March 29th, 2024
Dear Three Years Ago:
Looking back on 2020, it became clear early on that COVID would disrupt the global economy and that local impact would be determined by harmony between public health officials and political leadership. Luckily, in Atlantic Canada, we watched the rest of the world transition between lockdowns, school closures and COVID tests, while we used our relative freedom to focus on entrepreneurship, the right way.
The right way meant many things. It was about talent and capital and how we unlocked, aligned, and mobilized it. Business accelerators, incubators and investors in Atlantic Canada knew that as a region of 2.3 million people, they would never have the 5,000 startups every year that Silicon Valley boasts or attract more than 40 percent of the VC dollars in North America that the Valley does.
Atlantic Canada’s approach needed to be strategic, optimistic, bold, and focused on quality aligned with pillars of ESG (Environmental, Social, and Governance), harmonized tax incentives, as well as targeted recruitment efforts for new Canadians, underrepresented populations, and women.
Now, the numbers of women founders are approaching 50 percent due, in no small part, to the efforts of Sandpiper Ventures that mobilized a movement to unlock female talent and capital.
The pandemic, though devastating, inspired a much-needed focus on developing the right skills to survive and thrive as an entrepreneur. Ecosystem leaders decided, instead of trying to find the next unicorn, to create a baby unicorn farm (for fun, let’s define them as a privately held company with a valuation of more than $50 million), which is simply a smarter and necessary first step in unicorn hunting.
Soon, stronger and more consistent numbers of growth companies started taking root in Atlantic Canada and gaining traction: traction in cutting sales cycles in half, traction in tripling average contract size, and traction in securing repeatable revenue as they focused on their ideal customer profiles.
This led to smooth investments and quick hires. Companies hired the people needed for growth and paid them competitively. Government funding programs, both at the Federal and Provincial levels, served the region with accessible, non-dilutive funding options.
The focus on quality and a short-term goal of creating baby unicorns served two purposes in the life cycle of a startup. It attracted top founders from within our own borders, and outside talent, with competitive salaries. It also created a hotbed of deals for local angels, who filled an early-stage funding gap.
A regional angel network was launched to invest in educating new angels. Harmonization of provincial tax incentives proved to be useful in unlocking the flow of capital across borders.
Sandpiper Ventures tapped into the purses of women angels, which served as an advantage for the region. More early-stage capital flowed into the ecosystem and eventually larger cheques were written for Series B and even C rounds.
Accelerators that used a balance of market development content coupled with dedicated coaches were sought after by investors as this approach de-risked their investments. VCs were happier with the quality of deal flow. Baby unicorns were born.
Slowly but surely, Atlantic Canada has established its place on the map. Success is no longer defined by a Silicon Valley postal code. Universities produce talent and ideas, while accelerators are the finishing schools of company creation.
Investors were keenly writing cheques for future baby unicorns as they tackled deep tech challenges, modernized our traditional industries, and solved new, global problems.
A recent count shows we will exceed 100 baby unicorns by the second quarter of 2024 with nearly 1,200 startups in the region raising over $600 million in 2023 alone. Unicorn hunting is becoming a viable sport here in Atlantic Canada, where we are counting four unicorns within our region to date, two of which are led by women.
Our ecosystem has taken bold steps to put entrepreneurs in the driver’s seat of our economy.
Personally, I am grateful that my children see success from all four provinces, and do not live with the inherent assumption that they must leave the region for their careers, as I did.
Thanks to vital efforts over the years, started by Gerry Pond in New Brunswick, extending to the Rock with the likes of Cathy Bennett and Mark Dobbin, as well as Alex McBeath on P.E.I., and Patrick Hankinson in Nova Scotia, to name just a few, our ecosystem is thriving and leading our economies into the future. Entrevestor’s team has tripled in size to keep up with the good news. Founders are making their mark on our region, hiring talent, attracting capital, and creating endless examples of how baby unicorns have changed the region’s profile.
Kathryn Lockhart is the CEO of Propel and creator of the baby unicorn movement.