The same buzz that initially lured Mike Katchen to Silicon Valley got him gazing back at Toronto, the city where he’d grown up.
“Several of my friends that were doing interesting things in the Valley had actually moved back to Toronto to start businesses,” says the entrepreneur, who initially moved south of the border to help his friends build 1000Memories, a startup they eventually sold to Ancestry.com in 2012. “I had watched from a distance as it seemed like something special was happening in the Toronto ecosystem and I got really inspired about being part of this.”
So he moved back in 2014 and started low-fee investing platform Wealthsimple, a concept he’d initially come up with when his former business partners had approached him about investment advice after selling off 1000Memories.
“I had been investing since I was 12, I won my first stock-picking contest at that age and I actually still have the newspaper clipping,” says Michael. “Rather than send them to an advisor, I built a simple model in Excel which showed them how to set up a portfolio of ETFs and how to rebalance it and manage it on their own to save themselves a ton of fees.”
The spreadsheets quickly morphed into a bona fide platform and those first ten people he sent it to became his first clients. Since then Wealthsimple has exploded, becoming a definitively Toronto success story.
“In just over a year we’ve raised $32 million in financing, are working with close to 10,000 clients and our team is now 33 people,” says Michael. “It’s just been an incredible journey for us in a very short amount of time.”
And the success shows no sign of ebbing.
“We have been fortunate to become one of the leading tech companies in the country,” he says. “I think even if we had done the same sort of thing in the Valley with the same speed and even the same size round we would still be viewed as a small fish.”
Toronto, on the other hand, is much less saturated.
Michael points out that while Canada has, historically speaking, had its fair share of success stories like Blackberry or Nortel, this is the first time we’re seeing a whole cohort of companies in Toronto like Shopify, Wattpad and Wave achieving that sort of scale.
“And that’s how it’s going to stay here, they’re going to be well-funded because they just made a ton of money and they’re going to start their own businesses or join new companies and take that talent with them,” he says. “I think that’s really a first for our ecosystem here and a really exciting thing to look forward to.”
He chalks part of that vibrancy up to the collaborative nature in the city.
“One of the challenges of the Valley is that while there’s an awesome ecosystem that is very supportive it’s also very cutthroat,” he says. “Not that it’s not competitive here, I just think there is an undercurrent of support in the community of people wanting to see other Canadians be successful – it’s a wonderful environment to start a business with that support network around you that’s really rooting for you.”
He also points to tax incentives like the Scientific Research and Experimental Development (SR&ED) program that assist startups and a frothing seed stage investment community.
“It’s off the charts awesome right now,” says Michael. “There’s so much capital from really smart people that want to support great companies – I think it’s a great time to be raising money in Toronto for getting businesses off the ground.”