Toronto Reigns as Canada’s Proptech Capital — Thanks to the U.S.

Like any city with a successful and growing technology sector, Toronto has taken advantage of a flurry of factors to become home to numerous proptech startups.

Talk to Toronto entrepreneurs and investors, and they agree that homegrown tech talent, being located in the nation’s financial and real estate capital, and the city’s Proptech Collective, a networking organization for startups, are all major factors in creating a vibrant ecosystem for the sector.

The greater Toronto area boasts 45 percent of Canada’s proptech startups. Commercial and residential tech firms each represent 43 percent of the Toronto market, with the remaining 14 percent in construction. Early-stage startups make up 70 percent of the market, with 15 percent in Series A, 10 percent in Series B and 5 percent having exited, according to Stephanie Wood, vice president at Toronto-based early-stage proptech venture capital firm Alate Partners. Wood is also the marketing and communications lead at the Proptech Collective. 

The young industry has seen 40 percent of startups founded in the last five years and 75 percent over the last decade.

“Toronto is definitely the leading area in Canada for proptech,” said Wood. “It’s very much the hub, as well as the financial center of Canada. And it’s home to a lot of the largest real estate companies across the country — even some of the global players, like Brookfield — and a lot of the pensions that invest heavily are based here in Toronto. Also the sheer population size.”

Wood noted that the Canadian market is obviously not the same size as the much bigger U.S. one, but pointed to statistics in the Proptech Collective’s fourth annual “Proptech in Canada” report to illustrate Toronto’s standing in the country. Among its strengths: the highest density of both talent and customers.

Founded in 2018, Alate Partners has been active in funding Toronto-based proptech startups such as Doormat, a residential real estate transactions platform aimed at simplifying the legal components of home purchases, sales and refinances; Mave, an AI-powered platform that uses market data and automation to streamline workflows for real estate professionals; investment analysis tool Altrio; VendorPM, a procurement platform for real estate companies; and Promise Robotics, an AI, cloud-based industrial platform for robotic construction and assembly that uses robots employed in auto manufacturing to build homes.

Alate Partners and other investors in Toronto proptech helped fund VendorPM with a $20 million Series A round in August 2022, said Emiel Bril, co-founder and CEO at VendorPM.

“I think there’s a genuine desire from the commercial real estate ecosystem and the proptech ecosystem to support one another and see Canadian companies succeed,” said Bril, a Toronto native whose company was a founding member of the Proptech Collective. “Historically, all the big real estate or proptech players have come out of the U.S.

“And, so, you have a lot of these Canadian firms, which are incredible, amazing real estate firms in Canada, using U.S. solutions. I think they want to see more of those born and bred in Canada. So, while Canadian players might be a little bit slower to act or a little bit slower to move than their U.S. counterparts, they are very supportive of proptech in Canada.”

Proptech growth in Toronto has been helped greatly by investors and nonprofits like the Proptech Collective, said Bril. “It’s very possible that without these associations or organizations, that the proptech ecosystem in Canada may be growing. But, candidly, there was no platform for us to all come together, collaborate and to know one another. And so it becomes real. You believe it when you see it. And you get to see it as a function of these groups.”

Like most Canada-based proptech companies, VendorPM wants to grow beyond its geographic borders but is wary of headwinds from possible interest rate hikes as well as the Trump administration’s shifting tariff positions.

“I think that for some of the macroeconomic and macro-political sort of reasons, things are going to get a little bit choppy,” Bril mused. “Especially because in the technology business, we look to grow in the U.S., whether we’re based in Canada or not. That’s our neighbor and a big market for us to grow in. I urge buyers to look at the best solution for their business that is going to save them the most amount of money, make them the most amount of money or make them the most efficient, and not to necessarily look at where companies are based, especially considering there are no tariffs on technology as it stands today. 

“Software does not know boundaries. We should continue to look at what is going to be the best outcomes for our businesses, not where those businesses are headquartered,” Brill said.

