Waterloo Tech Highlights for October 2026
Our goal is to provide you with a monthly primer on significant news events from private Waterloo-based technology companies in 5 minutes or less.
Equator Studios will turn a profit this year. Their LiDAR and GIS platform helps engineers map and assess sites.
Hive announced a US$27M secondary from Frontier Growth Equity to buy out an early ~$4M investor.
ConeLabs has been acquired by Consor. Financial terms weren’t disclosed.
Page was acquired by Clio. The entire 12-person team has already joined the new parent. Financial terms weren’t disclosed.
ApplyBoard saw their valuation fall by 95% from a $4B peak with 2/3 of that decline in 2026.
Vena Medical secured a clinical publication focused on how outcomes would change if you could see inside a carotid artery. They also had a conference presentation showing what they enable. Video here. If you watch one minute of it start at the 4:00 mark.
ENVGO has announced a deal (MOU) with Open Ocean to help deliver an autonomous maritime defence solution.
Intellijoint received regulatory approval from Brazil for surgeons there to use their VIEW product.
RideCo dropped their appeal of their patent infringement case against Via Transportation. Via announced that the parties had reached a confidential settlement.
Chris’ Thoughts
Do Canadian companies undervalue great software developers? I think we do and here’s why.
First, the Scientific Research & Experimental Development (SR&ED or more often SRED) tax credit remains one of the best gifts that our tax system provides. A software developer working at a Canadian company doing qualified R&D work who makes $100k per year will cost the company about $121k after payroll taxes and benefits. SRED refunds about $62k of that so the net cost of that employee is about $59k. That same worker in California making the same salary (US$71k) costs their employer $143k after payroll taxes and health insurance, or about 2.4 times as much.
American technology companies pay considerably more for software developers than Canadian ones even before accounting for SRED. Median US salaries are about 2x higher and 90th percentile salaries are 2.4x higher for Americans ($547k versus $230k). Assuming both 90th percentile engineers are equally talented, a California employer will pay over 5 times as much for their employee as the Ontario employer ($624k vs $116k) each year. That’s a staggering advantage for Canada.
It’s wild that on a cost basis an Ontario company can hire 24 median salary engineers to equal the overall cost of three 90th percentile California developers. So why don’t Canadian enterprise software companies out-compete their American rivals given this incredible cost advantage?
That’s a genuine question, and one that we should publicly debate and fix. As with most things, the answer is likely multi-faceted but here’s a component that I think we tend to overlook:
Americans pay for productivity. Canadians tend to hire more bodies because too many of our incentive programs (other than SRED) revolve around hiring headcount instead of building productive capacity.
In the pre-AI world, my model of the productive value of a developer involved grading developers from 1 to 10, then raising that grade to the power of 2.5. For example: a 3/10 dev is worth 3^2.5 = 16, and 9 is worth 243, or about 15x more.
In the age of AI tools that exponent increases to 3.5 because great talent becomes even better. While a 3/10 engineer now has 47 points of value, the 9/10 one is worth 2187 points or 47x more. [Extra credit: There’s probably a refinement to make where people with a score less than 4 subtract value from a good dev team that I’m not accounting for. Larger teams are inherently less efficient than smaller ones – see Brooks’s Law.] California companies recognize the power law of talent and lean into it, gobbling up as many 10s as possible, meaning they can employ three 9/10 engineers who will out-build an Ontario team of ten average 5/10 developers.
The path to victory requires leaning into excellence, so Americans do that, and I’d argue still extract better value when paying some developers over $1M per year. I wish more policymakers and business owners understood this impact for Canada’s long-term competitiveness.
I’m seeing signs of improvement with many of our portfolio companies shrinking their dev teams as they increase the per-capita talent. I also remain thankful that our SRED program doesn’t punish companies for excellence or encourage them to just hire bodies. After SRED, three top-decile engineers cost an Ontario company $350k a year, versus $1.87M in California. I’m hoping more Canadians realize this arbitrage opportunity.
[Caveats and acknowledgments: All amounts in $CAD. Not all software development is SRED eligible, reducing the differential. Yes, Canadian companies also lose to Americans on capital and go-to-market, not just engineering. SRED only helps engineering. Salary numbers come from Levels.fyi and reflect total compensation; other sources largely corroborate these numbers. Ontario tax rates are used and other provinces will vary, but not by much. The same goes for California vs. other US states. Pay comparison includes stock which inflates the American numbers.]
Waterloo Tech Highlights is a communication initiative run by a group of experienced investors and strategists who would like to receive and share real news about the vibrant Waterloo, Ontario tech community. Everything here is written by a human. By day we run Veramito.
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