Silicon Valley Bank (SVB) has released its annual Startup Outlook Report, surveying founders and executives from tech and healthcare companies based in the United States, the United Kingdom, China, and Canada.
This marks the second year that Canada has been included in the survey, which is in its 11th year. The 2020 report surveyed 1,100 leaders and found that the global startup outlook is similar to last year with two-thirds of global respondents (77 percent of Canadians) presenting a positive outlook for this year.
It should be noted that SVB’s Canadian sample size for the survey was smaller than its international counterparts (five percent), but SVB told BetaKit that the numbers still represent a significant portion of the Canadian tech ecosystem.
While outlooks remain high for the second year in a row, startup founders and executives are also facing challenges. Forty-one percent of those surveyed reported that raising capital is getting harder, with 47 percent reporting no change from last year.
“The good news is there is still good quality talent here in Canada.”
Another major challenge, according to the report, is access to talent. Globally, 50 percent of survey respondents listed access to talent, including issues like immigration and education, as the top public policy issues facing startups. At the same time, 79 percent globally stated plans to hire in 2020, slightly up from 77 percent last year.
Win Bear, head of business development in Canada for SVB, told BetaKit that the number of companies planning to hire jumps to 90 percent. However, 47 percent of Canadian respondents stated that hiring is getting harder.
“Folks like Shopify, Google, and others are paying quality cost for [developers] and there’s a lot of other much smaller companies all competing for some of that dev talent. So the talent is there,” said Bear. “The good news is there is still good quality talent here in Canada. Is it keeping up the demand, that’s going to get into an interesting debate … these companies have very finite resources when it comes to money they can spend on untapped talent.”
Concerns over hiring come amid recent announcements of a number of global tech companies expanding their own presence in Canada. Last week, Google revealed it is opening three new offices in Toronto, Montreal, and Waterloo, with plans to hire 3,500 employees. Shopify announced its intentions to move into a permanent office space in Vancouver and 1,000 employees last month and Mastercard is investing $510 million in a global technology centre and planning to hire 270 new employees and 100 co-op students, also in Vancouver. On Monday, Ceridian revealed its own plans to hire 2,000 Canadian engineering and research and development employees over the next five years.
Bear expressed optimism though, noting that the high number of companies planning to hire likely means that startups are expecting revenue growth. “They wouldn’t be … planning to hire and increase their workforce in 2020 otherwise,” he told BetaKit.
“Canada’s progressive approach to immigration policy for highly skilled workers is absolutely proven to be an edge.”
Bear, having moved to Canada around six months ago as part of SVB’s growing presence in Canada, also echoed thoughts of many others in the tech ecosystem by adding that Canadian founders and leaders have emphasized the difficulty in hiring senior-level employees as well, including for sales and marketing positions.
“The majority of founders I talked to still talk about how that is a much greater challenge to fill those [senior] roles in Canada right now,” he stated. “A lot of them are having to look to the US for that talent and even kind of agreeing to let that talent reside in the US … not saying they’re all doing it but that’s a pretty frequent occurrence.”
While Bear told BetaKit that Canadian founders have often expressed to him that it is a challenging hiring environment, he also emphasized one area Canada has the advantage – public policy.
According to SVB, 65 percent of Canadians surveyed said government support of the innovation economy has a positive impact. Most frequently cited beneficial resources included federally run programs like the scientific research and experimental development (SR&ED) program and the Global Skills Strategy, which looks to make it increase the speed at which Canadian companies can hire qualified international talent.
“Canada’s progressive approach to immigration policy for highly skilled workers is absolutely proven to be an edge for Canadian companies. And it’s not just theoretical, we’re seeing it play out at our client companies,” Bear said. “Whereas is you’re somebody based in the US, good luck trying to get good technical talent from various parts of the world up and running with a visa as quickly as you can in Canada, it’s a real game-changer for Canadian companies.”
Other challenges cited by founders and executives globally were cybersecurity, consumer privacy, corporate taxes, and international trade.
Is diversity a priority?
Some surprising statistics from SVB’s 2020 report pertain to diversity.
More than half of the global respondents (55 percent) have no programs in place to increase diverse representation within leadership. Only 26 percent responded “yes” to having programs, with 19 percent responding “don’t know/prefer not to say.”
To that point, 43 percent of startups stated they have at least one female at the C-suite executive level, with 42 percent having at least one female board member. Similar numbers came out about ethnic and racial minorities, with just 42 percent of startups with at least one C-suite executive who is ethnically or racially diverse and 44 percent for board members.
These numbers come despite the fact that more than half (52 percent in Canada) of survey respondents reported having at least one founder born outside the country the company is based.
Notably, breaking down SVB’s respondents, the majority (68 percent) were male founders, with just 32 percent female founders.
The report also touched on the funding environment for startups, with the majority of funding still coming from venture capital. SVB’s report also found that 60 percent of Canadian startups expect the “realistic long-term goal” for their company to be an acquisition, with similar numbers in the UK and the US (58 percent) and 14 percent in China – 46 percent of Chinese startups expect to go public.
The 11th annual SVB Startup Outlook Report comes as SVB enters its second year in Canada. In March 2018, BetaKit reported that SVB was establishing a Canadian presence, with Barbara Dirks as head of the Canadian team. Just four months after the bank was able to open its first Canadian headquarters, Dirks stepped down from her role, citing personal reasons.
Despite the loss of its Canadian leader, SVB has continued to grow its Canadian team. Bear noted that SVB’s Canada team currently sits at 21 and plans to continue hiring locally. He stated that SVB plans to double down its efforts in Canada, and has a positive, long term outlook on the market.
Image source Unsplash. Photo by You X Ventures.