By: Nick Quain – Vice President, Venture Development, Invest Ottawa
I used to get frustrated when the venture capital rankings for Canadian cities were published.
I love lists — rankings, stats, top 10s, and various metrics always pull me in. And I love my city. I’ve always been an advocate for Ottawa, proudly cheering it on, even while running my company out of Toronto.
That’s why — until recently — it has long been a small but consistent irritation to read about Ottawa punching below its weight in rankings like the CVCA venture capital reports (an always informative report with insights on capital trends).
We’re Canada’s fourth-largest city, yet we rarely rank in the top five. In the Q2 2024 CVCA report, Ottawa ranked 8th. And while the recent 2024 Startup Genome report praised Ottawa’s tech ecosystem for continuing to ascend global rankings, it gave the city a lowly one out of 10 for access to capital. Other Canadian cities like Calgary scored much higher at six.
But recently I recognized something unique about Ottawa’s tech ecosystem: the lack of early-stage capital hadn’t held us back at all. In fact, being Bootstrap City may have helped.
For most startups, chasing capital too early shouldn’t be the main plan. Early-stage founders often spend too much time courting investors when their focus should be on product and customers. Even if they manage to secure funding early, the lack of validation and traction can be a huge problem. Once they’re on the clock to spend that money, they often end up on a path they can’t recover from. Raising capital early doesn’t guarantee long-term success, and startups are most definitely a long-term game.
I needed to validate my hypothesis. I started by asking some big questions…
Has the lack of venture capital impacted the growth of our tech ecosystem?
While Ottawa lagged in venture capital per capita for decades, we’ve emerged as a city with the highest density of tech workers in North America (CBRE) tied with San Francisco. In the overall ranking of top North American tech cities, Ottawa is in the Top 10, second only to Toronto (ranked 4th) among Canadian cities. San Francisco, New York, and Seattle are the top three. Even though Ottawa gets less venture capital than other cities our size, we have more tech workers per capita than anywhere else in North America.
How is that possible?
It’s a lot about bootstrapping. Bootstrappers don’t need as much capital, and they tend to build more sustainable companies and jobs. And this describes Ottawa to a tee.
Has the lack of venture capital held back the emergence of major local tech firms?
Despite receiving less capital, Ottawa produced one of the biggest and fastest-growing tech companies in history: Shopify, which remains Canada’s largest tech company. And
Ottawa isn’t a one-trick pony; Kinaxis is also among Canada’s top 10 public tech companies. Cities like Calgary and Vancouver, which routinely outpace Ottawa in capital raised, would love to have a tech anchor like Shopify or Kinaxis. We have both.
And it doesn’t stop there. Ottawa is home to several other “centaurs” (companies generating $100M+ in revenue) that are on the path to becoming global tech anchors. These include Calian, Ross Video, and Fullscript. Leading the next wave are firms like Assent and Solace.
Even with less capital, Ottawa produces a disproportionate number of tech anchors. This may seem contradictory, but it makes sense once you understand how a bootstrapped ecosystem fosters principles like doing more with less, spending wisely, and creating sustainable growth. These are companies that are built to last (hat tip to Jim Collins).
How can Ottawa’s startup ecosystem thrive without ample funding?
Despite receiving less capital, Ottawa continues to produce many startups and a record number of growth-stage companies that bootstrapped through early stages (before raising capital the moment they were ready to scale).
In Silicon Valley, bootstrapping to $1M in revenue without outside capital is considered an anomaly. In Ottawa, it seems the norm. Just look at a list of our top scaling firms like Knak, Rewind, Noibu, DistillerSR, and LemonadeLXP, all of which bootstrapped to millions before seeking any meaningful capital.
We also have many successful repeat founders who bootstrapped their ventures, such as Field Effect and Fellow. And then there are firms like Ross, JSI, RBR, and Pleora that have scaled slowly over decades to become major players in our tech scene.
This isn’t to say that venture capital is bad. Many of these companies have raised significant amounts of money, and Ottawa has set records for capital raised in the past five years (in the billions). But even as we hit these records, we still typically rank outside the top five which, to me, suggests that Ottawa uses capital more efficiently — with the right companies raising the right amounts at the right time.
Venture capital is like rocket fuel. When a company is aligned with a market and primed for rapid scaling, it’s time to pour it in. If not, forcing growth can cause a company to implode.
Looking back at how this bootstrap culture has become so ingrained in Ottawa, I think we owe some credit to The Ottawa Network.
Back in 2010, they recognized this trend and launched the Bootstrap Awards, an annual event that’s still going strong and remains unique to Ottawa’s startup ecosystem. It’s fitting that one of the inaugural winners was Shopify.
For a market that leads North America in bootstrapping, it’s only right that we’ve been celebrating bootstrappers for almost 15 years while other cities are more likely to keep score based on capital raised.
When I recently spoke with my peers in Montreal, Toronto, and Kitchener-Waterloo, they’re not seeing the same surge in startups as in Ottawa. And maybe that’s not surprising. The lack of available capital is nothing new to our ecosystem and won’t stop an Ottawa founder from starting a new venture.
The startup world is entering a new era, and Ottawa is perfectly positioned to take advantage of the new tools and best practices for building a startup. The rise of no-code/low-code tools and easy access to generative AI have made it easier than ever to bootstrap a business. In fact, it’s becoming more of an expectation from investors. Ottawa’s ecosystem is uniquely positioned to thrive in this new reality; these tools supercharge our superpower.
So, when the next CVCA rankings come out later this year and Ottawa is lower on the list than our peers, I’ll read it with a knowing smile instead of a frown. And I suspect all the thriving Ottawa founders will do precisely the same.
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