Economic Impact Report Shows Prosperous Startup Community In Fredericton
FREDERICTON – The Economic Impact Report released by Planet Hatch shows the start-up incubator and service provider’s effectiveness in assisting startups in their growth.
The report, completed by Stiletto Consulting, determined that of the 40 randomly sampled startups from across all sectors that have worked with Planet Hatch in the past, 65 percent had expanded their staff after working with Planet Hatch. The study also found 18 percent decreased staff, while another 18 percent’s staff did not change.
Every sector saw growth after working with Planet Hatch. Most significantly, startups in the IT sector saw 608 percent growth, while restaurants have seen 400 percent growth. Startups in Research & Development saw an increase of 325 percent, while retailers saw an increase of 355 percent.
“Really, at the end of the day, the entrepreneurs themselves deserve the credit for the gains that they’ve made and the impact their companies are having on our provincial economy,” said Adam Peabody, Director of Planet Hatch. “Planet Hatch, of course, is really happy to be a small part of that story with the services and programs that we can support these entrepreneurs with.”
The report shows that before working with Planet Hatch, the 40 startups surveyed had contributed $16-million to the provincial GDP. Since that time, they have grown to $53.7-million. This includes indirect and induced economic impacts.
When including personal income tax, sales tax, property taxes, and other indirect taxes, annual tax revenue from the firms surveyed rose from $4.7-million before working with Planet Hatch to $14.9-million after. Of that amount, approximately $9.7-million was received by the local and provincial levels of government.
Additionally, household spending rose from $9.6-million before working with Planet Hatch to $30-million afterward since being induced by labor income.
In addition to the 40 sampled startups across all sectors, Stiletto also surveyed an additional 20 from the IT sector. Their findings showed since working with Planet Hatch, these startups boosted provincial GDP from $11.7-million to $46.1-million. The number of employees in the sector had more than tripled to 331 employees from 80. The total labour income rose from $8.3-million to more than $32.5-million.
Additionally, the 20 IT firms saw an annual tax revenue increase from under $3-million to $11.6-million. $5.8-million of that total benefitted the provincial government, $925,000 benefitted municipal governments and $4.9-million benefitted the federal government. Household spending induced by the labour income rose from $6.1-million to $24.2-million.
“What we’ve seen in this study, just based on the 60 entrepreneurs surveyed or analyzed, is that there’s a significant return on investment from the tax dollars that economic impact produces at the provincial level,” said Peabody. “So I think what you’re seeing is taxpayers are getting a good return on investment, for the investments that they’re making, in entrepreneurs and startups.”
The IT sector in Fredericton has grown significantly over the past decade. According to data from Statistics Canada, from June 2014 to June 2020, the number of IT firms in Fredericton have grown 37 percent, far beyond the Canadian average of 23 percent.
From Planet Hatch’s perspective, this all points to an economy in Fredericton that continues to strengthen. Peabody believes the findings are only the beginning of where the many startups in Fredericton will grow.
“This is five, maybe seven, years since they started. These companies are going to continue to grow, innovate, and produce even more economic impact and more jobs into the future,” said Peabody. “So this really is just the beginning.”
Liam Floyd is a reporter for Huddle. Send him story suggestions: [email protected].