The Atlantic Canada Opportunities Agency made just shy of $20 million of funding commitments to startups in 2023, less than half its 2022 total.
An analysis by Entrevestor of ACOA’s funding agreements finds that last year’s figure is a decline of about $24 million from 2022’s $44 million. The loans and grants are flowing to a proportionately reduced number of projects, at 129 compared to 224 previously.
The drop-off deepens a trend of generally declining ACOA funding for startups from 2018’s $65 million. However, in recent years, funding packages have appeared to flow in two-year cycles, based on research we conducted for our 2021 Atlantic Canadian Startup Data Report, and based on that cycle, 2023 was always likely to be a down year. For example, in 2019, ACOA committed to distributing $29.9 million, before increasing its activity to $51.3 million in 2020 and decreasing it again the following year to $21.3 million.
These totals also do not include the roughly 90 percent of ACOA funding that flows to projects not directly related to the innovation ecosystem, according to our analysis. These figures also do not include money ACOA contributes to entrepreneurship support organizations, such as Propel ICT, Venn Innovation, or Volta.
Of the four sectors into which Entrevestor classifies startups — information technology, life sciences, cleantech and manufacturing — the largest number of funding packages went to companies in IT, at 30 deals worth a combined $5.2 million. We should note there are important grey areas in deciding which sector we place startups in, particularly since many have a foot in multiple sectors.
Another 21 deals worth $4.9 million flowed to life sciences, which is in keeping with the sector's status as the fastest-growing in our databank by number of companies, as of our 2022 Atlantic Canadian Startup Data Report. That year, founders in the sector reported they had grown their revenues by an average of more than 40 percent.
Advanced manufacturing startups received $5.5 million from 24 deals. That represents a much larger slice of ACOA’s startup funding than the roughly seven percent of the overall community that manufacturing businesses accounted for in 2022.
Cleantech companies represented the smallest group, with six deals worth $2.4 million -- a figure roughly consistent with the eight per cent of East Coast startups in our databank that we consider to be cleantech companies.
Breaking the funding down by province produces results reflective of the overall composition of the startup community, with $9.2 million flowing to Nova Scotia from 35 funding packages.
Newfoundland and Labrador was the runner-up with six deals worth approximately $2 million, followed closely by New Brunswick at $1.9 million. Prince Edward Island received the least money at just over $400,000 from two deals.
Not included in these figures are two innovation-focused organizations from outside Atlantic Canada that also received funding -- one young company and one innovation support group. Laval, Que.-based startup Dispersa, which has its research and development operations in Sydney, took out a $500,000 loan.
Counting funding agreements with ecosystem support organizations, the decline is less pronounced. The total figure rises to $51 million for 2023, which is only a slight decrease from 2022’s figure of $59 million. Many of the funding announcements for support organizations are multi-year commitments, so the actual money flowing to these organizations may differ year-to-year from the announced new commitments.
Disclaimer: ACOA is a client of Entrevestor.