Canada on the Rise
According to a recent index released by Forbes, many policy changes have made Canada the best country for business. The index evaluates countries on property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance. Canada jumped three spots from the 2010 survey, getting high marks for Personal Freedom (#1), Red Tape (#3), Investor Protection (#5) and Trade Freedom (#7). It also had a noticeable improvement in its tax ranking—thanks largely to a “Harmonized Sales Tax” and reduced corporate and employee tax rates. Is this resulting in a better climate for Startups?
Another study, "The Power of Many: Realizing the socioeconomic potential of entrepreneurs in the 21st century" named Canada the “most entrepreneurial ecosystem of all the G20 countries.” Just check out the Startup Canada campaign partners for a glimpse at the many components of this ecosystem.
I was in Toronto last week for the tail end of Global Entrepreneurship Week where I joined what appeared to be Startup Weekend’s largest event with 400 people on teams making startup pitches and another 200 on a waiting list. The lightning energy and ideas were staggering. The entrepreneurs I spoke to certainly felt Toronto was experiencing a startup revolution with its creative culture, business heavyweights and publicly funded universities right in the heart of the city. They even challenged Waterloo as the hotbed of high growth entrepreneurship in Canada.
GEW in Canada, led by the Canadian Youth Business Foundation and set against the backdrop of it being the “year of the entrepreneur,” continues to fuel more entrants into the startup ecosystem. One GEW event - the YOU Innovate Canada competition - showed that great business ideas can come from looking at an ordinary thing in an extraordinary way. The winner for the competition was The Grow Mug Project. The students from Brandon University in Manitoba, used personalized recycled mugs to grow herbs and teach children about plants and healthy eating. The Grow Mug Project team received $5,500 from Studentawards.com and one trip to Liverpool, England to attend the Global Entrepreneurship Congress in 2012. Outside of the annual statement of support from Prime Minister Harper, there was also a Startup Weekend in Vancouver, Ottawa’s week long celebration of entrepreneurship and lots of live Twitter chats with established entrepreneurs.
But there is clearly a lot going on for new and young firm formation in Canada beyond Global Entrepreneurship Week. Entrepreneurship education, for example, is reaping benefits. Take the perspective from a previous generation entrepreneur surprised at the difference a class can make. A Venture Design class at the University of British Columbia (UBC) was the source of inspiration for Energy Aware Technology Inc. Janice Cheam and Lauren Kulokas, two UBC students, were able to raise angel funds, attract a strong board of directors and build relationships with suppliers to the biggest electric utilities in the world. With 16 employees and growing, the company distributes its energy monitors in North America and Australia, and has plans for a European distributorship. As someone who became an avid skier when living in Canada as a kid, I was especially interested in something that was apparently born during a Venture Design class at UBC— Recon Instruments Inc., adds display technology to sports goggles. Last January, it won the product innovation award at the International Consumer Electronics Show in Las Vegas. Its 25 employees are helping commercialize the product, which can track every move down a ski slope.
Like many other countries, Canada is also focusing on the potential of women entrepreneurs. In Canada, only 16 percent of all small and medium-sized businesses are majority-female-owned, and the average annual revenue of those firms is roughly $563,000 versus $1.12-million for majority-male-owned businesses. The Canadian Task Force for Women’s Business Growth, chaired by a business professor at the University of Ottawa, recently issued a report that claims a 20 percent increase in total revenues among majority-female-controlled businesses would provide an extra $2 billion a year to the Canadian economy.
And don’t be surprised if Canada beats the U.S. in enacting Startup Visa legislation. As I learned in my interviews, the Canadian startup visa campaign is set for an upgrade in the immigration program aimed at attracting more people who want to create science and technology companies. The change reduces the funding needed to enter the country on the conditions that the applicant have Canadian investors and create new jobs within a couple of years.
I also met last week with a new committee launched by Rob Moore, former Minister of State for Small Business and Tourism, made up of private sector leaders focused on new business growth. I was impressed to see the government not appoint its own, but reach out to experts and practitioners in the space such as Iain Klugman, president of Communitech, a technology association in the Waterloo areas who gets high-growth startups, as well as accomplished entrepreneurs, including: David Aisenstat from Keg Restaurants; Harry Chemeko from Elastic Path Software Inc.; Shalres Desjardins from Absolunet; Sophie Forest from Brightspark; and, many others. They all seemed focused, not on the Fortune report, but on a next generation of ideas in the race to have the best startup ecosystem in the world. Cash-rich industries in Canada, less impacted by a global recession than most, seem to be helping to make this possible. In fact, at the Startup Weekend I participated in, several of the nascent entrepreneurs handed me their cards. I noticed that for their day jobs almost all worked for big companies or organizations. Perhaps that symbiotic relationship between big and small businesses working together to create new high growth new businesses is alive and well in Canada.