Investing in universities and the talent that is derived from them will have to be a central pillar of Canada’s innovation strategy.
What’s Waterloo’s secret sauce?
Whenever anyone seeks to emulate the University of Waterloo’s success in developing innovators, that question comes up.
The answer, according to Joel Blit (MASc ’99), an economics professor who studies innovation, is multilayered.
The University’s intellectual property policy, co-op programs that meld academics with practical experience for students and the commercialization programs are critical. There are also more than 45 entrepreneurship programs and supports, including the flagship incubator Velocity.
But Blit says it’s also about the special way that all these factors come together at Waterloo.
Waterloo’s core connections drive innovation
He notes that a number of universities have replicated one or more of the Waterloo advantages, such as the inventor-owned intellectual property policy or experiential learning programs. “But it’s how all of these things are put together at the core and how these things interact that creates something truly special,” he says.
Waterloo produces nearly twice as many tech founders as any other Canadian school and about 18.6 per cent of all the technology companies in Canada, according to a 2019 report from the Impact Centre at the University of Toronto. Waterloo’s historic strengths in mathematics, computer science and engineering are part of the reason Waterloo produces so many tech founders. OpenText, Clearpath Robotics, Intellijoint Surgical, Able Innovations, ApplyBoard, Arctic Wolf and Snapcommerce are just a few names on a list of more than 1,000 ventures, large and small, whose founders got their start in labs, classrooms and incubators at Waterloo.
Now, as the world emerges from the devastating COVID-19 pandemic, Blit says that Canada will need to focus on long-term growth, embracing the changes brought on by the fourth industrial revolution. Growth is the only way to ensure that Canadians can maintain a high standard of living and pay down the debt while maintaining social programs including education and health care.
Universities are a critical part of achieving that.
Universities raise per capita GDP
A study by Anna Valero and colleague John van Reenen from the London School of Economics and Political Science, examining a database of 15,000 universities across 78 countries for the period 1950 to 2010, found that doubling the number of universities in a region raises its future per capita GDP by four per cent. A recent Deloitte economic impact report estimated that in 2017/18, Waterloo’s operating expenditures alone contributed $1.52 billion to Canada’s GDP.
There are “many levers” that can be pulled to increase innovation in a country, from intellectual property reform and tax incentives to the intake of higher-skilled immigrants, Blit adds. But investing in universities and the talent that is derived from them “will for sure have to be a central pillar of our innovation strategy.”
Vast majority of founders have university degrees
Universities boost innovation by creating technology hubs, such as Silicon Valley or the Toronto-Waterloo corridor that generate technological advances and new companies, Blit says. “What we do know from history is that over the last 40 years, the demand for university graduates has gone up, as have relative wages.”
And despite the “dropout” stories in the technology world – such as Mark Zuckerberg, who quit Harvard in 2005 to focus on growing Facebook, or Bill Gates, who dropped out not once but twice from Harvard to focus on building Microsoft – the vast majority of company founders do have degrees.
Ilya Stebulaev, an economist at Stanford Business School who has done considerable research on startups, found that of 1,263 founders of 521 U.S. unicorns, fewer than five per cent were post-secondary school dropouts.
“Research does show that inventors of patents tend to be more highly educated than the average population and they disproportionately have university degrees,” Blit says. “They also, not surprisingly, tend to be educated in STEM (Science, Technology, Engineering and Math) fields.”
Research does show that inventors of patents tend to be more highly educated than the average population and they disproportionately have university degrees.