Each April, the World Bank and International Monetary Fund Spring Meetings convene thousands of government officials, journalists, private sector executives and academics from around the globe for a week of discussions on global issues, ranging from the world economic outlook to poverty eradication and aid effectiveness. One group that’s largely missing from the guest list? Canadian startups.
It’s no secret that the relationship between startups and policy makers is complicated. Fast-growing startups offer the highest potential for job growth in Canada, and the government has increasingly introduced immigration measures, research and finance policy tailored to support promising startups. Just last week, Prime Minister Justin Trudeau visited Wealthsimple and OneEleven in Toronto as part of his continued mandate to encourage innovation in Canada. However, knowledge transfer opportunities between the governors of the global economy and the innovators of today and tomorrow tend to be one-sided, with startups schooling the public sector. This year’s IMF/World Bank Spring Meetings demonstrated the importance of fostering synergies between entrepreneurs and policymakers.
Both groups share a commitment to globalization and a dependency on the United States
The IMF was conceived at a UN conference in Bretton Woods, New Hampshire, United States, in July 1944 in an effort to build a framework for economic cooperation to prevent future competitive devaluations like those that had led to the Great Depression of the 1930s. A core responsibility of the IMF is to provide loans to member countries experiencing balance of payments challenges. Implicit in this mandate is maintaining global consensus on the importance of multilateral cooperation, globalization through the lens of mutual and sustainable economic growth, reduced global poverty and inequality, and opportunity for all.
Much has been written of the new United States administration’s ideological rejection of globalization, and ensuing impact on automation, jobs and income inequality. The IMF is facing an existential threat - how does it evolve to continue operations when its single largest donor, the United States, may halt funding as a rejection of the core principles underlying the IMF’s operations.
Compare this with Canadian startups’ respect for pluralist economies driven by diverse individuals and dependency on the United States. Canadian startups rely on the United States as a customer base, a training ground for junior talent, and a source of experienced management talent. Furthermore, Canadian startups overwhelmingly find exit opportunities in the United States. Between 2010 and 2015, 70% of the 183 Canadian companies that were acquired found US buyers. Canadian startups embrace globalization, yet find much of that global reach concentrated in the United States, as does the IMF.
What can Canadian startups learn from the Spring Meetings?
The tech industry and enabling ecosystem’s reputation as being more risk averse is one that can be shed. The notion that Canada is an innovative country with a reputation for being risk-taking among the World Bank partners was constantly echoed during public sessions and private meetings alike. Canada is viewed as an international leader in proposing innovative financing mechanisms, and as a country that punches above its weight in both convening international conversations, and driving global conversations. There is a recurring refrain in media and private conversations alike that Canada’s business culture, risk capital, and individual tolerance for failure are all overly conservative, hindering startup success. This perspective was nowhere to be found at the Spring Meetings, and it’s time for the Canadian startup ecosystem to shed that reputation as well.
Women and girls aren’t a problem to be solved, they’re a demographic to engage. The Canadian tech ecosystem has made meaningful strides in improving gender balance and access to opportunities for women and girls. BDC and MaRS recently announced the initial closing of a women-focused fund, as part of BDC’s pledge to inject $50M into women-led technology firms. Although Canada has a higher percentage of female partners at major venture capital (VC) firms than the United States - 12.5% vs 7% - the numbers are still paltry and this discrepancy remains throughout the startup ecosystem, with similarly low percentages of female board members, startup founders, members of management teams, mid-level leaders and technical employees. The Spring Meetings heavily emphasized the importance of holistic solutions and building a narrative of “what we’re for, not what we’re against” to mobilize action and build partnerships. Most importantly, a critical message was repeated across numerous sessions - to truly drive change, conversation needs to be focused on how to give women and girls the authority and agency to act, as the people best equipped to enact meaningful change will be women and girls.
The artificial intelligence (AI) wave is one that Canada can catch. The IMF Spring Meetings were bookended by two sessions on innovation’s impact on the economy, reflecting a thematic focus on AI, innovation and its impact on jobs and income inequality. Canada has a clear opportunity to take advantage of AI’s transformative potential. Pioneers in deep learning and related AI techniques are largely Canadian - Geoff Hinton, Yoshua Bengio, Yann LeCun, and Richard Sutton have all been supported by the Canadian Institute for Advanced Research (CIFAR) and that funding continues, with a March announcement of a Pan-Canadian Artificial Intelligence Strategy to commit $125M to develop three Canadian AI institutes that are already among the best in the world. Canadian political leaders understand that skills training is crucial to support workers in fields that will be automated in the near-term, and that maintaining a blended focus on technology and humanities best positions students for the jobs of the future that will be created due to AI advances. The Vector Institute for Artificial Intelligence was announced in March to bridge industry and academia, ultimately in an effort to “propel Canada to the forefront of the global shift to artificial intelligence”.
At their core, the Spring Meetings are focused on equipping countries with the tools to empower individuals to escape poverty, realize their potential, and build a more prosperous global economy - fundamental principles that Canadian startups are aligned with.