The purpose of this report is to provide a data-driven approach to gauge Canada’s progress in developing a successful technology industry, one that is marked ideally by a high rate of startup creation, company growth, and ability to compete in global markets.
To understand how Canada fares, we used the notion of a ‘funnel’ in our analysis to ‘measure’ where companies are situated in Canada’s innovation pipeline, from the startup to world-class stage. We looked at the performance of over 2,600 technology companies in Canada, paying particular attention to 423 businesses with over $10 M of capital. We measured the companies’ relative position in the funnel to get a sense of how Canadian firms are progressing.
Based on additional analysis of revenue and employee growth and financing in public or private markets, we identified businesses with the potential to grow to world-class size, but only if they maintain current growth trajectories. In total, we identified 50 Canadian companies with over $10 million of invested capital that were growing at more than 20% a year. This represents 12% of all of the 423 Canadian companies above $10 M in capital.
Our analysis also looked at how Canada stacks up against other major regions in the world (the US, the UK, France, and Germany). We found some promising as well as weak points for Canada’s high-tech industry.
- We have a higher startup rate than Germany and France but trail the UK on the same metric.
- We lead all European jurisdictions in terms of scaling rates.
- We report a rate of startup and scaleup that is dramatically lower than the US and, in particular, Massachusetts, California and New York.
- We have lower rates of both startup and scaleup than Pennsylvania, Illinois, and Georgia.
While the emphasis of this report is on our ability as a jurisdiction to scale companies, we must note that there is a tremendous opportunity to improve the number of startups we generate. Although we have made significant progress in the last 10 years, the data clearly show that we have further work to do. While we tend to look to California as the ‘gold standard’, it may perhaps be more instructive to compare ourselves with New York and particularly Massachusetts, which has one of the best track records for company creation and scaling.
You can get a full copy of the report here.