“We need to produce more high-growth companies by increasing the 4.7% and growing them into commercial clusters. These companies create infrastructure, source and train talent, and procure services that help entrepreneurial players grow. We need to act with urgency. None of these issues are new. We have discussed the same problems and the same solutions for decades, but we are running out of time. The decline in the number of public companies and our inability to replace them with new entrants should be a wake-up call.” Adam Chowaniec, Chairman of Startup Canada, Ottawa Town Hall, Ottawa, ON September 5, 2012
3.1 One-Stop Shop & Startup Path
At a fundamental level, starting a business, sole proprietorship, non-profit or social enterprise requires much of the same knowledge, skills and understanding. However, Canadian entrepreneurs continue to struggle with navigating the ecosystem and finding the support they need. Canada needs a one-stop shop for enterprise inspiration, support, learning and connectivity – one that is free, online, dynamic, easy-to-use, comprehensive, personalized and user friendly. This online dashboard needs to:
- Provide a meeting place and voice for entrepreneurs;
- Aggregate resources and support available to entrepreneurs based on their location, demographic profile, stage of firm development and industry;
- Connect them to online and in-person networks, communities and associations of relevance to them;
- Inform them of events and opportunities to learn and connect with others in the community;
- Provide them with access to existing learning resources (tutorials, templates, case studies) and live support;
- Support them along the continuum of enterprise growth from start to ramp-up to acceleration;
- Provide a marketplace for entrepreneurs to find co-founders, exchange services and post jobs; and
- Feature inspiring articles, multimedia and case studies to encourage Canadian entrepreneurs to think bigger, think globally, be sustainable, and leverage innovation and technology to grow.
While entrepreneurship is messy contact sport, ensuring that the one-stop shop provides an organic, bottom-up and entrepreneur-led solution with an eye to the entrepreneur’s user experience can retain the creativity and competition present in the ecosystem. This one-stop shop should be highly social, aim to speed access to support, and become a vital tool in every entrepreneur’s toolkit.
With three levels of government registration, licensing and permits to navigate, Canada needs to develop a Business-in-a-Box solution for entrepreneurs to start a business. These resources would enable entrepreneurs to incorporate and register for insurance, licenses and permits, and would walk them through the process. The Business in a Box would provide entrepreneurs with a cost-effective, complete and reliable solution to get started, once again making Canada the easiest place in the world to start up.
A standardized FastTrack program to provide a practical hands-on learning designed to help entrepreneurs hone skills needed to create, manage and grow successful companies would be valuable in both exposing entrepreneurs to communities and supporting the community in identifying high-potential ventures. This program can be certified, delivered in modules online or in person, and can be tailored to particular industries to provide consistent, high-quality training to new entrepreneurs by leveraging local entrepreneurial communities and assets to provide Canadian entrepreneurs with the knowledge, skills and networks to build their companies.
To accelerate Canadian high-growth ventures, we need to create a Canadian Startup Path (CSP) for entrepreneurs to benchmark their own progress. Because a large and healthy crop of early-stage startups is required to produce even one major high-growth company, startups within each community should have access to education, workshops, evaluation, feedback and business development support. Certain startups with high-growth potential could benefit in a greater sense through winning a seat in a ‘cohort’, as is the case within the BCIC Acceleration Network, to access expert and targeted support.
- Kauffman FastTrac Program – Practical, hands-on, entrepreneur learning programs designed to help entrepreneurs hone the skills needed to create, manage and grow a successful business.
- Startup Wheel – A tool for decision making in startup and growth companies that helps entrepreneurs and advisors get focus, set agendas and take the next step.
- BCIC Acceleration Network – A fee-based, structured, venture-development service designed to guide, coach and grow ambitious early-stage technology entrepreneurs in BC.
- MaRS Entrepreneur’s Toolkit – A central information portal for entrepreneurs in Ontario to access articles, workbooks, workshops and events on topics of interest.
