There’s a troubling metric we’re discovering as we work on our next Atlantic Canada Startup Data report. For the first time, the startup community appears to be shrinking. As of right now, we have 732 innovation-driven companies in the Entrevestor Databank, a drop of 11 percent from a year ago.

These are only preliminary numbers and we hope to hear about more new companies from their founders or the organizations that support them. But we’d have to find 84 stealth companies to reach the 816 we reported in our last report, and that doesn’t seem likely.

The prospect of a shrinking startup community raises a lot of uncomfortable questions. First, have we reached “peak startup” in Atlantic Canada, and will we ever break the 1,000-startup mark? We should ask why numbers are declining, especially at a time when the region has such a deep network of business accelerators and incubators. Will the declining numbers affect funding and programming for startups? And finally, can this trend be reversed?

We’re not going to answer all those questions in this column, but we can present the preliminary numbers.

In our last Atlantic Canada Startup Data report, we found that 816 startups were operating at the end of 2023. We admit there are always going to be stealth companies we don’t know about, but this was the number of companies we identified. It was a piddly 1 percent increase over the previous year.

In the years after our first startup data report in 2014, the number of startups in our databank increased by about 15 percent each year. Then the pandemic hit and the growth slowed, almost stagnating in 2023.

In 2024, we removed 192 companies from the databank, driven mainly by a record 133 failures. That was about 1.3 percent more than the 117 failures we booked in 2023. We also removed 29 companies because they’re now service companies, and 20 others because they left the region.

Meanwhile, we found 96 new companies in 2024, the first time in at least seven years that we found fewer than 100 new companies. We’re a bit more selective than we used to be – for example, we don’t list every team that competes in the entry-level Pitch and Pick competitions at Genesis in St. John’s. (Despite this, St. John’s was home to almost one-third of the new companies we found.) Overall, we’ve been on the lookout for new ventures.

(The total number of companies was also affected by a healthy number of exits in 2024, and companies that emerged from stealth mode after operating silently for a number of years.)

We admit that we’re missing some new companies – we always do – but we’re hearing from other people within support organizations that they’re noticing “pipeline challenges”.

The reasons are not easily addressed. The number of international students – many of whom form companies – has fallen due to changing immigration policies by the federal government. The Atlantic Universities Association recently reported a decline of about 11.4 percent in international student enrollment in the region, representing a loss of almost 3,000 students.

Compounding the problems are rising living costs and a troublesome housing market. Most young people with technical and/or business skills are naturally going to forgo the lousy pay and perennial risks of startup life in favour of a steady paycheque.

The numbers are not encouraging, but there are two things to remember. First, these are preliminary figures. We hope to find more companies in the coming month or so and the decline may not seem as stark. And finally, the quality of companies is more important than the number of companies. Last week we reported that Halifax-based medtech company Sound Blade raised US$16.5 million (C$23.8 million) in only its second year of operation. There are still good companies launching, just not enough of them. 

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This article should demonstrate the importance of Entrevestor's research. We've already begun discussing it with the organizations that support our data reports, and will continue to do so as our work progresses. It is helping to shape policy. 

But we need the help of startup founders and CEOs. If you head an innovation-driven company in Atlantic Canada, please take two minutes to complete our 10-question survey. It's 100 percent confidential, and you can skip questions you don't like. 

You can find the survey by clicking on this image: