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Y Combinator website no longer lists Canada as a country it invests in
- dang 8mo agoI haven't talked to anyone at YC about this, have no inside information, and can't read the article*, but I imagine this is some technical change about where startups are incorporated. I'm sure applications from Canadian founders are as welcome as ever and there will be no change on the level of which applications get funded. (* edit: I originally posted this in https://news.ycombinator.com/item?id=46772809 https://news.ycombinator.com/item?id=46772809 but have since merged the thread hither)
- Sanzig 8mo agoSeems like a very bizarre move, considering Canadian-domiciled corporations have access to very generous financial incentives (SR&ED) at both federal and provincial levels. Can't help but think this is a move meant to satisfy the US admin.
- dang 8mo agoAgain, I have no inside info, but I'm pretty sure it's got nothing to do with that. Most Canadian YC founders incorporate their startups in the US (sctb and I did that, way back when), just like other international founders do and of course U.S. founders do, so the number of companies being affected by this change must be very small—small enough that it would be of little interest to the US govt. Most probably the change is because the number was too small to justify all the paperwork, legal hoops to jump through, compliance tracking, etc., that inevitably come with cross-border investments. The startups that YC funds are almost always so early-stage that it ends up being easier for everyone if the founders just incorporate in the US. (It would be like a software team saying "why are we putting all this extra effort into supporting platform X when we only have 3 users on platform X and they can all easily switch to platform Y".) But please understand that I'm just guessing here. The reason I'm posting at all is that I'd hate for any Canadian founders (or potential founders) to read a misleading headline and say "welp, I guess YC doesn't want us then". That is certainly not the case!
- adfm 8mo agoIs it politically motivated or does it have to do with Canadian tech not requiring investment because of its stability?
- Johnny_Bonk 8mo agoI would bet it's politically motivated, YC strikes me as money at all costs, and very dismissive of the techno feudalism they help support
- deleted 8mo ago[deleted]
- buckle8017 8mo agoShopify is basically the only really successful Canadian start-up. It's very hard to run a very small business here.
- steve_adams_86 8mo agoIt's actually remarkable how difficult it's made. My only experience is here in BC. In a couple of years I've learned that it's practically punitive, and you have to want to do it really badly. The risk to reward ration is abysmal. I only continue because it's more of a passion project than an economically viable, sensible project. It could become one eventually, but my god, I'd hate to be doing this without a full time job to depend on.
- wahnfrieden 8mo agoCan you give more details? I'm simply a sole proprietorship in Canada so not sure what I'm getting myself into.
- StayTrue 8mo agoDon’t worry too much. I’ve incorporated in AB and BC. Neither is difficult to setup or maintain. My regulatory burden amounts to about one weekend of effort per year including corporate tax filings. That’s a baseline. Harder if you employ a team (not just subcontractors) or in regulated industries where you might have environmental compliance or similar.
- garbawarb 8mo ago> “It’s the Valley-or-bust mentality that breaks the ecosystem and really hurts Canada,” Gomez said. Canadian pride isn't enough to keep a company in Canada. There are real and significant economic incentives to move elsewhere. That said, it's disappointing that YC no longer supports Canadian companies.
- PostOnce 8mo agoEconomic incentives are only one of the many incentives weighing on the scales. There are others.
- garbawarb 8mo agoLike which?
- ooooppppppp 8mo agoAttractiveness to talent? Fairly senior dev, US citizen here (20 years experience). After what I've seen this past year, but more the past month, I will work for peanuts for a path to citizenship in Canada. US in 5 years is not a place I want to be, looking into all options and very serious.
- jleyank 8mo agoIf you have skills in one of the many categories, and with 20 years in tech you should, get the offer. Once armed with an offer from a Canadian company you can handle the visa at the border. For Quebec-based companies you have to have a handle on French but for the rest of Canada it's a skills and education based system for getting permanent residency.
- Joel_Mckay 8mo agoThe wage difference for IT workers is often 3:1 or higher in the US economy, as Canada has 1/10th the population with higher ratios of university alumni. Starting a business in the USA is often far more lucrative, but people usually still incorporate in both countries for tax and liability reasons. Things like the Canadian youth tax-credits also mean anyone over 28 gets pushed down the list for entry-level positions. The US is far easier to find a reasonable job, and the cultural tradition of entrepreneurship is far better. =3
- FAFOAlex 8mo ago[flagged]
- ericzawo 8mo agoDisappointing.
