Insurers' investment turns around Toronto innovation center
(Bloomberg) -- Just a few years ago Canada’s biggest science and technology incubator had to be bailed out by the Ontario government. Now it has so many companies clamoring for space that it’s looking for a second office, people familiar with the matter say.
MaRS Discovery District, which houses companies such as Airbnb Inc. and Merck & Co. along with hundreds of entrepreneurs racing to commercialize science, is scouting for more space in Toronto’s east end, said the people who asked not to be identified as the negotiations are private.
A representative for MaRS didn’t respond to requests for comment.
MaRS’s potential expansion is a dramatic turnaround from 2014 when the innovation hub struggled to fill its empty offices in the city’s hospital district and the Ontario government had to step in with funding after its previous backer ran into financial difficulties. MaRS said in September it paid most of that loan off with C$290 million ($221 million) in financing from Manulife Financial Corp., Sun Life Financial Inc. and Industrial Alliance Insurance and Financial Services Inc.
The tech incubator currently houses more than 150 tenants and 6,000 workers, with two-thirds of those spots used by startups. The firm rents out space to corporations and acts as a central hub for capital funding, startup generation and research expertise. The goal is to help turn innovation into commercial success, long the Achilles heel of Canadian technology.
MaRS’ potential expansion is just one indication of Canada’s burgeoning tech sector. Venture capital and private equity funding surged 11 percent to a record C$3.5 billion in 2017 and companies from Shopify Inc. to Microsoft Corp. and WeWork Cos. are seeking additional space in downtown Toronto. With record-low vacancy rates and a move from suburban offices to the city, demand for space is hot, and developers are racing to build towers.
Paddy Cosgrave, co-founder of Web Summit, is moving its Collision conference from New Orleans to Toronto next year.
The Irish entrepreneur had originally considered San Francisco for the new location of what he says is the fastest-growing tech conference in North America with more than 25,000 attendees last year. He picked Toronto amid a wave of venture-capital funding and engineer hiring.
"You look at all the data and there’s something happening in Toronto," Cosgrave said in an interview at Bloomberg’s office in Toronto. "It’s more than just a mood. There’s data that backs it up. There’s a sea change.”