Geoffrey Hinton, a Nobel Prize-winning computer scientist, took a leap in the 1980s — leaving a well-funded post at Carnegie Mellon University to pursue a little-studied area of machine learning research at the University of Toronto.
Four decades later, Hinton and that research paved the way for how modern AI systems function, all while changing the face of the Canadian city.
Silicon Valley is the beating heart of the tech industry, but a thriving AI ecosystem has developed around Hinton in Toronto.
Tech giants including Google, Nvidia, Meta and Microsoft, along with a slew of startups, have opened offices or research labs within miles of the University of Toronto. Even non-tech firms are now eyeing the city for its AI expertise: pharmaceutical company Sanofi this year announced a nearly $300 million investment in a Toronto AI Centre of Excellence.
Toronto now boasts the world’s third best tech talent market, ahead of New York City but behind San Francisco and Seattle, according to an annual analysis by commercial real estate firm CBRE. That’s thanks to educational institutions like the University of Toronto, and public-private research institutes like the Vector Institute, which Hinton co-founded to help commercialize AI breakthroughs.
“I was lucky because very few people were working on this 20 years ago, and so smart young students would come to Toronto … and they’ve now turned into a whole generation of AI leaders,” Hinton told CNN in an interview in Toronto.
Prime Minister Mark Carney is now aiming to boost the local AI ecosystem with a national AI strategy that includes more than US$2 billion in spending on AI research, education and efforts to increase adoption, as well as new safety guardrails.
Toronto’s growing AI power comes as trade relations between the United States and Canada have deteriorated. A trade war has exploded in recent weeks, with Canadian officials seeking to protect the country’s industries. It may be yet another reason why the country’s tech investments are important.
“I don’t think we can afford for Canada to get all this technology from the States or from China,” Hinton said.
‘We liked it here’
Among Toronto’s new generation of AI leaders is Nick Frosst, who studied under Hinton at the University of Toronto and was one of the first hires at Hinton’s Google AI lab in Toronto in 2017. Frosst then went on to co-found the US$7 billion enterprise AI firm Cohere.
Frosst decided against the traditional route of moving to Silicon Valley to start his company for a simple reason: He likes living in Toronto.
“There’s a great tech ecosystem, there’s also a great arts community, there’s also a great academic community, there’s a great business community,” said Frosst, who also fronts Toronto-based indie rock band Good Kid. “All of it is here.”
Many other founders in the city feel the same.
Gennady Pekhimenko, who sold his startup CentML to Nvidia last year and now serves as senior director of AI software for the chip giant, said Toronto’s international food scene serves as a useful recruiting tool for out-of-town talent.
Tomi Poutanen, founder and CEO at AI healthcare firm Signal 1, mentioned the benefits of Canada’s healthcare system and Toronto’s famed “Hospital Row.”
Hinton added that, unlike the United States under the Trump administration, Canada welcomes immigration, which tech firms have long relied on as a talent pipeline. One of Pekhimenko’s first hires at CentML was an Amazon engineer who was unable to renew his H1-B visa to stay in the United States. He could, however, get a Canadian work permit.
Friendlier immigration policies make it easier to attract international talent who likely have a knack for thinking about how to serve a global market, said Jordan Jacobs, managing partner at investment firm Radical Ventures.
Toronto also benefits from close proximity to major markets such as New York, Washington, DC and Chicago.
“You can get on a flight that’s 90 minutes long and reach 200 million people,” Jacobs said.
Building outside the Silicon Valley bubble
San Francisco is still the undisputed centre of the tech industry, with around 20 per cent more tech workers than Toronto, according to CBRE. Tech firms are also making a big push back into the city centre after many dispersed during the Covid-19 pandemic.
Still, builders in Toronto’s AI ecosystem say they benefit from being headquartered outside the Silicon Valley bubble.
The cost of living is generally less expensive in Toronto, thanks in part to lower home prices, socialized healthcare and good public schools, local founders say. That means high-quality talent can come cheaper, too. (Although many Toronto AI firms also have a California presence.)
Toronto also doesn’t struggle with high staff turnover rates in the same way as San Francisco, according to Ray Reddy, a former vice president of Shopify who is building a new startup in stealth.
In Silicon Valley, “even people who are very mission driven are always looking over their shoulder, like, is there something better there?” said Reddy, who previously worked at Google’s Silicon Valley headquarters.
San Francisco is often characterized by its hype and unbridled enthusiasm around AI, but Frosst says there’s an openness to friendly debate in Toronto that feels unique.
Frosst offered his own relationship with friend and mentor Hinton as an example: the two have long disagreed on core questions, like whether building AI constitutes creating a new type of being or simply a tool. But they still regularly play chess together, and Frosst will bring up the debate in hopes of throwing Hinton off. (Hinton’s game is normally undeterred, he said.)
“I think it goes back to … Toronto and Canada not being a monoculture,” Frosst said. “It isn’t just tech workers here, it’s a bit of everything, and I think that leads to innovation, it leads to people thinking about what isn’t popular.”
Canada’s AI opportunity
Already, Canada’s digital sector contributes more than US$140 billion to the country’s GDP, according to the government. The local AI ecosystem has other benefits for the country, according to Hinton.
“If AI causes a lot of unemployment, we’ll want the profits that are made by replacing workers to stay within Canada, so they can be taxed within Canada to support the replaced workers,” Hinton said.
What’s more, governments and companies around the world are increasingly looking to diversify away from buying advanced technology solely from the United States. That’s created an “ongoing advantage” for Canada-based firms, Frosst said.
Cohere received an influx of new customer inquiries after the White House in June put export controls on Anthropic’s advanced AI models.
“The flag of Canada is one that builds trust,” Frosst said. “We’re looking to increase the resiliency and independence of anybody who uses our technology, and broadly I think Canada, as a country, is interested in doing the same for all of our partners.”
And while the most well-known tech investors are in Silicon Valley, being located elsewhere is no longer an obstacle to fundraising.
Raquel Urtasun left her role running Uber’s autonomous driving lab in Toronto to start self-driving semitruck company Waabi five years ago. She founded the company in Toronto, although it’s piloting its trucks mainly in the American southwest. Earlier this year, Waabi raised a more than U$1 billion Series C, the largest funding round in Canadian history.
“At the end of the day, what attracts investors is: what is going to be the top company that is leading a massive market,” Urtasun told CNN. “Whether we are in Canada, whether we are in the Silicon Valley, it didn’t really matter.”