- Rupok 8mo agoThat's truly saddening. I hope there will be more VC backing in Canada because the talent is definitely there.
- alephnerd 8mo agoWe in the VC, PE, and Growth Equity space invest using other people's money. The people who have capital in Canada are uninterested in funding Canadian domiciled GPs - they mostly end up choosing American asset classes because of high returns. Institutional investors like the Ontario Teachers Pension Plan and CDQP tend to target asset classes outside of Canada due to their returns requirements being in the double digits range. Edit: Can't reply > TBF, the OTPP has a huge home bias - they’ve got more Canadian investments than they do US investments despite the market being less than a tenth the size Huge by institutional investor standards but not in aggregate. The majority of OTPP's assets are not in real estate [0] - out of $209B AUM, only $29.4B is invested in real estate globally. Most of their Canadian assets are fixed income investments, and even then their overall Canadian assets are dwarfed by their transnational investments (primarily US and Asia). [0] - https://www.otpp.com/content/dam/otpp/documents/reports/2024-ar/otpp-2024-annual-report-eng.pdf https://www.otpp.com/content/dam/otpp/documents/reports/2024...
- garbawarb 8mo agoOr Canadian real estate.
- alephnerd 8mo agoMost institutional investors limit real estate to around less than 5% of their portfolio.
- Joel_Mckay 8mo agoNot in Canada, the investment holding companies are leveraged 17:1 in some markets. Keep in mind the 2008 correction never happened in Canada. =3
- jleyank 8mo agoWonder if the founders not being US citizens or possibly even residents will hinder their ability to maintain their company. Or, whether this change increases the likelihood of being replaced when the startup shows some success. Also, being foreign in the US is a concern at the moment. Hell, being native in the US is a concern at the moment...
- trollbridge 8mo agoThere's probably no nationality easier for tech workers to migrate to the U.S. with than Canada, though. (And vice versa.)
- garbawarb 8mo agoNot at all. The only benefit Canadians get compared to others is the opportunity to work for employers on TN status which is a temporary non-immigrant-intent work visa. You're not even allowed to want to immigrate if you have one. And given the political climate there's a chance it will go away at any time.
- jleyank 8mo agoYup, such visas (going both ways) are based on the NAFTA/CUSMA agreement and probably live or die with that agreement. Uncertainty limits what businesses and people can/will do, and the sudden loss of work/residency permission would be really annoying for the families involved.
- egourlao 8mo ago> The only benefit Canadians get compared to others is the opportunity to work for employers on TN status which is a temporary non-immigrant-intent work visa. That doesn't strike me as "not at all" when the TN status is 1/ effectively a work visa, whether you like the strings attached or not, and 2/ a foot in the door that lets you move to a more permissive status down the line. A Waterloo or UofT grad can go from applying to a US job to their first day in a few weeks, and the only interaction they'll have with the immigration system will be getting asked for paperwork at the border. Compare that to a British or Japanese new grad, for whom there is essentially very few options unless they have excellent connections or that they display enough extraordinary abilities to be eligible for O-1.
- wilson090 8mo agoThis is extremely misleading. YC still backs Canadian founders (and other international founders). There must have been one too many painful experiences investing in companies based in Canada. Creating or converting to a US-based entity is a standard ask for most international founders who want to participate YC and I suppose something has changed such that Canada is no longer an exception to that.
- tptacek 8mo agoImportant added context here: the list went from US, Cayman, Singapore, Canada to US, Cayman, Singapore. It's not as if YC was generally investing in non-US based entities before. Canada was an exception and isn't anymore. We're a global employer, and just employing people in different jurisdictions is kind of a nightmare (totally worth it, though). I can't imagine how much of a pain it must be to try to manage investment stakes in foreign corporations.
- trollbridge 8mo agoIt's a weird change though. Canada is one of the most investor-friendly and startup-friendly jurisdictions I can think of. If you want to grow quickly, you need to be thinking about how to get an office set up in places like Calgary (lots of machine-learning talent there), Toronto, and Vancouver, and when you do so you'll find the government incentives and lower wages lead to you spending about half on total compensation versus a typical American startup hub. I worked at a place that expanded into Calgary and picked up a bunch of ML engineers with oil-and-gas backgrounds (who were eager for something outside the energy sector) and the government picked up half of the payroll tab for several years. There is also, of course, no health insurance benefits to worry about.