3.2 Mentorship and Entrepreneurship Champions
Entrepreneurs are naturally inclined to help other entrepreneurs. Canada needs to create a culture that encourages mentorship and we need to develop infrastructure and networks that foster mentorship in its many manifestations. From one-to-one, many-to-one, one-to-many, online and in person, entrepreneurs need access to other entrepreneurs who have experience in building and growing successful ventures and who can lend their time and expertise to accelerate the learning and growth of others. Mentorship never ceases to grow in importance. Whether testing an idea, exploring a new market, struggling with work-life balance or navigating exits, IPOs and M&As, Canadian entrepreneurs who have been successful need to send the ladder down to help others.
Online and virtual platforms on Sprouter and Clarity.fm make accessing entrepreneurial mentors easier for technology entrepreneurs, so building on and leveraging these platforms can help to accelerate the growth of entrepreneurs beyond the technology sector. Furthermore, many enterprise-support organizations across the country provide mentorship opportunities in various forms. For example, the Canadian Youth Business Foundation provides mentorship as part of its loan program for young entrepreneurs between 18 and 39. Nevertheless, entrepreneurs remain unaware of available support.
Much more can be done to champion mentorship as a critical element of any entrepreneurial ecosystem, increase awareness of mentorship programs and opportunities available for Canadian entrepreneurs, and connect mentorship programs together to facilitate sharing of best practices and leveraging of strategic resources to accelerate entrepreneurial development.
A network of Entrepreneurial Champions in Canada composed of a broad spectrum of successful entrepreneurs from various backgrounds, industries and sectors could be developed as a nation-wide program to unleash these entrepreneurial evangelists into communities and institutions across the country in order to inspire Canadians, stimulate entrepreneurialism, and mentor and impart their advice and expertise to new and developing entrepreneurs.
- Clarity.fm – Clarity is an online platform that brokers the giving and receiving of good advice for entrepreneurs.
- Entrepreneurs Forum – EF connects new and growing entrepreneurs with strategic advice from advisors in-person.
- Wallace McCain Institute – Helps entrepreneurs develop the understanding, tools and relationships needed to grow their business. through creating an environment where entrepreneurs develop a network of like-minded peers.
- CYBF moMENTum – Provides young entrepreneurs in the Greater Toronto and Hamilton areas with a mentor for six months.
Canada has much smaller pools of risk capital than the US. We therefore tend to fund our companies at lower levels. As a result, Canadian companies are usually weaker than their competition and often end up getting acquired before they can realize their full potential. Our public companies achieve valuations that are much lower than their peers south of the border. This applies to TSX-listed companies as well as dual-listed Canadian companies. A recent analysis by Byron Capital Markets suggests that this undervaluation is systemic across the tech sector. ICT companies for example are valued at a 23 percent discount in the software sector and a 34 percent discount in the hardware sector.
We need to solve the risk-capital problem, at least in the seed and venture stages. This cannot be done through one-shot government handouts or wishful thinking that the money will come across the border. The problem is systemic, tied to risk aversion, and will take years to change. We need significant new capital on an annual basis. This has to come from the private sector or private individuals and not from government, where risks on this magnitude are not sustainable.
Nevertheless, we can explore a national tax credit to encourage private sector activity, similar to the BC Investment Tax Credit Program that provides 30 percent refundable tax credits for investors. A BC-like tax credit system at the federal level, with provinces matching this, would increase Canada’s competitive standing as a place to start up and invest
When it comes to financing, availability of capital is only part of the equation. Entrepreneurs need to have access to learning opportunities to better understand the continuum of startup finance; the differences, benefits and disadvantages of debt and equity finance; lean principles and the virtues of bootstrapping and ‘having skin in the game’; and, the importance of real clients, users and customers. Additionally, given the emergent renaissance of angel investment in Canada, programs need to be developed to not only train angel investors, but also to create a nationally connected and scalable model for angel networks nationwide. Money needs people with the skills to deploy it. It will take time to build this ecosystem.
