VentureLab’s HardTech event discusses the state of Canadian deep tech, re-shoring, and the investment landscape.
Semiconductors and artificial intelligence (AI) took centre stage at the fourth HardTech Summit this week, where attendees gathered to network, attend panels, exhibitions, and check in on the state of Canada’s hard technology ecosystem.
Markham, Ont.-based VentureLab, which caters to entrepreneurs building hard tech solutions, hosted the event.
HardTech 2024, which was held on Nov. 6 and 7 and counted BetaKit as a community partner, saw Canadian tech leaders discuss Canada’s role in the global chip supply chain and some of the chances and challenges facing the country’s semiconductor and AI industries among other topics.
“It’s becoming clear that the world’s biggest problems are not going to be solved with software.”
Hard tech or deep tech startups are companies trying to solve significant scientific or engineering challenges. Among others, this group includes hardware companies developing medtech, AI, and semiconductor solutions. These types of tech businesses are often more complex, technical, risky, and time- and capital-intensive to build than their software counterparts.
In an interview at HardTech 2024 just over a year after taking the reins of VentureLab, CEO Hugh Chow outlined some of the opportunities he sees right now for Canada in two key areas—semiconductors and AI—and where he thinks the country should focus its efforts.
“There’s no reason why we have to pick a battle on all fronts,” Chow told BetaKit. He argued Canada needs to focus on its strengths, which include advanced chip design. He said that today, the country has lots of promising semiconductor firms taking a fabless approach, naming Toronto trio Untether AI, Alphawave Semi, and Tenstorrent as examples. (Fabless chip manufacturing is a model wherein companies design semiconductors but outsource their manufacturing.) Chow singled out the country’s commitment to advanced chip manufacturing as lacking.
In terms of advanced AI research, Chow argued that “Canada is clearly in the lead,” but has fallen short previously on commercialization. Going forward, he believes that Canada needs to focus more on the latter and the hardware that powers AI. Chow views the federal government’s recent $2.4-billion CAD AI package as a positive development and hopes to see more commitments towards AI and semiconductors.
These days, hard tech innovations are being commercialized and increasingly converted into successful exits.. Earlier this year, outgoing Panache Ventures partner Chris Neumann argued in a blog post that a hard tech renaissance is happening globally right now and Canada risks missing out.
Per a 2023 report from Boston Consulting Group, hard tech’s share of overall venture capital funding has doubled over the past decade, to 20 percent. As the tech market has cooled amid the macroeconomic downturn, and many other startups and fund managers have struggled to fundraise, AI has remained hot. This has also helped fuel investor interest in the hardware that powers AI, as semiconductor investment appears to be bouncing back after a down period in 2023.
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During one panel discussion at HardTech, Kanata Ventures managing partner and VentureLab venture advisor Yuri Navarro noted that lots of people are claiming to be hard tech investors right now, some without any expertise, “because they see the writing on the wall” about the opportunity that exists in the space.
This can be a benefit, but it can also fuel “a dangerous dynamic” where many want to invest in hard tech but do not understand it—something Navarro warned hard tech founders to be careful about. “You don’t want to get into a bad marriage just because somebody wants to marry you,” he added.
Fellow panellist Mitch Debora, co-founder and CEO of Toronto-based Mosaic Manufacturing—which recently closed a $28-million CAD round to scale its 3D printing infrastructure—shared some insight into how this landscape has shifted.
“Hardware is so hard, and no one wants to talk to you—at least that’s what it felt like for a bit,” Debora said. “But I think the world is changing … it’s becoming clear that the world’s biggest problems are not going to be solved with software.”
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The COVID-19 pandemic revealed some of the challenges associated with reliance on global supply chains. Since 2020, bringing manufacturing back to the country, or re-shoring—including for semiconductors—has become a strategic priority for both Canada and the United States (US). Despite these efforts, Chow stressed that international collaboration remains important.
“While we want to bring more supply chain back here in Canada, it doesn’t diminish the need for us to continue to work with the global community,” Chow said. To this end, VentureLab has inked a memorandum of understanding with American semiconductor hub Hudson Valley FastFab to collaborate on advanced manufacturing, engineering, and workforce development.
Speaking on stage alongside Chow, Hudson Valley FastFab chair and CEO Dick Thurston echoed some of the VentureLab CEO’s advice. Thurston argued that Canada already has a strong base when it comes to semiconductor knowledge, development, and creation. “Draw upon the foundation that already exists,” he said. “And it’s a tremendous one.”
With the tariffs that US President-elect Donald Trump has promised to impose—which may extend to Canadian imports—Debora believes the time is now to invest in hard tech innovation.
“I think the North American ecosystem is going to really have to triple down quickly on how we do things differently here,” Debora said. “Let’s not copy what works around the world. Let’s use technology to do it better.”
Feature image courtesy VentureLab.