Tech Recruiters Flock to Ontario

University of Waterloo has become a magnet for companies such as Google and Amazon

To find Silicon Valley's latest hunting ground for engineering talent, start at Stanford University -- then drive northeast for about 40 hours.

The University of Waterloo, in Waterloo, Ontario, has become a magnet for recruiters at Google parent Alphabet Inc., Electronic Arts Inc. and Amazon.com Inc., who seek the school's entrepreneurially minded engineering graduates.

Employers and school leaders say the students understand how to translate engineering projects into viable businesses.

The school's graduates are the second-most-frequently hired in Silicon Valley behind students from University of California, Berkeley, according to a 2015 report by Startup Compass Inc., which tracks small and midsize businesses.

American universities have poured money and resources into teaching entrepreneurship in recent years, with mixed results. Waterloo has intensified its focus on entrepreneurship over the past decade, and alumni include founders of the messaging app Kik and smartwatch maker Pebble and a co-founder of BlackBerry Ltd.

Waterloo students or alumni have consistently won spots in Y Combinator's elite Silicon Valley accelerator since 2009, according to the school.

Setting Waterloo apart is its cooperative learning model, which blends academic and practical experience. Roughly 20,000 students are placed with about 6,500 employers each year. Engineering students alternate academic terms with at least five four-month stints at companies.

Students are encouraged to work on their own startups during up to three co-op periods. An in-house incubator, called Velocity, and an affiliated dormitory for student entrepreneurs provides opportunities for funding, mentorship and collaboration, according to the school.

Canada's leaders have noticed the U.S. recruiting drive. In a recent speech at the U.S. Chamber of Commerce, Prime Minister Justin Trudeau noted Waterloo's startup successes, joking that U.S. firms "poach our best grads."

The university "clearly punches above its weight class in terms of number of startups relative to number of students," said Sam Altman, president of Y Combinator.

To be sure, students at top U.S. schools including Massachusetts Institute of Technology, Harvard University and Stanford are also in high demand among tech employers, and many startups are founded by those graduates as well.

BlackBerry, co-founded by Waterloo alumnus Mike Lazaridis, achieved global dominance from its Waterloo perch. The company has since shed thousands of jobs as its phones have lost market share.

But Google, mobile-payments firm Square Inc. and others have moved in, opening nearby offices in Waterloo to snag local tech talent.

Startup Compass values the local ecosystem at between US$2.8 billion and US$3.4 billion, and estimates the region currently hosts 1,100 startups.

Google's presence in the region has grown from four employees a decade ago to more than 400, about 60% of whom are Waterloo graduates. The company opened a new local office earlier this year that could accommodate 1,000.

Steven Woods, another local graduate, is based in Waterloo as the engineering director for Google Canada. In addition to hiring graduates, he said the tech giant occasionally approaches teams of founders, such as e-commerce startup PushLife, offering to acquire the startup so Google can bring a startup's talent and technology on board.

International Business Machines Corp. brings on more than 200 Waterloo co-op students and interns annually. Feridun Hamdullahpur, the university's president, said in a recent meeting that IBM executives urged the school to admit more students, and offered to "hire all of them."

Venture capitalists say their dollars go far in Waterloo, due to relatively low living costs coupled with government and university grants often available to students.

The university recently secured 2 million Canadian dollars (US$1.6 million) in venture funding for student startups from Spectrum 28, a Menlo Park, Calif., VC firm co-founded by Waterloo alumni.

Calvin Chu, a 2013 Waterloo engineering graduate, spent a co-op term at Apple Inc. in Cupertino, Calif., as a wireless-technology engineer. Mr. Chu said he turned down a full-time offer from the company, choosing instead to nurture his startup, Palette, which makes custom-designed computer accessories.

The school granted him C$35,000, and he received additional government funding. Palette closed its seed round last year. Apple declined to comment on Mr. Chu.

Kik founder Ted Livingston completed three co-op stints as an engineer at BlackBerry, where he said he "built a piece of software to replace myself" at work.

Mr. Livingston said his superiors at BlackBerry offered him a pick of co-op positions, and later, a full-time job after graduation. BlackBerry declined to comment.

Instead, Mr. Livingston spent a subsequent co-op period launching Kik, and never completed his degree, dropping out in 2008. The messaging platform was recently valued at about US$1 billion.

"There's no better time in your life to start a company," he said.