Region’s Startups Grew In Number, Created More Jobs, Raised More Capital In 2020
HALIFAX — Atlantic Canadian startups created more jobs, made more money, and grew in number in 2020, despite the havoc wrought by the Covid-19 pandemic.
Last year, the region also produced its first unicorn when Nasdaq bought St. John’s-based Verafin for a staggering $2.75-billion.
But despite those successes, the region’s startup ecosystem remains far more welcoming to men than women, while Black, Indigenous, and other people of colour are dramatically under-represented.
The trends, both good and bad, are laid out in Entrevestor’s Atlantic Canadian Startup Community Data Report for 2020.
The annual report digs into the numbers behind the region’s startup economy, providing estimates for how many jobs it supports, how much funding was raised, as well as other key indicators.
Peter Moreira, the owner Entrevestor and co-author of the report, says he and his team tracked 738 companies over the course of 2020. That’s a 5.9 percent jump in the number of startups in the region, compared to 2019.
Data from Entrevestor’s report also reveals Atlantic Canadian startups raised $206.2-million in 2020, which was the second-most ever in a single year. (The biggest ever collective raise came in 2019 when Verafin’s $515-million raise juiced the overall numbers).
Just as more funding came in 2020, companies also reported big jumps in revenue growth. In 2020, companies reported growth of about 72 percent, marking the fourth year in a row the region hit 70 percent growth or higher. The region also added about 700 extra jobs last year, employing a total of 7,200 people across the region.
Moreira did note a significant spike in startup failures in 2020 (102, versus 47 in 2019), which he argued isn’t necessarily a bad thing.
“There are always companies that need to be weeded out of the system. Their resources, not just their financial resources but their human resources, could be better used elsewhere,” he said.
Much less money for women
While Entrevestor’s report contains quite a bit of good news, it also reveals some troubling trends in Atlantic Canada’s startup ecosystem.
According to Entrevestor’s data, women are wildly underrepresented at Atlantic Canadian startups. Women founders also have a much harder time securing funding than their male counterparts.
Just 31 percent of companies covered in Entrevestor’s report had women in C–level positions. Meanwhile, only 14 percent of companies were led by women CEOs or co-CEOs.
The biggest problem for women in the industry, says Entrevestor’s Avery Mullen, is attracting funding.
Women-led companies raised a combined $5.3-million in 2020, which is less than four percent of the total raised in Atlantic Canada. Take away the money those women founders put in from their own pockets, and the total raise drops to just over $4-million.
“The big takeaway here is that not only are there a disproportionally small number of companies run by women, but also even those companies that are run by women seem to have disproportionately little access to funding,” Mullen says.
The report also highlights the under-representation of Black, Indigenous, and other people of colour in Atlantic Canada’s startup ecosystem.
Of the 554 startups covered in the report, a paltry 0.7 percent had black founders or CEOs who were born in Canada. Only 1.6 percent of the companies had Indigenous founders. That is a massive underrepresentation, considering 1.4 percent of Atlantic Canadians are Black and 5.5 percent are Indigenous.
Although the region has a very long way to go, some organizations are popping up with a mission to change some of the imbalances.
Moreira pointed to initiatives like Sandpiper Ventures, Tribe Network, and Boost, which are all relatively new and working to promote and support underrepresented communities in Atlantic Canada’s startup ecosystem.
$1.1-billion raised in 30 months
Moreira says the success of big Atlantic companies like Verafin, CarbonCure Technologies, and Introhive bodes well for the future of the region’s startup ecosystem.
“What it means, above all else, is that we’ve got companies that we would consider, in an Atlantic Canadian context, super-elite startups. But, really, they’re corporations. These are companies that are fulfilling the promise of the startup community that we all talked about a decade ago,” he said. “They’re reaching that state where they are global leaders, they’re certainly taken seriously, they’re doing what we all hoped they’d do.”
Moreira pointed out that, over the last 30 months, Atlantic Canadian startups have raised more than $1.1-billion.
That’s more than quadruple the amount the community raised over a 36-month period just five years ago.
“So things are definitely heading in the right direction. There’s work to do, but 2020 certainly came out to be a better year than we had all hoped for,” Moreira said.
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