In recent years, Toronto has established itself as an emerging artificial intelligence (AI) cluster — a region concentrated with companies, organizations, and institutions focused on the AI field that feed off of each other’s success.

Many people in the industry might still believe that Silicon Valley is the main destination for tech companies. But the AI revolution has made Toronto more and more attractive as a place to launch an AI-focused startup. Toronto’s attractiveness as a destination for AI is perhaps the result of U of T’s Department of Computer Science Professor Emeritus Geoffrey Hinton’s groundbreaking work in AI development, which earned him the title within the industry as the ‘godfather of AI.’

In a 2023 tech talent scorecard ranking from the investment group Coldwell Banker Richard Ellis (CBRE), Toronto ranks fifth, following Bay Area, Seattle, New York Metro, and Washington, D.C. Using 13 metrics, the scorecard seeks to “measure each market’s depth, vitality and attractiveness to companies seeking tech talent and to tech workers seeking employment.”

However, CBRE also reports that Toronto trails just behind the Bay Area in tech-sector job growth. It has the third-largest tech workforce, and is the second fastest-growing space for North American tech talent, having added 63,800 jobs between 2017 and 2022.

Jordan Jacobs, managing partner and co-founder of Radical Ventures, an AI-focused, Toronto-born venture fund, told Bloomberg that Toronto’s startup scene has seen a total reversal in the last decade. “Ten years ago, people couldn’t wait to get out of Toronto,” he said.

Today, notable companies such as Samsung, Google, Nvidia, LG Electronics, Roche, and Johnson & Johnson have all set up AI research and development laboratories in Toronto.

U of T as a driving force of AI growth in Toronto

The 2022 Academic Ranking of World Universities has ranked U of T 15th in the world for computer science & engineering. In the past, graduates have tended to migrate south to Silicon Valley, but now, the flow of graduates from the university also has the potential to supply Toronto’s AI startup scene with outstanding talent. 

For example, U of T startups Waabi and Cohere both placed on the 2023 Forbes 50 AI list, which recognizes privately-owned North American companies making the “most interesting and effective use of artificial technology.” Waabi focuses on self-driving technology for usage in long-haul trucking, while generative AI startup Cohere focuses on helping companies integrate natural language processing.

Jai Mansukhani and Alexis Tassone, co-presidents of UofT AI, a UTSG club that hosts an annual AI conference and aims to help undergraduate students break into the AI industry, both have seen a huge increase in the number of AI-related opportunities at U of T. For example, the Toronto-based Vector Institute is an independent not-for-profit organization dedicated to AI research and was founded in 2017 by U of T Professor Brendan Frey. “The Vector Institute provides great opportunities, great research opportunities, internship opportunities for students, and kind of sets them on the path to having a full-time job lined up [in Toronto] after graduation,” said Tassone.

“Many of the core technologies underlying the recent advances in AI were developed here. The university has trained thousands of students to build, use, and apply AI tools. While today there are many important players in Toronto’s AI ecosystem, the initial boost largely came from U of T,” wrote Professor Avi Goldfarb, the Rotman chair in artificial intelligence and healthcare, in an email to The Varsity.

Hayoung (Gloria) Son, a third-year UTSG student majoring in ethics, society and law with double minors in history and philosophy of science and technology as well as in science, technology and society, finds that U of T’s current strength is that it isn’t limiting the study of AI to only the computer science department.

Son told The Varsity in an email that she became interested in the ethics of AI while studying at U of T. She noted the importance of studying AI within disciplines such as law, ethics, and public policy. 

She also pointed out that U of T researchers are working with UNICEF to see how AI can work towards non-profit humanitarian goals. “[U of T is] essentially serving as a trailblazer in this endeavour,” wrote Son.

U of T is also currently building the Schwartz Reisman Innovation Centre, which it says will house the Schwartz Reisman Institute for Technology and Society — the U of T research centre dedicated to exploring the social implications of emerging technologies such as AI.

Growing pains

A big question is whether Toronto will be able to compete with Silicon Valley’s heavily developed venture capital (VC) ecosystem — the financing that startups rely on to turn their dreams into reality. 

In 2014, Atomwise was a Toronto-based startup and one of the first to apply AI to drug discovery. However, it moved to Silicon Valley to raise capital. Since then, startups such as Toronto-based Deep Genomics and Ottawa-based Shopify have stayed in Canada as the VC ecosystem has shown signs of improvement. As of 2023, a Deloitte report ranked Canada third in per capita VC investment in AI among the G7 countries. The US takes the top spot, followed by the UK. 

Mansukhani founded his own AI startup, Ace It, which works directly with schools and educators to use AI to quickly generate classroom content. Recalling his search for financing, Mansukhani emphasizes a sizable difference in US and Canadian investors’ appetite for risk, believing that investors in San Francisco are willing to take on greater risk in their search for returns.

“I’ve seen these articles where people have just met investors in a coffee shop. That is not happening in Toronto. So it’s a much more formal process,” said Mansukhani in an interview with The Varsity.

Rotman Professor Joshua Gans, the Jeffrey S. Skoll Chair in Technical Innovation and Entrepreneurship and Chief Economist at the Creative Destruction Lab (CDL), warns against focusing too much on the current landscape. “While the venture capital ecosystem in Toronto may not be as developed as in Silicon Valley, it’s important to remember that VC isn’t the only factor for success,” he wrote in an email to The Varsity.

Gans emphasized that Canada, and by extension Toronto, is working to grow its investment environment by establishing “startup-friendly policies and providing mentorship and support programs for entrepreneurs.” 

He noted that the federal government has already taken steps to do this through certain immigration programs that specifically target AI talent. He also added that mentorship opportunities are provided by the CDL, a seed-stage funding program established at Rotman. Professor Ajay Agrawal founded the CDL in 2012, and Gans claims that it’s “[bringing the] best Silicon Valley VCs to Toronto to invest in startups in the program.”

Between 2021 and 2022, Ontario saw $2.86 billion in VC investment into AI — a 206 per cent increase from the previous year — demonstrating a sizable growth in AI financing.

But investment isn’t the only barrier to Toronto’s growth as an AI hub, “I feel like there’s always this part of me like, what if I was in San Fran? What would the key difference be inside of my company? I feel like Toronto hasn’t really encompassed the hustle mentality yet,” said Mansukhani.

Regulatory challenges

Regulation concerns have also become a contested topic among those in the industry, with the European Union’s AI Act formed in June as the world’s first comprehensive AI law. Canada currently has no AI regulatory framework.

Avi Goldfarb, the Rotman chair in artificial intelligence and healthcare and a professor of marketing at the Rotman School of Management, implores against stifling technological advancements through excessive regulation but still highlights the importance of regulation in the growth of the AI industry and its role in consumer protection — advocating for a balance between the two viewpoints.

“If regulation is too loose, consumers may not trust its application. A robust competitive business environment is key to this growth,” wrote Goldfarb in an email to The Varsity. “We need to ensure that regulations aren’t focused on slowing us down and instead ensure robust competition.”

Gans agrees. “AI regulation should keep pace with the industry’s growth, but it’s crucial to strike the right balance,” he wrote. “Having appropriate regulations is important for consumer protection and ethical use of AI, but excessive regulation can hinder innovation and stifle technological advancements. But AI regulation is really a national issue and not a city by city issue.”