The concentration of intellectual talent in the Toronto area is a major factor in the development of Leni, an AI-powered platform for institutional multifamily owners and managers, said co-founder and CEO Arunabh Dastidar.

The University of Toronto and the University of Waterloo are but two nearby seedbeds of technological talent, with the former boasting world-class scientist Geoffrey Hinton, a winner of the 2024 Nobel Prize in physics known for his work on artificial neural networks, a reputation that has earned him the nickname “Godfather of AI.”

Leni draws from other AI research institutions for its talents as well.

“We are part of the FastLane program at the Vector Institute for Artificial Intelligence,” Dastidar said of the independent, not-for-profit corporation dedicated to AI research and co-founded by Hinton. The FastLane program has helped more than 250 Canadian startups to accelerate their AI commercialization development. “We hire some of the students from that set of Ph.D.s and master’s students, which helps us build all our cutting-edge AI technologies.”

Another major factor in Toronto’s proptech growth is its housing crisis, which involves high prices and increasing demand, much of the latter fueled by immigration, said Dastidar.

“Toronto is probably one of the top five cities for investment on the real estate side of things, as well as being one of the most expensive real estate cities,” he said.

Scott Kaplanis, a partner at Toronto-based Groundbreak Ventures, a VC firm focused on proptech, contech and home technologies, agreed that Canada’s housing crisis is a big driver in demand for such technology.

“We’ve been the most active funder in Canada, and are currently working with the federal government on a big new initiative: the Centre for Housing Innovation,” Kaplanis said in an email. “It will be a hub to convene all industry stakeholders interested in embracing innovation across the housing and construction supply chain. There will be a free accelerator focused on supporting entrepreneurs and scale-ups, and a ‘skill house’ focused on training and educating new and existing talent. If we’re going to tackle Canada’s housing crisis, it’s going to come through productivity gains and a willingness to embrace technology.”

Even Toronto-based proptech companies with native founders who rave about the area’s advantages realize that their greatest market advantage can be found south of the border, said Terry Wang, founder and CEO at ReLease, an insurance technology startup that gives renters the option to leave their lease at any time for any reason.

“Our team is Toronto-based, but our market is actually down in the States,” said Wang,  who, although not a native, grew up in the Toronto area. “We’ve actually raised all our money down in the States. A good part of why we love Toronto is that no other city in Canada is actually as well connected from a U.S. perspective. It is tremendously easy to go from Toronto to anywhere we need to get to in the States, both on the West and East coasts.

“From a talent perspective, when it comes to proptech specifically, I think it’s hard to be in proptech unless you are around a vivid ecosystem of developers, property management companies, owners and financiers, and folks who can really contribute to the industry. Without that kind of melting pot, it’s hard for individuals to come up with great ideas and find great talent, which is needed to build. You see naturally that it happens more in the big hubs where there is more real estate activity.”

In a similar vein, Tim Ray, co-founder and CEO at Toronto-based Verifast, a verification as a service platform that specializes in screening tenants for multifamily owners, is a Toronto native, as are his partners. Although they have clients in Canada, they are finding their best business opportunities in the U.S.

“Obviously, there’s lots of real estate companies in Toronto that have large portfolios in the U.S. as well,” said Ray. “One of our largest clients is Tricon Residential, which is one of the top five single-family residential REITs. We do all the identity, income and fraud prevention within their tech stack. They’re headquartered in Toronto, but 90 percent of their portfolio is in the U.S.”

Canada can be more conservative in adopting proptech compared to the U.S., so recognizing the advantages of the larger market is key to success for Canadian startups, said Ray. 

“I think there’s just a lot of Canadian technology entrepreneurs who see a combination of being more open to new ideas faster, the exchange rate obviously is nice, as well as the size of the market,” Ray said. “Not too many technology companies will become a really large going concern if they just focus on Canada.”

Philip Russo can be reached at prusso@commercialobserver.com.