I’d like to thank the Halifax Partnership for including my work in the Halifax Index, its annual examination of social and economic progress in the city.

I contributed a column on the startup hub in Halifax, which examined the growth and impact of startups in the city in the past few years. You can find its on page 44 of the report, and we’ve reprinted it below here.

I was lucky to appear on a panel at the Index launch yesterday to discuss the economic outlook for the city, province and region. We had a great discussion with my co-panelists, the Partnership’s Chief Economist Fred Morley and Junior Economist Ryan MacLeod and Deputy Business Minister Catherine Mayo Woodman. Mark Lever, CEO of the Chronicle-Herald, moderated the panel.

The most reassuring thing about these appearances is that startup development is now becoming a pillar of debates about economic strategy. This wouldn’t have happened even three years ago.

The Halifax Index is an interesting read which highlight that Halifax’s GDP is expected to increase 3.1 percent this year, tied for the best in Canada. Here’s my contribution to it:

SPECIAL ANALYSIS: HALIFAX’S START-UP COMMUNITY

Though it’s a young cluster, the start-up community in Halifax is a thriving, growing segment of the economy that is contributing to exports, attracting investment and creating employment. The city is also home to key components of the regional start-up ecosystem, many of which aid companies far beyond Atlantic Canada.

Some 109 start-ups are based in Halifax, according to the Entrevestor databank, and most are young companies. More than half the high-growth companies are less than four years old, whereas fewer than a quarter were founded before 2010.

Entrevestor’s research has shown that almost four-fifths of the revenue of Atlantic Canadian startups comes from outside the region, aiding in the development of export markets. Though the ITC segment dominates the Halifax community (59% of the start-ups are IT companies), there is actually a lower concentration of ITC companies than in the Atlantic Canadian community overall (64%). The reason is that Halifax has a disproportionately large biotech sector. There are 23 biotech start-ups based in Halifax – half of the total for the region.

These companies are drawing private investment to Halifax and using that capital to create high-paying jobs. Last year, Halifax-based start-ups attracted more than $26 million in equity investment, about half of it from venture capital investors. With this and previous funding, these companies have developed a workforce of about 1,000 people. Research from Entrevestor and others shows that the average pay at Atlantic Canadian start-ups is more than $50,000.

More than 400 people also work at local start-ups that have been bought by multinational companies, meaning the start-up community has directly created about 1,400 jobs in the Halifax area. In addition, research by Enrico Moretti of the University of California at Berkley shows that each “innovation” tech job creates five indirect jobs due to professional services, taxes and individual spending. That means the start-up sector is responsible for about 7,000 jobs in the region.

The ecosystem that has produced this success is largely regional, not local. Halifax’s start-ups have benefitted from such groups as PropelICT, an accelerator and mentorship network that began in New Brunswick. Conversely, there are institutions based in Halifax that benefit start-ups throughout the region and beyond. The biotech segment is strong in Halifax largely because of the medical facilities in the city, namely Dalhousie University’s medical school and the Capital District Health Authority. It means BioNova, the provincial biotech association, has grown in Halifax and assists life sciences from across the region. Innovacorp, the provincial innovation agency, is headquartered in Halifax and working at assisting a range of Canadian start-ups through its partnership with Disruption Corp. of Washington, D.C.

So what’s needed to enhance the success of the start-up segment? Some obvious answers would be greater access to capital or research funding. But even more than this the start-ups in Halifax and Atlantic Canada need to improve their proficiency in sales. Though revenues are increasing overall, there are still a range of start-ups that have no revenue or weak revenue. This has to improve if this exciting economic segment is to fulfill its promise.