Reflecting broader trends across the Atlantic Canadian landscape, Halifax’s startup community is evolving into two distinct tiers: a high-performing group of growth-stage ventures, and a larger pool of startups facing mounting challenges in a tough economic climate.

These are the trends we outlined last week at the Halifax Partnership’s launch of the Halifax Index. The Index is the economic development group’s annual monitor of progress in the city, and for the past few years Entrevestor has contributed an analysis of the startup and innovation community to the report.

Though the number of startups in Halifax is falling for the first time since we began tracking them a decade ago, the core of elite companies has performed well.

Leading the charge in 2024 were a number of high-potential companies launched before 2020 that have successfully scaled into international markets. This core of Halifax-based innovators is achieving strong revenue gains, securing growth capital, and demonstrating encouraging signals of improved productivity — a key metric for the Halifax Partnership this year.

Though we lack detailed productivity data, survey insights from founders suggest many of Halifax’s top tech firms are increasing earnings at a faster pace than they’re adding employees. In our most recent survey of local startup leaders, respondents reported a 27 percent average revenue jump in 2024, while headcount on average grew by just 5.4 percent.

Digging deeper into the data, 12 of the surveyed companies surpassed $1 million in revenue in 2024. Eleven of those saw year-over-year revenue growth, and nine managed to scale without adding staff — further supporting the argument that productivity is rising among the city’s elite ventures.

While confidentiality agreements prevent us from naming the companies surveyed, some prominent examples illustrate the strength of Halifax’s top performers. Dash Social — the social content platform formerly branded as Dash Hudson — was recently crowned Business of the Year at the 2025 Halifax Chamber of Commerce Awards. Meanwhile, Dartmouth-based Site 20/20, which creates automated traffic control solutions for work zones, cracked Deloitte’s Fast 50 for a second year running, ranking 31st with an impressive 686 percent revenue surge over four years.

Site 20/20 also landed one of the biggest venture capital deals in the region in 2024, closing a multi-million-dollar investment from two New York-based VC firms. Though the company kept the round’s value under wraps, data available online suggests it was the largest private raise by an Atlantic Canadian company last year.

Other notable Halifax fundraises included Novagevity, developer of the plant-based nutrition beverage Sperri, which secured more than $4 million, and NovaResp, which raised $3 million to support clinical trials of its AI-powered sleep apnea device.

Overall, startups in the Halifax metro area attracted $81.6 million in equity capital in 2024 — a steep decline from the $167 million raised the previous year.

A major pain point is emerging: early-stage startups are struggling to access angel or seed funding. Our research found that companies launched in 2022, 2023 or 2024 in Halifax raised a total of only $1.2 million in 2024, and $489,000 of that total came from the companies’ founders. The total investment in early-stage, innovation-driven companies for the year was $700,000 – just above the average price of a single-family detached house in the city.

This mirrors a trend we’re seeing across Atlantic Canada, where one- to three-year-old companies raised $6.2 million, with almost one-third coming from founders.

The ongoing decline in seed-stage funding poses a serious threat to the long-term sustainability of Atlantic Canada’s tech-led economic development. Despite significant ecosystem gains over the past two decades, a capital bottleneck is making it harder for new ventures to gain traction.

And the effects are starting to show. For the first time in the 11 years of tracking startup data in the region, the Halifax innovation community has contracted. In 2024, our dataset included 285 active companies employing a total of 3,300 people — down from 310 firms and 3,700 workers a year earlier. Some 35 innovation-led companies shut down, including formerly high-profile firms like Meta Materials, which at one point had a valuation in the billions.

One outcome of the funding crunch is a strategic shift among founders, who are now encouraged to launch leaner and move faster to market — generating revenue instead of chasing early capital. The growing influence of generative AI and automation tools has sparked a new breed of solo founders, or “solopreneurs,” who are building and iterating without hiring full teams. These one- or two-person startups can now use AI agents to develop software and hit the market quickly, cutting time-to-revenue and boosting efficiency.