Toronto vs. San Francisco — what city is more suited for launching a startup

According to the businessman, the main office is located at AdParlor Toronto. Among the clients of platforms — Netflix, Groupon, Walmart and other. According to Fazal, a business he built from Toronto and to a certain point the company had additional offices only after the platform has gained a much larger organization, the company management decided to open offices in new York, San Francisco, London and Singapore. The founder of AdParlor, by his own admission, spent up to one-third of their time working in Silicon valley.

When choosing the location of the launch of its new startup Hussain Fazal considered two cities. San Francisco and Toronto. The entrepreneur decided to summarize my thoughts and share them with other startups. According to Fazal, one of the easiest to analyze is the salary of developers in the region.

According to the website AngelList, the average Silicon valley developer gets about $120 thousand a year. Thus, says the entrepreneur, in order to be competitive, the company must offer employees numerous bonuses. For example, free Lunches, a partial compensation of the cost of travel, membership in the club, free travel home, snacks, fruit, soft drinks and so on. This, writes Fatal, adds to the cost the developer about $30 thousand a year.

In addition, in the Silicon valley, high turnover of personnel because of the huge number of opportunities available in the region. According to Fatale, the average operation time of a programmer in one company is from year to year and a half, while the cost of hiring and firing workers is about $40 thousand. Thus, according to the entrepreneur, the average cost of a developer in the Valley is $190 thousand a year. Meanwhile the average salary of developers in Toronto is less than $59 thousand a year. Fazal offers to set the mark at $50 thousand a year — from my own experience in the city.

Meanwhile, the government of Toronto to help management companies, covering their costs for developers. “The calculations are quite complicated, but if employee earns $50 thousand, the government will cover the company around $27 thousand. Do not forget about the bonuses — we will have to spend about $15 thousand per employee. Loyalty of employees in higher Toronto, they change jobs on average three times less than colleagues from San Francisco, so the cost of hiring and firing, I would estimate at $10 thousand a year.”.

The average cost of a developer in Toronto, according to the estimates of Fasala, $48 thousand a year versus $190 thousand per year in San Francisco. “In other words, in Toronto you can hire four developers for the price of one specialist in San Francisco.”. It is important to assess the skills of these developers, writes Hussain Fazal. He notes that most technicians coming out of University of Waterloo, are among the best in the world — and although some of them leave to work in the Valley, most of them prefer to stay in Canada.

For many startups, says Fazal, the ability to attract funds for further development — one of the most important aspects when selecting the region. Although the investment community Toronto is growing, it still looks pale on the background of Silicon valley. According to the estimates of the entrepreneur in the Valley is open 20 to 30 times more funds and investors than in Toronto, and they are willing to invest in technology projects more money. “There are many reasons why Toronto lags behind Silicon valley investment. However, I always ask myself the question.

“Can I raise funds in Silicon valley while in Toronto?”. Such examples are numerous,” says the entrepreneur. Thus, he notes, most canadian companies that have received investment from the Valley, long past the seeding stage, already had an income and has attracted a big number of customers. The management of these companies had to spend a lot of time in San Francisco, agreeing about the transactions.

During one of his visits to Silicon valley Hussain Fazal talked with several investors, with whom he was negotiating, when looking for investment for AdParlor. He asked them two questions. Would they invest in his new company, and they wouldnt change their opinion, if this company was based in Toronto. Most interviewees expressed willingness to invest in the new company of Fatale. However, after hearing about Toronto, some hesitated.

“Some investors have noted that there is no any problem in this — they know me and are willing to Finance my new idea. The other part noticed that it would be more convenient if the team was based closer to the investor.”. “To attract money from the United States, being in Toronto, it is possible, but nothing replaces the atmosphere in Silicon valley. In San Francisco you can get a large number of useful links. Furthermore, it should be borne in mind that the majority of transactions is carried out not a single investor is most often the educators invite their friends, so they also participated in the round.

Ecosystem in the U.S. is much more developed, and the chance to attract a large amount of funding significantly increased,” concludes Fazal. “There are many other factors that should be considered when selecting the region”, — writes Fazal. The entrepreneur tried to describe the most important ones. In Toronto, the competition between technology companies is lower than in San Francisco, CA- and leadership of a startup may be easier to recruit a good team. “San Francisco will always be someone who will offer the developer the best possible conditions.

In Toronto the chance to miss the talent below,” explains Hussain Fazal. According to the entrepreneur, whenever he comes to Silicon valley, he has a lot of interesting contacts. For example, in 2009, when Fazal going to move to the Valley for three months, he very long time to find accommodation — and literally at the last minute booked a place with the help of free classified ads website. His roommate was one of the first employees of the social network Facebook.

“This just cant happen in Toronto”. There are cases, says the entrepreneur, when the success of the company leadership to sign a partnership with some of the tech giants — Facebook, Google, Twitter, Uber, Airbnb, Dropbox and so on. In such situations it makes sense to launch a startup in the Valley is working in other cities, to get the attention of these companies is very difficult. In San Francisco, said the entrepreneur, contains the best technological minds in the world — and they can always suggest something to colleagues. To get advice, feedback or to make useful contacts easier in the Valley.

San Francisco entrepreneur can spend weeks at various technological conferences, meetings, events and so on. Spending time thus, the entrepreneur feels that he is busy, and its productivity does not suffer — although in fact, according to Fasula, things are exactly the opposite. “Listening to presentations and meeting with investors at conferences, you are distracted from what is most important — your product. If you have a clear development plan, you better focus on it.

Toronto in this parameter wins — in the city much less distractions.”. The cost of living in San Francisco is much higher than in Toronto. Studio apartment in the Valley, the entrepreneur will cost 2-2. 5 times more expensive than housing in Canada. Valley startups more likely to be sold to a large company — being in the immediate vicinity of the technological giants, the guide easier to negotiate on the acquisition of technology or team. “Its one of the advantages of the Valley”.

At the time of this writing, the entrepreneur has not made a decision, in which city he will start his next project. According to Fasula, even if in the end it will stop on Toronto, the company still would make sense to have an office in the Valley to be closer to the technological community.


Leave a Reply