- sbarre 8mo ago> There is also, of course, no health insurance benefits to worry about. Uhh, we don't have universal coverage for everything health up here, we still have private benefits that our employers pay for as part of our compensation plans. Life insurance, dental, vision, prescriptions, physio, mental health, critical illness etc.. It might be less than in the US, but it's not "no health insurance benefits to worry about".
- greenavocado 8mo agoCanada's economy is dominated by a few big companies because the government makes too many rules. It costs too much to start a business here. In politics, only two parties really matter. This creates a closed system where big players stay big and new competition is crushed by red tape. Regulatory frameworks impose prohibitive compliance costs, favoring established incumbents over startups. Key sectors like banking, telecom, and aviation function as protected triopolies. Political power remains centralized between two parties with overlapping establishment interests. These structural barriers effectively suffocate competition and exclude new market entrants.
- paleotrope 8mo agoCan't help but read this as "Canada's today is the US in 10 years..."
- greenavocado 8mo agoNVIDIA makes up 7% of the S&P 500 ETFs. We live in the United States of NVIDIA.
- TacticalCoder 8mo agoYes but at least it's not People's Republic of NVidia, so there's that.
- deaux 8mo agoRight, it's the Democratic People's Republic of Nvidia.
- deleted 8mo ago[deleted]
- jdalgetty 8mo agoWhat do you mean it costs too much to start businesses here? I’ve founded 3 start ups and have not had any issues with things costing too much. Not a single one of those startups needed much to get going and there was no red tape or mysterious taxes that got in the way.
- deleted 8mo ago[deleted]
- throwpoaster 8mo agoProbably de-risking (or front-running) capital controls (tariff on FDI).
- brianbest101 8mo ago[dead]
- darig 8mo ago[dead]
- motohagiography 8mo agoWhether it's significant or not, YC's basic model of seed funding with ~$100k could be reproduced in Canada with $10MM or less. Unsure how this is a problem. If Canada wanted to be serious about startups it could make trivial changes to enable it. However it's committed to becoming a dutch diseased resource colony with no value add and a macquiladora for US software companies. Relative to capital and assets, it's the least productive place on earth. The whole thing runs on riding the coattails of like 5 undergrad profs at waterloo, and a certain bank everyone knows launders cartel money and facilitates capital flight out of China. Judging by its impact, YC is one of the greatest companies of all time. Canada isn't in that game imo.
- Yeroc 8mo agoWhat are the trivial changes Canada could make if it wanted to be serious about startups?
- motohagiography 8mo agobriefly: cap gains reductions. at will employment. competitive top line corporate rates that attract HQ's and IP the way Ireland did. reduce the public sector talent tarpit, tariff goods from countries that use slave labor. abolish the dairy, wheat, and syrup boards and other agriculture cartels. enforce money laundering laws against retail businesses to normalize commercial rents. reduce immigration to levels where people can integrate and actually want to make things for each other and to take the pressure off home prices. pro natal policies that create more young people with a stake in their country. make math education a national project. to name a few. if you talk to anyone in canada who is from here and doesn't work in the public sector, the conversation quickly turns to whether they're planning to leave and how far along they are. the way it's going, they're going to have to bar the exits.
- bpye 8mo ago> if you talk to anyone in canada who is from here and doesn't work in the public sector, the conversation quickly turns to whether they're planning to leave and how far along they are. the way it's going, they're going to have to bar the exits. It sounds like that is just your bubble. I live in Vancouver, BC, and am a Canadian citizen. Yes, lots of people agree that things could be (and should be!) better - but I don't know many folks that are actively planning to leave.
