Silicon Valley and the Bay Area generally has long reigned as the world's undisputed startup capital, but recently cracks are starting to show in the area's dominance. Eye watering cost of living is the primary culprit in this decline, but the growing vibrance of other scenes, as well as allegations of groupthink in the Valley, are playing a role too.

The truth is, all reigns, no matter how long and fruitful, must eventually end. So when Silicon Valley declines, what cities or regions will be passed the crown?

Predicting the next big tech hub is a long-running parlor game for startup insiders, and the current historical moment is no exception. Only now, thanks to changes in government policy among other factors, the cast of contending princelings is shifting, causing one big name VC to publicly bet on an less-often-mentioned possibility  -- Canada.

Startup talent not welcome.

What has made our northerly neighbor suddenly such a contender for startup talent? As Foundry Group investor Brad Feld explained on his blog recently, the answer can be summed up in three words: Trump's immigration policy.

In the post, Feld, a long-time advocate for a "Startup Visa" to allow more international entrepreneurial talent to come to the U.S. to build businesses and create jobs, remarks on just how hard the current administration has fought to keep the program from going into effect.

"The year-old program has been constantly under assault since the election of President Donald Trump," is the summation of one article on the issue Feld sites. Unsurprisingly, talented would-be founders have proven to be mostly unwilling to apply for a program with such an uncertain future. The grand total of applicants so far is a measly ten, and as of yet no one has actually been granted a visa. (This will give you a sense of the type of people the government is fighting to keep out.)

From his position on the frontlines of startup decision making, Feld has already seen the effects of these policies. He writes:

This is a gift to Canada around entrepreneurship, and I've already seen the impact of it in many places. The Toronto/Waterloo startup community is on fire. Many companies I'm involved in are exploring offices in Canada, especially Vancouver (for the Seattle folks) and Toronto (for the east coast folks) since it's so difficult to get work visas in the U.S. for employees. Other entrepreneurs from around the world are simply opting to start the company in Canada rather than the U.S. because of all the uncertainty around visa status.

Canada's ascension to the startup throne is far from guaranteed, Feld implies, as it remains to be seen if the government there will take advantage of America's fumble.

But whatever the longer-term outcome for Canada, Feld's observations should probably be concerning for anyone interested in the continued vibrance of the U.S. startup scene. No matter what you feel about the immigration debate more widely, it's hard to imagine an argument for pushing some of the world's most talented and driven wealth creators northward. And that appears to be just what the current administration is doing. ​

Published on: May 3, 2018