How St. John’s has become an unlikely hub for tech startups

Some investors were skeptical that Adam Keating and Jeremy Andrews could build a successful tech company in St. John’s.

Newfoundland, affectionately referred to as “the rock,” is far from Silicon Valley’s Sand Hill Road, the California thoroughfare densely populated by the offices of venture capital heavyweights such as Sequoia Capital and Andreessen Horowitz.

In 2019, an investor told Mr. Keating he’d finance their engineering software company, CoLab AI Inc., but only if they agreed to relocate to the Valley.

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“You cannot build a billion-dollar company in St. John’s,” the investor told him, Mr. Keating recalls. “I straight up said to the guy, ‘There is a billion-dollar company in St. John’s. I just can’t tell you who it is.’”

Several weeks later, a St. John’s-based financial crime-fighting technology company then called Verafin Inc. announced a $515-million financing deal that valued the firm at close to $1-billion.

Today, St. John’s is home to a thriving ecosystem of tech startups, as graduates from Memorial University eschew the Valley in favour of Newfoundland’s rugged coastlines, laid-back lifestyle and lower cost of living. Newfoundland and Labrador tech companies raised close to $300-million last year, comprising 78 per cent of Atlantic Canadian startup funding, according to data firm Entrevestor, despite making up less than a quarter of the region’s population.

Some credit Verafin with emboldening a new generation of founders in the province who are bucking a broader trend of Canadian entrepreneurs leaving for foreign tech hubs. The company proved that with the right ingredients, a billion-dollar tech company can be built anywhere, even a remote island in the North Atlantic Ocean.

“It took those guys doing that to make me believe that I can do that,” Mr. Keating said.

St. John’s may seem like an unlikely place for a tech boom. Originally a fishing outpost, Newfoundland feels cut off from the rest of the world, and in a way, it is. The fog that often shrouds the island can get so thick that it brings air travel to a halt.

But a visit to St. John’s yields plenty of evidence that tech entrepreneurs have made a home here.

At Bannerman Brewing Co., a firehall converted into a brewery and cafe a block from Water Street in the heart of the city, locals sip $5 lattes and tap away on their laptops beneath soaring ceilings and exposed beams. The North Head trail, a 1.7-kilometre loop characterized by jagged rocks plunging dramatically into the ocean, is populated by Patagonia-clad professionals hurriedly getting their steps in while speaking into their AirPods. And the Co. Innovation Centre, a tech hub housed in a former Rona store near the airport, has the relaxed-but-focused vibe of a trendy co-working space.

“I don’t think that old adage holds, that you have to relocate to Silicon Valley,” said Chris Gardner, chief strategy officer at Spellbook. The legal AI software provider, which was founded in St. John’s, raised US$50-million last year in a financing led by Silicon Valley’s Khosla Ventures.

“This is part of the opportunity for Newfoundland and Canada. People used to say, ‘If the VCs can’t come to your office that afternoon, they’re not going to invest in you.’ That’s just not the case anymore,” Mr. Gardner said.

Case in point: Mr. Keating’s CoLab raised US$72-million recently from a group of investors that includes prominent American firms such as New York-headquartered Insight Partners and Y Combinator, the San Francisco startup accelerator known for helping launch companies such as Airbnb, DoorDash and Stripe.

The province’s homegrown tech firms run the gamut from marine technology company Kraken Robotics to smart thermostat maker Mysa to Bluedrop ISM, an e-learning company born out of a class project at Memorial University.

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“For an economy that’s very, very resource-focused, this is a different economic lever that’s really starting to power the growth of the Newfoundland economy,” said Chris Moyer, founding partner of St. John’s-based Pelorus Venture Capital Ltd.

Newfoundland’s success at retaining tech talent defies the trend of a nationwide exodus of founders documented in a recent report. The study, which was published by Toronto venture-capital firm Leaders Fund last year, found that only 32.4 per cent of what it defined as “high-potential” Canadian-led startups launched in 2024 were headquartered in the country, a figure that had exceeded 67 per cent from 2015 to 2019. (The study looked at startups that have raised at least US$1-million, with most of their senior leaders educated in Canada.)

Tackling the longstanding brain drain – the outflow of top Canadian talent to larger markets, particularly the United States – has become a high priority as Canada looks to grow its economy amid a trade war with its increasingly volatile southern neighbour.

Last year, Ottawa announced an ambitious plan aimed at poaching academic talent from the U.S. as the Trump administration slashes federal research funding: a $1.7-billion fund to create 100 research chair positions across fields such as climate science, food and water security, and defence technologies. But in order to attract and retain talent, Canadian communities will need to think holistically about what it takes for entrepreneurship to thrive.

