Are Startups the New Blue Chip?

Not too long ago it was the giants, such as IBM and HP, that ruled the tech world – but that might all be changing. There is a new driving force in Silicon Valley – the tech startup. Startups have taken the tech world by storm to become the new darling of investors. In fact, several startups that have yet to reach their tenth birthday are already valued at tens of billions of dollars.

Leading the charge in cultivating new startup tech talent is a young company (half incubator, half venture capitalist) called Y Combinator (YC). Founded in 2005, YC has already taken on over 1,000 startups, and although roughly half of these have failed, some, including the juggernaut AirBnB, are now valued at over $1 billion. The Economist reports that the combined value of YC’s projects is close to $65 billion, with the incubator entitled to approximately $1-$2 billion of that number.

However, until these tech startups go public (as Facebook and LinkedIn have), there is no guarantee that their estimated value is any indication of what investors will receive. AirBnB, for instance, is considered to be worth a colossal $25.5 billion, but this valuation could change drastically should the company decide to go public. For those who remember the tech crash of 2000, the memory of tech firms that just couldn’t deliver profits is still fresh. However, a great deal has changed in the last 15 years and the Internet has evolved from simply a novelty for those who are technically inclined to a necessity for people from all walks of life. What tech startups offer that perhaps the incumbent tech giants don’t, especially for eager computer programmers straight out of school, is the promise of innovation. While large scale and bureaucracy tend to work against innovation and creativity, the very premise of a tech startup is designed to foster those exact things. Many of the best and brightest that would have taken their Harvard degrees to established firms several years ago, are now opting to delve headfirst into the startup world, looking for excitement, challenges, and perhaps, being on the ground floor of the next Google. Given the rapid period in which some tech startups can rise into ‘Unicorns’ (a Silicon Valley term for startups valued at over $1 billion), the opportunities for a young programmer or business person with drive and a little imagination, are endless.

While many would-be tech entrepreneurs look to Silicon Valley for their start, the nuances of the Internet allow for the creation of tech startups any and every where there is a need. Simply Laundry is a great example of a tech startup that developed in response to a local need. In speaking with friends and colleagues, the founders discovered that what busy Torontonians truly needed was more time, and tedious – yet necessary – chores such as laundry and dry cleaning, were eating into their free time. Leveraging their expertise in technology, the founders came up with an ingenious platform that allows Torontonians to outsource their laundry and dry cleaning needs with the familiar click of a mouse. The result is a thriving and growing tech startup, right in Toronto’s own backyard.

Know of any other innovative tech startups calling Toronto home? Leave a comment and tell us about them!