Canadian SaaS companies are rejuvenating Ottawa’s tech scene

May 30, 20183 Minute Read

At the nation's capital, the tech sector is experiencing a renaissance due in part to Canadian SaaS companies.

Nearly two decades ago, Ottawa was poised to become a technology powerhouse, fuelled by a strong telecom sector which included Newbridge Networks and its numerous spin-offs. Corel CEO Michael Cowpland believed he could take on Microsoft by buying WordPerfect. There was a general feeling that the city could be more than a sleepy government town as feds were shedding jobs to balance the books. The concept of Canadian SaaS companies was yet to be born.

Canadian SaaS startups reinvigorate Ottawa

By the new millennium, the dot com bubble had burst, Nortel was in disarray, and the once-promising Newbridge spin-off, CrossKeys, was shutting its doors. While the city's tech sector has continued to grow steadily, it's only been recently that Ottawa has caught a second wind. Like many other cities, it's been due in part to startups. Local stars include Shopify, a wildly successful e-commerce platform, and Halogen Software, a provider of cloud-based talent management software.

But enterprise software is also fuelling the tech renaissance in the nation's capital, and Ottawa has become a hub for software as a service (SaaS) startups. The worldwide market for public cloud services was forecast to reach CAD$275 billion by the end of last year, putting the nation's capital front and centre of Canadian SaaS companies. More broadly, Canadian SaaS startups are garnering worldwide attention and investment. For example, for a total of approximately CAD$674 million in 2014, Salesforce acquired Canadian SaaS startups GoInstant, Rypple, and Radian6.

The boom of Canadian SaaS companies in Ottawa demonstrates a recognition by the city of where its strengths are. For example, Accelerator L-SPARK was formed two years ago to specifically tap into the city's enterprise software potential, and the city is a welcoming place for startup Canadian SaaS companies and legacy enterprises because past successes have laid the foundation. The legacies of Mitel, Nortel, Newbridge Networks, and Cognos groomed experienced executives who are now mentoring new entrepreneurial talent through accelerators and community groups such as Invest Ottawa, Startup Garage, and Wesley Clover.

The Silicon Valley of the North

The city was already given the Silicon Valley North moniker two decades ago, but in comparison to its California counterpart, Ottawa has lower housing and salary costs and lots of room for businesses to grow. The nation's capital is also in the top three rankings of Canadian cities for its quality of life, environmental sustainability, and for its suitability for families — giving it broad appeal to entrepreneurs and employees alike. The nation's capital alone is home to more than 580 software companies employing 22,000 people, thanks largely to the Kanata North tech hub. In fact, it boasts the highest concentration of talented scientists and engineers in the country.

One challenge that has dogged the Canadian tech sector for decades is attracting the same level of venture capital as US startups. One of the drivers behind L-SPARK was to help Ottawa SaaS enterprise software startups, as well as Canadian SaaS companies, attract investment in Canada rather than having to travel to Silicon Valley to participate in competitive American seed accelerators such as Y-Combinator. Money from VC is coming to Canada. The MoneyTree Report from PwC Canada and CB Insights stated that Canada defied the global trend of a 10 percent drop in venture capital deals in 2016 and a 23 percent drop for 2015. Ottawa made 10 deals in 2016 with an average of CAD$17.5 million each.

Another indicator of Canada's healthy SaaS situation was last year's inaugural Annual SAAS NORTH Conference, which is returning to Ottawa for a second year in November. The event is expected bring together more than 1,200 attendees, 400 companies, and 70 speakers, and will include new features such as roundtables, AMAs (Ask Me Anything), as well as an updated Investor Zone. According to event organizers, the trade show portion is expected to double in size.

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