In addition to increasing the availability of both seed funding and real venture capital, Canada needs to explore new funding models and investment incentives because traditional financing mechanisms are no longer relevant or are no longer responsive to the changing nature and culture of Canadian startups. Notably, facilitating Canadian crowdfunding platforms, and exploring any securities regulations that might inhibit the development of healthy crowd funding culture, could empower Canadian entrepreneurs to find new ways of raising seed-stage capital and engage more Canadians in entrepreneurial ventures in the process.
- BC Investment Tax Credit Program – Provides a 30% refundable tax credit for investors who invest in eligible businesses to a maximum annual tax credit of $60,000 per investor.
- Kickstarter – A funding platform for creative projects.
- Kauffman Fellowship Program – A highly sought-after, two-year program dedicated exclusively to the world of venture capital investment in new technology, high-growth and high-impact companies.
3.4 Leveraging Critical Mass
Unlike large firms that can exploit scale to reduce costs, entrepreneurs and small businesses pay premium prices for everything from employee health insurance to office supplies. By leveraging the critical mass of entrepreneurs and small businesses in Canada, national organizations can work in partnership with larger providers to secure discounted rates, incentives and insurance offers for entrepreneurs and small businesses.
3.5 Networking Events & Online Communities
Being an entrepreneur can be a lonely experience for many. The best thing that we can do to support an entrepreneur is to put them in the same room with other entrepreneurs.
Providing opportunities for entrepreneurs to connect with and learn from each other, investors, potential partners, clients and mentors helps to create a dynamic and reinforcing community where entrepreneurship is accepted and expected. Continuing to grow and support events such as the C100, the International Startup Festival, the GROW Conference, networking events, Startup Drinks events, Startup Weekends, Lean Startup workshops and entrepreneurial mixers of all sorts will help to ignite and fuel entrepreneurial communities across Canada.
Although the majority of the Canadian population lives in large urban centres, less-populated cities and rural Canada are full of entrepreneurs looking to connect with other like-minded Canadians and build their networks to grow their ventures. The Internet is the great equalizer. The one-stop shop can be used to connect entrepreneurs from across Canada to each other, creating online social communities that are safe, supportive and tied concretely into real-life communities.
- Startup Weekend – 54-hour events where developers, designers, marketers, product managers and startup enthusiasts come together to share ideas, form teams, build products and launch startups.
- International Startup Festival – An event about the business of startups that includes startup and experienced entrepreneurs delivering rich content.
- Startup Drinks – Monthly freestyle networking events hosted in pubs and bars by startup community instigators.
3.6 Access to Human Capital
Recruitment, retention and succession are top of mind for many Canadian entrepreneurs. There is significant migration from the Atlantic and other regions to the booming economy of the West, which, despite the influx of workers, cannot accept newcomers fast enough to keep up with demand. Different regions in Canada are confronting complex push-and-pull dynamics that make recruitment and retention increasingly challenging. Added to this is Canadian emigration globally, which sees, for example, 350,000 Canadians living in Silicon Valley. National, provincial and local apprentice programs that bring together college and university partners, succession programs and skilled-immigrant programs may all contribute to fostering local connectivity and the recruitment and retention of skilled employees.
Through startup recruitment fairs and greater exposure to entrepreneurship as part of their campus experience, young Canadians will come to view joining a startup as a desirable career path, one that will accelerate their personal and professional growth and impact. Platforms like Enternships.com (available in Europe), which connect individuals to entrepreneurial work experience, would enhance entrepreneur’s access to talent and enable talent to access entrepreneurial opportunities.
Further, the development of a private-sector-aligned Startup Visa Program will make Canada an attractive destination for global entrepreneurial talent. Accelerator programs that fund and support high-growth global ventures to relocate to Canada can be explored as they have met with success in the UK, Chile, the US and other countries, and could be considered in Canada.
