Canada growing more $1-billion “unicorn” companies, global startup ecosystem report shows

Mark Lowey
June 22, 2022

More Canadian companies are remaining in Canada to grow into “unicorns” rather than selling early to U.S. firms or other foreign entities, based on data in the 2022 Global Startup Ecosystem Report.

"The incredible increase in the number of unicorns (companies with valuation of $1 billion) does show Canada is now developing very large tech companies, and we can expect them to exit at large valuations,” said JF Gauthier, CEO of Startup Genome based in San Francisco, which produced the report.

“This bodes well for Canada and shows Canadian founders have elevated the definition of success and believe they can scale, rather than safely sell early,” he said in an email to Research Money.

Vancouver produced five unicorns during the period covered by Startup Genome’s 2022 report. They included online identity and address verification firm Trulioo, legal software startup Clio, and Dapper Labs, a NFT (Non Fungible-Token, or digital assets) company.

Montreal produced four unicorns, including travel app Hopper, while Ottawa saw one unicorn (Asset Compliance, which sells supply chain sustainability management software) during Startup Genome’s reporting period.

During the last two years, the number of Canadian unicorns created has risen to 18 from three, with Toronto producing nine, Gauthier noted.

The Ontario Scale-Up Platform has helped increase confidence by founders that they can grow their companies in Canada, and the Apexe Hypergrowth Quebec (Hypercroissance Québec) program in Quebec is expected to do the same, he said.

The Scale-Up Platform, with funding of $52.4 million from the Federal Economic Development Agency for Southern Ontario, is a collaboration among innovation entities Communitech, Invest Ottawa and MaRS Discovery District.

The Quebec government has committed $6.5 million over the next two years toward Hypergrowth Quebec. The program will be delivered by Startup Montréal and Silicon Valley’s Apexe Global.

Toronto-Waterloo is Canada’s leading startup ecosystem

The Toronto-Waterloo region is Canada’s leading startup ecosystem, ranked at No. 17 globally, according to the 2022 Global Startup Ecosystem Report.

This is due to the “broad and well-designed” startup policies the Toronto-Waterloo ecosystem adopted five to 10 years, ago, which has borne fruit in the last few years, Gauthier said.

Toronto-Waterloo has the highest concentration of startups in artificial intelligence in the world, including genetic therapy company Deep Genomics and AI chip manufacturing Tenstorrent, according to Startup Genome’s report.

Canada’s top three startup ecosystems – Toronto-Waterloo, Vancouver and Montreal – slipped an average three spots in the global rankings, according to the report. However, this was mainly due to very few billion-dollar exits in these ecosystems, which scores lower points in Startup Genome’s “performance factor” ranking category, Gauthier said.

Other findings in Startup Genome’s 2022 report included:

  • Toronto-Waterloo’s startup ecosystem ranked in the top 10 global ecosystems in “funding,” which measures innovation through early-stage funding and investor’s activity. The ecosystem created $45.6 billion in ecosystem value from July 1, 2019 to December 31, 2021.
  • Montreal ranked as a top 40 global ecosystem overall, creating $24 billion in ecosystem value during the same period.
  • Calgary ranked as a top 10 North American ecosystem in “affordable talent,” which measures the ability to hire tech talent. The ecosystem also ranked in the top 10 North American emerging ecosystems in funding, creating $2.5 billion in ecosystem value.
  • Quebec City ranked No. 3 in North American ecosystems in affordable talent. The ecosystem created $1.2 billion in ecosystem value.
  • Edmonton ranked No. 4 in North American ecosystems in affordable talent and in the top 25 North American emerging ecosystems in funding, creating $641 million in ecosystem value.

Startup growth slows in Atlantic Canada

Atlantic Canada’s startup ecosystem failed to crack the top global 100 emerging startup systems in Startup Genome’s report, noted Bedford, N.S-based Entrevestor, which reports on the region’s startups.

In 2021, the number of startups in the Atlantic Canada region slowed for the second year in a row, increasing only 4.5 per cent compared with nearly six per cent in 2020, according to a separate report by Entrevestor.

It is the lowest growth rate Entrevestor has recorded since the creation of its annual report nine years ago and “is a worrying trend,” Entrevestor said.

Newfoundland and Labrador was the only province where the startup community grew, adding 41 companies in 2021, more than 40 per cent of them in life sciences.

One reason for the slow growth rate of startups is the high cost of hiring highly skilled talent, especially computer programmers, according to the report.

To help address the problem, the McKenna Institute at the University of New Brunswick announced last week a partnership with IBM Canada that aims to train up to 40,000 people in the province for entry-level tech and non-tech jobs across a range of sectors, using IBM’s SkillsBuild program.

The McKenna Institute was founded last year by Frank McKenna with a personal donation of $5 million.

As for Atlantic Canada’s startup companies attracting funding, Entrevestor’s report noted that higher-growth startups raised $638.4 million in 2021 — the second-highest total for the region in the report’s history, behind about $680 million raised in 2019.

However, angel investment comprised a smaller share of overall funding, dropping to 6.3 per cent in 2021 compared with nearly 18 per cent in 2018.

Ocean tech startups increased funding to $22.7 million. Atlantic Canada — home to Canada’s Ocean Supercluster — “has become an international hub for ocean-related startups,” according to Entrevestor’s report.

The Ocean Supercluster has approved more than 60 projects worth $320 million, with most of the projects being led by East Coast partners.


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