British Columbia

Vancouver cheaper than other cities to launch a tech company, says report

Report scoring tech talent in North America says Vancouver provides the best value for quality versus cost, citing the low Canadian dollar as a large factor.

Report scoring tech talent in North America says the strong U.S. dollar is factor in rankings

A new report says tech companies can save money by setting up in Vancouver, where wages and rental costs are lower than other major North American cities. (Hootsuite handout photo/Canadian Press)

Among 50 U.S. and Canadian markets, the cheapest place to start up a tech company is Vancouver, says a new report.

It costs about $24 million US a year to cover employee salaries and rent in Vancouver, says a report by CBRE, a commercial real estate firm. That's less than half the most expensive place cited; the San Francisco Bay area, which costs $57 million US, the report noted.

All figures in the report are in U.S. dollars.

The main reason for the lower prices is because the average salary of a tech worker in Metro Vancouver is $79,402. That's $34,000 to $44,000 less per year than similar jobs in Seattle and San Francisco, the cities measured with the highest wages.

CBRE Research Director, Colin Yasukochi said the lower start-up costs in Vancouver are due are part to the lower Canadian dollar, favourable immigration policies, and lower rental rates, compared to some major U.S. tech centres.

"I think there's a better supply demand balance in Canada with regard to the account workforce and the demand for it," said Yasukochi.

"Yes our salaries are lower, so that's attracting big anchor companies to come here, because A we've got quality talent, and B, it's a reasonable place to set up shop," said Allison Rutherford, Executive Director of HR Tech Group, which conducts a yearly salary survey of the B.C. tech industry.

A graph measuring labour quality versus cost for a software engineer landed Vancouver in the high-quality, low-cost area of cities sampled. (CBRE Research)

Healthy wage ecosystem

Nels Anderson, a game designer in Vancouver, said the lower Canadian wages may attract companies, but they also push away senior workers, encouraging a brain drain. 

"It's how markets work. The market pays what the market pays, and if nobody else in town is going to increase the wages ... then that's the offer you get here," said Anderson.

"As soon as you want to start a family here in Vancouver, it's like okay, can you do that on $30,000 to $40,000 a year less. When the cost of living here is basically the same as San Francisco, that's not really an option."

Game designer, Nels Anderson said many tech workers have left Vancouver because of the lower pay compared to other markets. (Olly Moss)

Both Yasukochi and Rutherford say the current conditions won't last. As Vancouver's tech sector and reputation grows, salaries will likely increase.

"I believe that as more and more companies discover the high quality of tech talent in Vancouver, then the relative value of the wages will start to go up," said Yasukochi.