Service) companies provide operational services needed by startups e.g., finance and financial reporting (cash flow, profit and loss, balance sheet, etc.), CRM (Customer Relationship Management), help desk, payment processing, etc.

#17 Reviews of startup companies

Some companies are focused on reviewing startup solutions.  Other companies enable reviews of startups as a sideline to their main business (e.g. job boards enable employee reviews of the CEO).

#18 Conferences

Conference organizers manage Toronto conferences focused on startups.  Many of the organizations in the Toronto ecosystem also host events.

#19 Regulators

Every startup needs to be aware of regulatory requirements as soon as they start raising capital.  Financial Services startups must be compliant with many more regulatory requirements.

#20 Federal government programs

Startups can benefit from tax credits, financing, and advisory support. When going global, Canadian trade commissioners are based in 160 global cities.  The startup Visa program enables a foreign employee with a job offer to quickly obtain a visa to work in Canada.

#21 Ontario government programs

The Ontario government has numerous programs, including the funding of the infrastructure for angel groups.

#22 Municipal programs

Many cities have their own programs.

#23 Ecosystem researchers

Facts about startups are available in databases.  Some organizations conduct and publish fact-based research regarding startups.

#24 Startup charities

The Upside Foundation focuses on startup companies donating stock options.

#25 Coworking space companies

Once the startup leaves the founders’ homes (or accelerator) they move to a coworking space. These companies also enable a startup to quickly establish a global physical presence.