I'm not Canadian but I sure love investing in Canada. I also love @Alex_Danco 's writing - agree here in some ways but disagree in other ways.

https://alexdanco.com/2021/01/11/why-the-canadian-tech-scene-doesnt-work/

Read his post + a few extrapolated thoughts on investing in up-and-coming startup ecosystems >>

1) Let's hone in on what makes Silicon Valley special.

It's really about the flywheel effect. There are a lot of startups who created investors. Investors funded more startups which created more investors. Etc.

This is a beautiful magical thing.

2) It's hard to get a flywheel going...for any city. Arguably, it took Silicon Valley a LONG time. HP? That started decades ago!

But once you get it going, like a flywheel, you have to actively mess it up to make it stop.

3) I think NYC is a great poster child of getting this going. Sorry Boston - your successful founders didn't become investors for many yrs.

It wasn't until really the @HubSpot mafia started investing did you start to get your flywheel going despite a long history of tech.

4) NYC is a poster child because almost immediately once there were successes, there was a sense of NYC pride. Investors in NYC mostly invest in NYC (unlike in other places).

You don't hear about NYC investors investing in SV for the most part.

5) NYC immediately doubled down on getting their flywheel going. This is what every aspiring startup ecosystem needs to do.

You can't have your successful founders go off and buy boats and invest in real estate. They need to be investing in startups to get it going.

6) This is exactly why I'm actually quite bullish on Toronto. They have something great going - @Alex_Danco's workplace - @Shopify

And w/ that stock price, they are going to continue to mint would-be angels.

7) That is of course, if @Shopify employees invest in local startups. And most of the best angels I know in TO come from Shopify (either were there or are still there)!

And this will only continue to grow (I'm bullish on Shopify)

8) These angels move quickly. They are smart and knowledgeable about how to start companies. They have useful advice for new startups.

If I were starting a biz today, I would totally take money from my friends at Shopify / ex-Shopify.

9) But it takes time to get a flywheel going. 20 Shopify people actively investing isn't going to make TO big.

But you have to start somewhere. For the deals we've been in @HustleFundVC w these Shopify angels, they have moved fast like I've never seen in Canada before.

10) As an outsider, you can just feel the momentum. I've been to TO multiple times for the last 5 yrs (except last yr). When I first started going, angels were SO SLOW to move.

But once these Shopify angels started writing checks, I was afraid that I was going to miss out.

11) (Btw, if you are a Shopify angel, we are always interested in seeing dealflow :) )

What happens next? More angels will be created. More cos will be created. Some of these cos will make it. What has to happen next to get the flywheel going is they need to become angels too.

12) In the meantime, there's still going to be a lack of capital. And so many investors will still be slow to move in TO.

But the other thing that has changed is that US investors are no longer afraid to invest in Canada.

13) Fast moving Silicon Valley investors will fill that gap in the meantime while this flywheel gets going.

I already see it happening. In so many of our TO portfolio cos, they filled their rounds with Americans.

14) So, yes, capital is still a problem (everywhere really - it always takes a while to get a round going), but I see it changing every year that goes by.

I'm quite optimistic and excited about TO getting its startup ecosystem flywheel spinning.

15) Lastly, this is what other aspiring startup cities need to do.

Get early wins. Those founders invest in new local startups. Some of founders become angels too. Etc.

That's what it takes. It's not about schools or tech talent. It's about reinvesting in ecosystems.