To get a better idea of how Canadian startups scale compared to their global counterparts, the Impact Centre at the University of Toronto has released the results of a report comparing Canadian scaleups to the US and the UK.
To complete the report, the Centre looked at the fundraising patterns of tech companies in Canada and the US. Public company data was obtained from Google Finance, and private company data was obtained from CB Insights and LinkedIn. All dollar amounts reported are in USD.
The report looked at the performance of over 2,600 technology companies in Canada, paying particular attention to 423 businesses with over $10 million of capital, which it defined as a later-stage company. Businesses with under $10 million in capital were regarded as early-stage.
The Impact Centre summarized the report in four key bullet points:
- Canada has a higher startup rate than Germany and France but trail the UK on the same metric.
- Canada leads all European jurisdictions in terms of scaling rates.
- Canada reports a rate of startup and scaleups that is dramatically lower than the US and, in particular, Massachusetts, California, and New York.
- Canada has lower rates of both startup and scaleups than Pennsylvania, Illinois, and Georgia.
In total, the report identifies 50 Canadian companies with over $10 million of invested capital that are growing at more than 20 percent a year, which represents 12 percnt of all of the 423 Canadian companies above $10 million in capital.
The report said that Canada can be compared to smaller US states, but trails all major US regions in its ability to create private technology companies, and trail all but Florida in its ability to turn companies into firms that can scale. “The numbers clearly show that Canada has both a startup and a scaleup challenge as it trails even midsize US states in its rate of company creation and only exceeds Ohio in its rate of scaleups,” the report reads.
The report said that while Canada still struggles with business expenditures on R&D in general, “our current national obsession relates to scaling technology companies. The narrative on this subject is typically centred on: Canada is good at creating technology companies but often fails to scale them to a world-class size. As a result, both federal and provincial governments have been launching programs and funding mechanisms to grow tech companies. But what we lack is a way to define success and measure progress along the way.”
Another key finding is that while Canadian companies tend to compare themselves to California, it may be helpful to compare to places like New York and especially Massachusetts, which has the best record for company creation and scaling.
The Centre said that the report is not intended to be academically rigorous, but its hope is that the information contributes to the conversation on this topic.
Access the full report here.