- ensemblehq 8mo agoThere could be many factors at play here so it’s not clear what the main issue is. However, from experience, US VC funds typically come from other US institutions and so it’s an easier sell when the corporation is US-based. Rules and regulations are more well understood and less complex for funds. The article states the requirement is to flip the structure to have the parent company based in one of the 3 countries mentioned. Presumably, better business/returns/policies
- deleted 8mo ago[deleted]
- throwup238 8mo agoThis whole move is about corporate governance. The US makes it really easy to start or manage corporations and the courts are (mostly) streamlined and predictable, especially the chancery courts in Delaware. Cayman Islands adopted much of Delaware's legal approach to corporations in 2016 to make the island more business friendly rather than just a tax haven, and they've got a foot in the Latin American market. Singapore is the SEA equivalent of Delaware. Nothing else much to it. In reality they're all going to have to register to do business in Canada/California/whatever and pay their taxes anyway. Structuring the parent in one of those jurisdictions just makes the legal wrangling about ownership and stock classes safer and more predictable to both investor and founder.
- compiledkoala 8mo agoThis exactly. Canadian common law has some very odd implications for corporate governance. Much higher risk of governance deadlock due to recent rulings. VCs are not going to know that when evaluating a company. YC as the incubator and the first check in has an obligation to vet the situation for future investors. The easiest way for them to do that at scale is to ensure they are experts in a very small number of jurisdictions that are predictable. Honestly, it makes sense.
- Onavo 8mo agoWhat are some of the recent rulings that make it high risk?
- am3141 8mo agoThis is simply not true. Canadian founders lose massive Canadian tax benefits by incorporating in the US. The only way out of further tax complications (and it’s not because of Canada, it’s just how international tax laws work) the founders have to permanently move to the US. Source: I have founded both Delaware and Canada federal co.
- compiledkoala 8mo agoI understand how SR&D works - I've filed for it several times. My hot take: given the 1 year delay on receipt of funds and the fact that it has the biggest impact on small teams, if you are going to scale a VC backed startup as fast as you need to - SR&D won't be the reason you succeed. If you are not scaling fast enough to make it - SR&D won't save you. If you stay in Canada and raise from Canadian VC's you'll get half the cash at half the valuation. The government makes that up to you in SR&D a year later. Found in Canada because it's your home and you love it. That's the only real reason. And it's a good one.
- JimmaDaRustla 8mo ago[flagged]
- cowpig 8mo ago[flagged]
- tptacek 8mo agoWell, that theory is pretty easy to debunk, because Archive.org exists.
- throwup238 8mo ago> Suddenly YCombinator no longer invests in Canadian startups. There's nothing stopping a Canadian from starting (or redomiciling) their startup in the Cayman Islands. That's basically the Cayman Islands' raison d'être ever since the war on terror and the crack down on international anonymous banking.
- tamimio 8mo agoYeah, except Canada really sucks for innovation and startups. Canada's [[[insert any sector here]]] is basically controlled by 2-3 companies that will either kill your idea before it happens, or you must get their “blessing” to penetrate the market. The government doesn't help either. I remember seeing some programs that require 3 years of profit and at least 5 full-time employees to get support of, say, $100k Canadian dollars, which is even less than the US one. The only time you can do something in the Canadian market is when you are already a very well-established company with big capital; only then can you survive there. I have seen government contracts mostly always given to corporations rather than promising startups simply because the conditions required only apply to large corporations.
- ChrisArchitect 8mo agoEarlier: https://news.ycombinator.com/item?id=46772809 https://news.ycombinator.com/item?id=46772809 https://news.ycombinator.com/item?id=46771213 https://news.ycombinator.com/item?id=46771213 https://news.ycombinator.com/item?id=46723068 https://news.ycombinator.com/item?id=46723068 https://news.ycombinator.com/item?id=46773242 https://news.ycombinator.com/item?id=46773242
- pjjpo 8mo agoInteresting - I was surprised to see a note on Wefunder, though the opposite direction that Canada residents aren't allowed to use the platform to invest. For context, no problem from Japan. It sounds like Canada has some unique regulations here, wouldn't have expected that.
- BergAndCo 8mo ago[dead]
- metalman 8mo ago"y combinator website no longer lists canada as a country it invests in" they say it like it's a bad thing
- michelmyara 8mo agoThis is a win from a tax perspective. Canadian founders pay Canadian income tax on their salary, regardless of where the company is incorporated. The Delaware C corporation pays its own income tax in the US using form 1120. The personal tax rate is the same. The corporate tax rate is actually lower. US: 21% (federal only). Canada: 23% to 31%, depending on the province. I'm the co-founder of looch, a US SMB financial platform. Our Delaware incorporation package is $249, all-in. https://looch.money/start https://looch.money/start
- deleted 8mo ago[deleted]