Canada’s untapped advantage is our newcomers. In order to engage newcomers in the Canadian entrepreneurial economy, we need to provide them with immediate access to education through soft-landings programs, language training and education on starting a business in Canada. Many newcomers inherently exhibit entrepreneurial traits. We need to support them in engaging with cultural associations, and provide them with mentors and free trial memberships to Chambers of Commerce to connect with the local business community. We also need to work together to transfer newcomer credentials so that they can hit the ground running in Canada.
- Startup Chile – A program of the Chilean Government to attract world-class early-stage entrepreneurs to start their businesses in that country.
- Startup Career Milkrounds – Evening and afternoon events bringing local companies together with students who share their passion for startups and small business aimed to assist startups looking for fresh talent.
- S.U.C.C.E.S.S – A BC-based multicultural, multi-service social enterprise assisting people at all stages of their Canadian experience.
3.7 Strengthening Global Networks – Preparedness and Travel
For Canadian firms to grow, they must not only think globally from the onset, they must also be prepared to do business globally. However, most first-time entrepreneurs do not know how to research foreign markets and prepare market-relevant marketing materials to demonstrate their value-added. Small companies struggle in accessing global markets due to challenges around cultural awareness and navigating new business environments. We need to ensure that when Canadian entrepreneurs travel, they are educated, equipped and prepared.
Building and leveraging global markets and supply chains often requires travelling to client sites, trade shows and investment meetings. Canada needs to develop an easy-to-access Mobility Program that provides funding for young firms with high-growth potential to benefit from opportunities that require global travel. For those firms that decide to do business in a new country, Canadian Trade offices across the world can be accessed to accelerate their knowledge and networks as they begin to operate in new markets. Such services facilitate connectivity with local investors, entrepreneurs and enterprise support organizations, while providing an understanding cultural nuances and customs.
- 48-Hours in the Valley – Twice a year, C100 invites 20 of Canada’s most promising startups to the Silicon Valley for two days of mentorship, workshops, investor meetings, strategic partner visits and networking.
- Trade Commissioner Services – TSC provides entrepreneurs with on-the-ground intelligence and practical advice on foreign markets to support better, more timely and cost-effective decisions. Much more can be done to ensure that more entrepreneurs know about these services.
Overall, entrepreneurs view the Canadian Innovation Commercialization Program (CICP), a small business procurement program for innovative products and services, and the Industrial Research Assistance Program (IRAP) to be effective and useful government programs supporting innovative firms. These programs should continue to grow to help stimulate innovative companies, advance industry-campus relations, and increase private-sector investment in R&D. Much more attention needs to be paid to accelerating the commercialization of innovations coming out of universities and making university innovations available for private utilization through programs to train commercialization staff, by creating incentives for university leadership to invest in entrepreneurship, innovation and commercialization, and by creating standards, benchmarks and targets against which institutions will be evaluated. Furthermore, entrepreneurs support targeted efforts to reduce unnecessary red tape, administrative burdens and response-time issues with regards to government services, reporting, regulations and taxation.
- NRC-IRAP – Canada’s premiere innovation assistance program for small- and medium-sized enterprises.
- CICP – Helps companies bridge the pre-commercialization gap for their innovative goods and services by awarding contracts to entrepreneurs with pre-commercial innovations.
- CFIB Red Tape Report Card – The Canadian Federation of Independent Business evaluates the progress of federal and provincial governments on regulatory reform on behalf of Canadian business.
3.9 Spaces and Places
Co-working spaces, MakerSpaces, CreativeSpaces and Hubs, community innovation spaces targeted at diverse segments of entrepreneurs, are popping up across Canada and providing flexible community workspaces and facilities for entrepreneurs and startups. Every community in Canada should have at least one co-working space, an entrepreneur-run “home” for the local entrepreneurial community to congregate and collaborate. Training programs to support communities and entrepreneurs in creating co-working spaces will help to accelerate the development, sustainability and success of these relatively new communities.
