A new report has pitted Ontario’s Waterloo region against giant startup metropolises such as Rio de Janeiro and Atlanta.

The research, titled “Waterloo, The David vs. Goliath of Startup Ecosystems,” closely examines the hot-button issue of how to successfully scale up startups. Published by business intelligence and reporting firm Compass, the report uses renowned local companies like BlackBerry as a case study to demonstrate how small to mid-sized cities can successfully compete again major urban growth centres in the battle to grow an internationally recognized startup ecosystem.

“If it can solve the challenges—shared with all lower performance ecosystems—around its startups “going global” and scaling, as well as close the funding gap, Waterloo can become an international success story,” says the report.medium_9_web

In spite of being home to a population of only 500,000, the Waterloo region boasts a startup density that is second only to Silicon Valley, and in many respects, the report hails the town as a highly successful scaler of these upstart organizations.

The report primarily credits the region’s achievements to its top-tier talent pool. And recruiters at companies around the globe have noticed.

“Something is going on in Waterloo, because the applications we get from Waterloo students are better than those we get from students of any other university,” said Paul Graham, co-founder of Silicon Valley startup accelerator Y Combinator, in the study.

According to Compass, Waterloo also boasts a “deep sense of community” and strong coordination between various stakeholders as additional reasons for its advancements to-date.

The in-depth analysis could serve as a guide for other cities looking to build their startup communities. The study shows that if Waterloo can manage to address some fundamental issues, it could be a viable contender in the global market for startups.

A few of Compass’ actionable insights to help Waterloo grow included:

  1. Solving the problem with scaling into the U.S. and globally.
  2. Closing the funding gap, especially at the seed stage but also at Series A.
  3. Integrating Toronto and Waterloo into a larger, more globally attractive startup ecosystem.

This report closely follows Compass’ previous report that runs down their list of the 2015 Global Startup Ecosystem Ranking, where the Waterloo region sits at No. 25. Canada is also home to three of the top 20 startup cities that making the ecosystem ranking, including Toronto, Vancouver and Montreal.

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