Silicon Valley loves Montreal

http://www.travelettes.net/wp-content/uploads/2012/12/Montreal-skyline-Canada.jpg

Venture capital is fairly easy to get at an early-stage nowadays, and especially in Silicon Valley. If you have what it takes to be fundable — a solid founding team, an MVP with traction, and a clear plan— you most likely can raise an angel or seed round.

(2016 started on the wrong foot for venture capital, but plenty of money is still on the table, ready to be deployed. Build a great startup and you’ll get funded.)

When my startup, Retinad, started taking off, we approached Montreal angels that we admired and closed a 500k angel round with them. Great. Now fast forward a few months later, we’re at the Seed financing stage. What do we do? Should we go and talk with Montreal VCs? Yes, we could. But there’s another way.

We decided to fly to Silicon Valley. Why? As I mentioned, the money is flowing in early-stage startups there. And as Canadians, especially in a major city, we have an unfair advantage.

Why_?_

It all comes down to one thing: money.

In Montreal,

1. Salaries are low

Software engineers, Designers, Front-end programmers — those talents are not cheap. Even in Montreal. But in Silicon Valley, those people are just too much in demand. 6 figures for 22 years old fresh out of college. $125,000 in average for an mid-level engineer. And don’t even think about the rockstars. The salaries are at least 2x more expensive than in Montreal. And the people here are good, too. We have many universities and a growing startup ecosystem. You can find the people you need in Montreal.

2. USD is strong, CAD is weak.

1 US dollar is currently worth 1.41 canadian dollar. Let’s do the math. If I had raised the angel round in San Francisco, and converted it to CAD, I would’ve had 705k CAD (500k * 1.41) instead of 500k. For a US investor, this is a golden. His money will go a long way, since you’ll have way more buying power than a US startup.

In San Francisco:

500k USD / 125k per engineer = 4 engineers @ 12 months

In Montreal:

705k CAD (500k USD) / 60k per engineer = 6 engineers @ 24 months

Let that sink in.

3. We have Tax Credits.

If you do R&D, you’re elligible for a 75% payroll tax credits from the Federal Government. What does that mean? If you’re creating new technologies or improving existing ones (most startups do that), the government will refund up to 75% of the salaries of your people working on those problems. That’s pretty substantial for a startup.

4. Rent is cheap

You can bootstrap your startup out of an appartment that will cost you $1,000 per month for a big 2 bedrooms, maybe 3 if you don’t live downtown. When things scale up, you can rent a decent office space for $15 per square foot all included. For $27 per square foot you get a very, very nice office located on “the main” (St-Laurent Blvd.) of Montreal. Compare that to $96 per square feet in average in San Francisco, and your monthly rent for a 10 person, 1,000 square foot office went from 1,250$ to $8,000.

In a startup, cash is king. Make the right decision for it’s survival.

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