Staff at incubators and co-working spaces require training to make their programming more responsive to the changing nature and culture of startups. These spaces need to evolve beyond bricks-and-mortar, to cultivate a community atmosphere through the provision of services, resources, mentors, training and virtual environments and by investing in promoting, celebrating and creating a community around their clients.
Accelerators supporting and fuelling high-growth ventures have become attractive hotspots for Canadian entrepreneurs looking to make it big. Examples include Launch36 (Moncton), FounderFuel (Montreal), Extreme Startups (Toronto), Hyperdrive (Waterloo), and GrowLab (Vancouver).
With many downtown centres across Canada undergoing urban renewal, municipalities across Canada can forge together to create a Pop-Up Canada Campaign, assigning vacant storefronts as pop-up shops for use by local entrepreneurs to sell their products for short periods. Indeed, local businesses, corporate and public offices that have unused office space can open up their space for local entrepreneurs to work within, helping to fuel a community that is supportive of entrepreneurial undertakings.
Lastly, in many communities, enterprise-support associations, Chambers of Commerce, investor offices, and government business-support and crown corporation offices such as BDC and EDC are dispersed throughout the city and are not centrally located. Where possible, one-stop locations for enterprise support within a city would provide entrepreneurs with easier access to the support that they need without travelling from place to place. In addition to providing easier access, co-location is often cost effective and creates more opportunities for collaboration and alignment.
- AssentWorks (Winnipeg, MN) – A non-profit prototyping facility and makerspace that provides a community, equipment and space that supports the creative process as well as personal and business growth.
- Launch Academy (Vancouver, BC) – A pre-accelerator work space helping entrepreneurs to start and grow.
- Hub Halifax (Halifax, NS) – A professional member community where individuals have the space, resources and peer support to co-work, kick start, collaborate and grow.
- FounderFuel (Montreal, QC) – A mentor-driven accelerator program that provides seed capital and access to veteran entrepreneurs, angel investors, venture capitalists and senior executives. Teams receive $20k – $25k and are eligible for $150k more on Demo Day.
- Markham Convergence Centre (Markham, ON) – Supports entrepreneurs by bringing valuable resources, networking and events together under one roof. It is a hub for entrepreneurs in York Region, designed to provide a single place to access support and resources.
- MaRS Centre (Toronto, ON) – A central hub with lab facilities, offices, event venues, meeting places, business-support organizations and industry partners. It is home to startups, mid-sized companies, multi-nationals, investors, researchers and community developers.
It is not enough to strive to just create bigger companies; we also need to work towards creating better companies that seek to solve real-world challenges and create social and environmental impact through their business practices and innovations. Committing to do no harm and to exercise corporate social responsibility are foundational principals to many Canadian entrepreneurs.
As the social innovation and entrepreneurship sector in Canada continues to grow with the proliferation of new academic programs, social incubator hubs and awareness campaigns, social entrepreneurship policy in Canada must keep pace. In addition to increasing service provisions for social businesses and sustainable non-profits that do not neatly fit within current programmatic confines for government training and support, we need to enhance the provision of social entrepreneurship education, awareness, financing mechanisms and workspaces. We must also do much more to connect the social enterprise community with entrepreneurs in different industries and sectors to facilitate collaboration and the transference of experience and knowledge.
- Centre for Social Innovation (Toronto, ON) – A social enterprise with a mission to catalyze social innovation in Toronto and around the world through incubating emerging enterprises and developing new models and methods to advance social innovation.
While there is a great deal of support available for Canadian entrepreneurs, if we are to support our entrepreneurs in building bigger, better businesses, faster, then we need to better connect entrepreneurs with the support, networks, mentors and infrastructure available and help them to navigate the system through the creation of a one-stop shop and Canadian Startup Path. In doing so, we will be better able to identify high-potential young firms, and equip them with the support, mentors, infrastructure and resources needed to harness the opportunity, whilst identifying gaps and redundancies in community-support to create a healthy entrepreneurial ecosystem with a vibrant entrepreneurial culture.