Plunging loonie may be a blessing in disguise for Canadian startups | Hacker News Reader

Plunging loonie may be a blessing in disguise for Canadian startups

kitchener.ctvnews.ca

19 pointskspaans13 comments

Forget "in disguise". It's awesome for most Canadian startups, period. The majority of sales for many, if not most, online businesses (and even many hardware startups) are going to be in the US, so you basically earn more while your costs remain the same.

I'm seeing nothing but benefits from my startup[0] due to the low loonie. We've seen more customers since the drop. Legalization is happening (sooner than anyone believes), and, while the government is talking down the revenue, all estimates point to over 100 billion in sales.

However, I'd disagree about funding. All the American VC's I've talked to are hesitant to join in before the end of prohibition. And now that the VC's are starting to get burnt by the unicorns, they're pulling out of everything that isn't a sure thing. And we aren't a sure thing yet. We can make money hand-over-fist, but good luck getting investment capital before Trudeau rubber-stamps legalization.

0. http://medicalcannab.is

I'm advising a company right now based on Toronto who is fundraising, and it is definitely easier for them. The CEO tells me that investors will literally say, "I get 50% more for every dollar I put in!".

It's totally true -- American investors love Canadian companies right now.

I appreciate that labour costs are lower in general in Canada, but as CAD falls and Canadian talent begins to look south of the border, won't everyone start to demand a commensurate increase in salary? Every Canadian programmer is a skip, a hop and a TN visa away from a USD$100k job. Taking less money to stay home in Canada was one thing with the dollar at parity, but all of a sudden the pay differential from the employee's perspective is pushing 100%. Canadian companies already want people worth USD$100k in the US to take CAD$80k in Vancouver or Toronto. That's now just USD$55k.

The biggest struggle I've heard from a lot of Canadian companies is the difficulty of holding onto talent given the proximity of the US and the fact that Canadians are blessed with a far simpler visa process than other foreigners. Doesn't that effect become even worse as CAD drops relative to USD if employers in Canada don't make up the difference?

It also depends on the cost of living. Your rent doesn't change much when the Canadian dollar goes down. Your medical care is still free, some utility bills stay the same. Buying things are more expensive now although.

For example, that $2000/mo USD rent is now $2900/mo CAD instead of the $2000 CAD it used to be. Your $900/mo rent in Canada is now $600/mo USD!

So you have to look at the total profit margin to make more sense of it. It's definitely a great time to start paying your Canadian student loans and to work in the USA! It's also really good to work remotely and still live in Canada.

> It's also really good to work remotely and still live in Canada.

You'd think, but every bigcorp I've suggested this arrangement to says it would want to put me on the payroll of their Canadian subcorporation, paid out in CAD at a 1:1 conversion of the USD rate. Kind of a lousy bargain, all told (though one I'm currently taking anyway from IBM.)

Yup they will all do that. The key is to not work with bigcorp.

At the current exchange and the salaries that are higher in the US, you can nearly double your salary. Lets says you can have 100k USD, exchange to Canadian gives you 145k CAD. In a city like Montreal where you can have a maximum of 85k CAD in most places (yes I know some pay more, but it's still not that common), this make a huge different.

Best is to work remotely, but if you move across for a couple of years, when you come back, this is a new house paid cash.

I can understand it's hard for people with family, but otherwise I really don't understand why young engineer stay here.

Agreed, it's almost universally better for young people. With families I would argue the US has higher cost of living though (education costs mostly).

What are some good resources to find this particular type of setup? i.e., work in Canada for a US company without actually having to latch on to a subsidiary.

A smaller startup too small to have a subsidiary. Or to just do it as a contractor or as part of general negotiations.

won't everyone start to demand a commensurate increase in salary

I'm sure it will drive salaries up, but the falling CAD means that (in USD terms) Canada is becoming a cheaper place to live. There's no point earning $50k more by moving to the valley if your cost of living will increase by $75k.

I have to say, I love this exchange rate. But I have to keep reminding myself that the Canadian dollar will be going back up eventually so I can't just sit back and enjoy the boost in profits.

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