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Toronto and Vancouver nurture mortgage tech

May 16, 2024 | Public | 0 comments

Mortgage tech is the top draw for venture capital in the tech sector in Toronto and Vancouver, contrasting with a heavier investment emphasis on software as a service (SaaS), artificial intelligence (AI) and machine learning in U.S. markets. JLL’s newly released summary of tech sector trends across 19 North American markets reveals more than USD $1.1 billion (CAD $1.5 billion) of venture capital has flowed into mortgage tech in the two Canadian cities since the spring of 2023, with the largest share invested in Toronto-based businesses.

Toronto has the seventh largest tech workforce among the markets, at nearly 181,000 employees, while Vancouver boasts the fastest growing workforce, with a 68 per cent increase in tech employment over the past five years. The dominant U.S. tech centres continue to be New York, San Francisco, Silicon Valley, Washington D.C., Seattle and Los Angeles, but Silicon Valley was alone in experiencing a drop in the number of tech companies since 2019, while Seattle and Washington posted the largest gains — 39 per cent and 28 per cent respectively — for the period.

Toronto’s tech workforce is divided among 17,975 companies, suggesting a higher proportion of small enterprises than most of the other surveyed markets. About 10 per cent of those companies have been launched since 2020. Job growth is forecast at 6.4 per cent over the next five years, taking the tech labour force slightly above 192,500 by 2028.

In addition to mortgage tech — which received USD $903 million (CAD $1.23 billion) in venture capital in the 12 months ending in March 2024 — AI and machine learning are drawing investment, with a USD $859 million (CAD $1.17 billion) injection in the same period. Life sciences (CAD $585 million), EdTech (CAD $549 million) and beauty (CAD $460 million) round out the top five tech sub-sectors.

Tech firms currently hold sway in Toronto’s office leasing market, accounting for an estimated 25 per cent of prospective tenants looking for space. However, Toronto landlords still have more balanced interests in play than in U.S. tech hubs, where tech firms represent 29 per cent of space seekers in Boston, 38 per cent in San Franciso, 43 per cent in Seattle and 61 per cent in Silicon Valley. In Vancouver, tech firms are estimated to comprise about 26 per cent of prospective tenants looking for office space.

The roughly 75,700 Vancouverites employed in the tech sector are spread among 3,959 companies, of which about 18 per cent have been launched since 2019. Following the chart-topping growth spurt over the past five years, the sector is projected to gain 9,030 more by 2028 for a five-year growth rate of about 12 per cent.

Nearly 60 per cent of venture capital investment, or USD $252 million (CAD $343 million), over the previous four quarters has flowed into mortgage tech. EdTech attracted USD $127 million (CAD $172 million) in investment, largely on par with cloud tech at USD $122 million (CAD $166 million). AI and machine learning captured a more modest USD $56 million (CAD $76 million) in the same period, but JLL analysts project it will see “a growing proportion of funding” in the future.

The post Toronto and Vancouver nurture mortgage tech appeared first on REMINET.

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