Poutine & Pitch Decks

Montreal is the Climate Tech City

Introducing Our New Series

We at Coral are believers in the value of highly specific tech centers. Walk down biotech row in Cambridge, Massachusetts, consider the list of lifesaving innovations produced in those few blocks, study the economic data from keeping so many graduates from the local Harvard & MIT campuses in greater Boston, and one starts to see how owning an industry can be tremendously beneficial for both the city, and those trying to build in the industry. Proximity creates serendipity, exited companies create the next crop of founders and senior executives to start businesses, all of the above incentivize local universities to create academic tracks and post-grad programs which feed directly into lucrative jobs, and around we go. 

In climate tech, we’ve yet to see a true geographic home for the industry. This makes sense; Climate is an incredibly broad category (anything from geospatial imaging to batteries to stormwater management, and so much else), and companies tend to start based on the legacy industries that they serve or disrupt. There are excellent SaaS companies providing decarbonization analysis to the oil & gas incumbents in Houston, because of course there are. Where else would you start it?

We’ve written that the climate industry is the great wealth creation opportunity of the 21st century, and stand by this today. In order to kickstart the economic flywheels and virtuous cycles to take the industry to those heights, we think it needs its own “San Francisco”. It needs a home, a default founding location, a place where all the smart builders are ready to gather and grow. Our next few pieces are about one of the best, and we think the most unexplored, cities to fill that role, and a detailed roadmap of how to get there. 

Before we dive in, a note that we want to see climate tech everywhere, and see ecosystem development as a profoundly positive-sum game. We hope the builders in Detroit / Raleigh / Miami / San Diego read this and think about how to apply the principles to their own hometowns. We’d love to help if they do. 

Enter Montreal

Montreal, QC, is one of the world’s great cities. It has a larger population than Boston with a 70% lower cost of living, seven excellent universities, a massive international airport, the best food scene outside of NYC or Paris, and is an easy trip to anywhere on the east coast of the United States. It’s also the single best candidate to become the worldwide home of climate technology. Let’s explore why, how, and what to do about it. 

Why

The climate city, as we’re calling it, needs a few characteristics; Large pools of capital, an educated population, high quality of life, time zone convenience, and simpatico industries. 

Montreal is home to aerospace companies (Bombardier, Pratt & Whitney), engineering (SNC Lavelin), AI (Facebook, Google, Samsung), numerous banks, forestry companies, and the world’s largest inland port. Climate companies are inherently multidisciplinary, heavy on software and mechanical / chemical engineering, and deeply concerned with food and forests. One could not design a better talent pool. 

How

We would like to live in a world in which good intentions, community activation, and new college graduates hammering on keyboards from their mother’s garages could create a tech center through sheer force of will. We don’t. 

Instead, the key determinant of ascendant tech hubs is simply the number of exited companies in the previous decade or so, roughly multiplied by the net dollar value of said liquidity events. Why? Exits tend to propagate downwards. Successful founders become angel investors and venture capitalists, VPs become founders, Directors become VPs. All have enough money in their pockets to work for cheap and get companies off the ground.

There is a way to shortcut this process without the long feedback loops of angel investment + bootstrapping. Steal some exits, specifically by attracting US-based climate companies to open offices in Montreal, staffed by local talent. We suggest two:

• Mast Reforestation, led by the excellently named Grant Canary, is a forestry-as-a-service company based in Seattle. They also have cool drones. Quebec, which has suffered from horrific wildfires over the past several summers, is a natural outpost for Mast and would benefit greatly from their services. 

• Remora is an innovative carbon-capture business that uses tailpipe mounted devices to pull CO2 away from combustion engines before it escapes into the sky. Montreal is a globally significant port and one of the centers of trucking in North America. We trust we don’t need to draw you a map. 

When these companies exit, which we anticipate that they will, and for extraordinary amounts of money, local talent will stay and build. 

Partnerships can and should be bidirectional. Remora is based in Detroit, a city which knows much about concrete. We see immense value in a simple lead-sharing partnership with Montreal-native Carbicrete, which we’re writing about in the next few weeks. 

Coral has deep-dived into a number of Montreal companies, and will write about three of them at length over the course of the series. We’re impressed and think they belong in the US market, both as a way to increase revenue, and to legitimize the quality of builders in the city. If Carbicrete was to open a sales office in, say Atlanta, with the promise of helping any interested employees emigrate to Canada after two years of service, we imagine a very high uptake to that offer.  

This covers the short term wins, if 5-10 years can be said to be short, but what about the long term? We’d love to see a talented local incubation studio, such as Innovitech, open a climate practice, financially backed by entering into a scouting arrangement with a large American Climate VC. Social Capital, you up?

It’s worth noting that this can be done fairly cheap on the part of the VCs. Montreal companies raised a total of $1.6bn in financing in 2022, which is less than a quarter of the $7.8bn deployed in greater Seattle in the same timeframe, per pitchbook. If deftly scouted by local pickers, we see a Montreal climate fund as the sort of asymmetric bet that makes VC careers. 

What next?

Our upcoming pieces are all about the creation of the climate city. We’ll look at a few talented builders already hard at work in Quebec, the value of expanding the Acela corridor further north, and companies we hope someone starts in Quebec. And now if you’ll excuse us, team Coral is off to argue over our favorite poutine recipes.

If you like this, check out our piece on the carbon credit market.