Mr. Moyer believes that Newfoundland’s economic diversification holds an important lesson for Canada: “We’re always going to be a country of resources, because we have them, but we shouldn’t be reliant on them.”

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Canada’s newest province – Newfoundland and Labrador joined Confederation in 1949 – was a seasonal camp for European cod fishers before it became a permanent settlement. The extraction of resources, from minerals to fish to oil and gas, accounts for roughly a third of the province’s GDP.

Resource-dependent economies tend to be cyclical, and for much of the province’s history, many Newfoundlanders have left the island in pursuit of opportunities elsewhere.

The cod moratorium implemented by the federal government in 1992 triggered an exodus. Decades of commercial overfishing had depleted the cod population, and the ban aimed to allow the area’s signature fish stock to recover. But it also left tens of thousands of people unemployed virtually overnight, sending shockwaves through the local economy. The population of Newfoundland and Labrador contracted from 580,109 in 1992 to 509,047 in 2007, even as Canada’s overall population grew.

Thankfully, Newfoundland had more than just fish. It also had barrels and barrels of oil, although they were difficult to access on account of being trapped beneath the ocean floor.

In 1979, Chevron and its partners discovered the massive Hibernia oilfield just over 300 kilometres off the coast of St. John’s. Building a gravity-based offshore platform for extracting the oil was an ambitious undertaking, as it needed to be able to withstand the impact of roaming icebergs. When the project finally started producing oil in November, 1997, it kick-started the province’s offshore energy industry.

Infrastructure projects like Hibernia can result in significant employment opportunities. Equinor’s Bay du Nord project, a proposed deep-water oil development about 500 km northeast of St. John’s, promises to create thousands of jobs if it moves forward.

However, many of those jobs are temporary. It took thousands of workers to build Hibernia, but as of March 31, the number of people employed by the project – which, contrary to expectations, continues to produce oil after more than two decades – had dwindled to just over 1,000.

The development of Newfoundland’s offshore oil and gas sector created a talent pipeline to Alberta, and over the years many Newfoundlanders have moved to Calgary to work in the oilsands. Others were lured to Ontario’s growing tech sector during the dot-com boom of the late 1990s.

As the growth of the internet contributed to globalization, an opportunity arose for Newfoundland’s economy to diversify away from natural resources and infrastructure projects, and towards something less cyclical and more enduring – tech.

Verafin was “ground zero” for the province’s technology boom, says Steve Follett, CEO of St. John’s-based subsea management software company Enaimco.

“They created the ecosystem that we’re all feeding off now,” Mr. Follett said. “Half my people are from Verafin.”

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Verafin was founded in 2003 by three engineering students from Memorial University: Jamie King, Brendan Brothers and Raymond Pretty. Originally, the three co-founders had set out to build AI software allowing mining robots to identify patterns in rock formations that would help them navigate dangerous environments. Then, an early investor told them the pattern-recognition technology they were working with could also help banks solve a problem: detecting criminal activity amid a global crackdown on money laundering.

“That was the pivot that they made at the time,” said Stephanie Champion, executive vice-president and head of what is now called Nasdaq Verafin.

Verafin’s first customer was the Newfoundland and Labrador Credit Union. The partnership gave Verafin a better understanding of the problems that credit unions faced in trying to combat financial crime.

“Once we solved those problems really well for credit unions in Canada, we thought, it’s a really similar problem set that credit unions in the U.S. are trying to solve. So we expanded into credit unions in the U.S.,” Ms. Champion explained.

Next, Verafin moved into serving regional banks. Eventually, it scaled all the way up to serving the largest G-SIBs, or Global Systemically Important Banks, in the world, despite being headquartered far from every global financial centre.

The $515-million transaction that Verafin announced in 2019 was, at the time, the largest venture funding deal in Canadian history. A year later, in late 2020, Verafin struck a deal to be acquired by Nasdaq Inc. for US$2.75-billion. It was, and has remained, one of the largest exits by a Canadian tech company of the past 25 years.

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The acquisition has helped the financial crime management company grow, benefiting from Nasdaq’s trusted brand and its relationships with enterprise banks.

Today, Nasdaq Verafin employs more than 900 people in St. John’s – it recently opened a second office in the city, a modern, airy space with cream-coloured wood finishings and red accents – has more than 2,800 financial institutions as clients and is expanding into Europe. Its revenue has more than doubled since the acquisition, and it’s added 22 more enterprise banks as clients, Ms. Champion said.

“We continue to build, we continue to grow, we continue to hire Newfoundlanders and fit out new floors in our buildings, and I think that’s a really incredible part of the story – that post-acquisition we continue to thrive here in Newfoundland,” she said.

Its success has trickled down to the rest of the province’s tech sector, serving as both a proof of concept and a talent pipeline.

