Justin Trudeau’s plan to lure Silicon Valley investors to Canada

By Elaine Pofeldt, special to CNBC.com

When former elementary school teacher Tami Zuckerman dreamed up the idea for VarageSale, a Toronto-based site that runs local online garage sales, she had no shortage of funding options.

After her husband, Carl Mercier, a developer and serial entrepreneur, helped her build and launch the site, the couple began hunting for capital and raised an undisclosed amount in seed and Series A funding from both Canadian and U.S. backers. Then, in April 2015, they pulled in US$34 million in a Series B round in April 2015 from the Silicon Valley firms Lightspeed Venture Partners and Sequoia Capital.

“For them it was really about our retention numbers,” said Zuckerman. “Fifty percent of our members were coming back to the app six times a day. One of the investors said they hadn’t seen that kind of activity since they invested in WhatsApp.”

Zuckerman, whose firm has grown to 55 employees since 2012, isn’t alone in finding that Canadian start-ups like her own are being taken seriously by investors. Thanks in part to a large-scale government commitment to supporting high-growth job-creating businesses, many homegrown start-ups are attracting financing from both Canadian venture capital firms and U.S. firms, which often invest alongside them. Last year Canada saw four venture capital deals above 100 million Canadian dollars (US$76.3 million as of Feb. 23), compared to 2015, when there were none, according to the Canadian Venture Capital & Private Equity Association. “Tech is seen as an important sector for the country,” says Zuckerman.

It’s a very visible one, too. “You routinely see Prime Minister Justin Trudeau show up in the same room where all the founders show up,” said Ben Baldwin, founder of ScaleDriver, a Toronto management consultancy that advises executives on building innovation, and founder of The Founder City Project, a network of start-up and scale-up founders.