The technology sector contributed $1.8-billion to Newfoundland and Labrador’s GDP in 2023, up from $1.55-billion in 2016, according to a report commissioned by industry association techNL and produced by The Dais, a public policy and leadership think tank at Toronto Metropolitan University. Nearly 10,000 people were employed by the tech sector as per the 2021 census, earning an average income of $85,030.

Florian Villaumé, who recently completed his term as techNL’s CEO, said CoLab and Spellbook are on track to become unicorns. (A unicorn is a private technology company valued at US$1-billion or more.)

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Both companies are growing rapidly. CoLab was valued at about US$500-million when it raised financing last year, and the company is on track to top US$100-million in annual revenues within the next couple of years. Spellbook is expected to seek fresh capital in the near term, and could top the US$100-million revenue mark as soon as this year. It was valued at about US$350-million during last year’s Khosla-led US$50-million round.

“We are on track to have three unicorns in a province of 550,000 people,” Mr. Villaumé said. That would put Newfoundland behind only Estonia on a per capita basis, he said.

“We are kind of the outliers. It shouldn’t happen here, but we are killing it, on many dimensions.”

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There isn’t one single ingredient that has made Newfoundland such fertile ground for entrepreneurship to flourish. Rather, the province’s tech sector has benefited from a confluence of factors.

One of them is a growing trend towards remote work, accelerated by the COVID-19 pandemic, which has normalized the concept of starting a business anywhere and made it easier for startups to hire outside their home markets.

Entrepreneurs in St. John’s are also acutely aware of the fact that because Newfoundland and Labrador is such a small place, they’ll have to sell to international markets in order to succeed – a dynamic that has similarly driven prosperous but small tech ecosystems in places such as Israel and Estonia. “A lot of companies start globally from the get-go, and that helps them to scale quicker,” Mr. Villaumé said.

There has also been good homegrown capital support. Local investors have taken a key role in many of the early-stage financings that have launched Newfoundland’s tech stars, with two firms standing out: Killick Capital and Pelorus Capital.

They have very different origins. Killick Capital was founded by Mark Dobbin, son of the late legendary entrepreneur Craig Dobbin. Mark worked for his father’s CHC Helicopter Corp., leaving to become CEO of Vector Aerospace from 1998 to 2003, and started Killick a year later.

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Mr. Dobbin is a leading establishment figure in Newfoundland and has invested in an array of ventures in the province through Killick, including aerospace businesses, a brewery, an outfitters lodge and a company that has developed an incendiary launching device designed to ignite controlled forest fires from a helicopter. But its most prolific portfolio is in technology. Killick was an early investor in Verafin and now lists stakes in 18 tech companies on its website, including CoLab, Spellbook, Avalon Holographics, Mysa and Sequence Bio.

Pelorus, meanwhile, was created at the behest of a provincial government bureaucrat who encouraged the principals of the labour-sponsored GrowthWorks Atlantic Venture Fund – including Mr. Moyer – to create a new fund, as their employer was beginning to liquidate its portfolio.

Expectations weren’t high when the province committed $10-million in 2014 to a new venture capital fund managed by Pelorus to back homegrown tech startups. Business Development Bank of Canada and just nine other investors put up a further $4-million combined, despite the lure of a 30-per-cent investment tax credit. One of them, Shopify angel investor, philanthropist and part-time Newfoundland resident John Phillips, saw his $1-milion investment as more of a contribution to a social ecosystem to help “a small out-of-the-way-place,” he told the Globe earlier this year. He didn’t expect to make any money.

But that little, $14-million fund has already repaid investors $21-million, or $1.50 for every dollar they put in, and was sitting on a further $40-million-plus worth of unrealized investments as of January – an impressive performance for a Canadian VC fund.

Pelorus’s second $26-million fund, anchored with $13-million from the province, launched at the 2021 market peak and its performance is in the top quartile of peers. Pelorus is now looking to raise $50-million for its third fund, and has already secured $20-million of that, including $15-million from the province and $5-million from Mr. Phillips.

Early-stage financing is vital for startups. In order to attract venture capitalists, a company must have some demonstrated traction, said Spellbook’s Mr. Gardner, such as prominent customers or a rapid rate of growth.

“There needs to be something world-class about what you’re doing or building to attract that level of investment,” he said. “Without Pelorus and Killick, you might not even get that opportunity, so they’re a critical piece of the whole ecosystem here.”

Memorial University, a highly ranked school with a well-regarded engineering program, also plays an important role. Some years, Verafin has hired virtually the entire cohort of computer science graduates from Memorial, Ms. Champion said.

Many of those who choose to stay in Newfoundland – or return after some time away – emphasize the appeal of the lifestyle: short commutes; fresh, salty air; easy access to world-class hiking trails; and the feeling of community that comes with living in a smaller place. On the other side of the country, Vancouver has similarly benefited from the draw of its natural beauty, which helped the city, for example, become a global hotspot for the development of therapeutic antibodies.

For a time, Mr. Keating lived in Torbay, a short drive from CoLab’s office in St. John’s, and could watch icebergs and whales float by from his backyard. “It’s kind of hard to get that anywhere else,” he said.

And house prices, while rising, are still relatively affordable compared to cities like Vancouver and Toronto. The average price of a home in St. John’s was $423,600 in June, significantly below the national average of $696,078, according to the Canadian Real Estate Association.

But there are still challenges for the industry to overcome if it is to achieve techNL’s ambitious target of becoming the leading contributor to Newfoundland and Labrador’s economy.

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The lure of Silicon Valley can be hard to resist.

“The Teslas and the Amazons, they’re recruiting right out of our university, which is awesome,” said Ed Martin, president and CEO of Genesis, Memorial’s business incubator. (Verafin is a Genesis alumnus.)

“It’s hard to argue with moving to the Valley with a bunch of your friends from school, getting tremendous salaries, working in some of the biggest, most innovative companies in the world,” he added.

For homegrown companies, that can make hiring difficult. It’s tough to compete on compensation, said Mr. Gardner, especially when factoring in the stronger U.S. dollar.

The weather can also be a deterrent for some. Newfoundland is cold, windy and damp, and flying in and out of the island is tricky, on account of both the fog and the lack of direct flights to business hubs such as San Francisco, London and New York.

“People survived here on grit,” Mr. Gardner said. “People who want to be here, they really want to be here, because it’s not easy to live on a rock in the middle of the ocean.”

During the pandemic, a well-documented phenomenon saw some city dwellers cash out on the appreciation of their homes and move to smaller cities or rural areas. Some of those people came to Newfoundland; not all of them stayed.

“I could tell right away when I met people if they were going to like it here after a year,” said Robert Decker, a St. John’s-based realtor with the Moore Decker Dunn team at Remax.

Although homes are still relatively affordable, supply is limited, Mr. Decker said. There are few large developments, new construction on the island is extremely expensive and the province has experienced significant immigration in recent years. After hitting a low point in 2007, the population of Newfoundland and Labrador rose to nearly 550,000 in 2025, according to Statistics Canada.

Some people will always be lured away by the Valley, where some of the world’s most innovative companies are based. “If you want to go work at SpaceX, we can’t give you the equivalent,” said Mr. Gardner. “There’s probably nothing we can do that’s going to prevent that type of brain drain.”

One of the things Mr. Keating enjoyed during his stints in the Bay Area was interacting with people pursuing “wildly ambitious” projects. “When you’re around people like that all the time, it levels you up,” he said.

The hope is that some of those graduates will eventually return, as Mr. Keating did, bringing their newfound wisdom with them. Many of Mr. Martin’s friends from engineering school secured jobs in oil and gas and left the province; almost all of them have returned to raise their families.

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When Mr. Follett of Enaimco returned to Newfoundland after years working in offshore oil and gas in Australia and other places, he felt that something was missing from St. John’s – a place for people to convene over the highest quality beer and coffee. He built Bannerman Brewery to fill that gap, and it became a hub. He’s proud of that.

“This is the type of place that I would go to when I lived in Australia,” Mr. Follett said.

Return migration might help address one of the sector’s biggest challenges – a limited pool of more experienced talent. St. John’s has ample entry-level tech talent, says Mr. Villaumé, but experienced talent is needed to drive the sector’s growth, and to mentor newer staff. That could help with the brain drain, he said: “If there are more mentors, more people with experience, it’s also how you attract people and retain people in companies.”

One of the things that makes Newfoundland and Labrador unique is the degree to which its successful founders give back to the community, Mr. Martin said. Earlier this year, he reached out to 10 founders to see if they would participate in a community event about building with AI that Genesis was hosting. All 10 said yes.

Some successful founders are giving back financially, too. Mr. Keating made his first angel investments this year, and, despite a demanding work schedule, chairs the board of the Student Design Hub, a Memorial initiative for students competing in international competitions like the one that helped launch Mr. Keating’s career. (In 2017, Mr. Keating was part of a team of Memorial engineering students that finished second in SpaceX’s hyperloop competition, in which students designed and built sub-scale transport vehicles and raced them through a test track.)

There’s a culture of collaboration in the province that Mr. Martin attributes partly to the fact that Newfoundland is a remote island. “I think there’s this mentality of, we’re in this together and we want to see Newfoundland really succeed on this bigger scale,” he said.

Mr. Martin doesn’t believe that’s replicable in larger cities, although they may do other things really well.

“We’ve got a thing that’s really kind of our own here, I think, in the way everyone sort of supports each other and cheers each other on,” he said.

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