The most significant effect of the technology sector labour shortage for startups is not problems accessing talent, but rather the price of workers and its knock-on effects for capital raises, according to Propel CEO Kathryn Lockhart.

In an interview, Lockhart told Entrevestor that Propel — an online startup incubator serving the Atlantic provinces — is advising its resident companies to consider hiring remote workers because remote labour markets are more elastic than those confined to a single region. But that strategy does little to alleviate the effects of cost pressure on startups, she warned.

The increased staffing costs faced by startups have also meant they need to raise more capital earlier in their growth, Lockhart said, which in turn causes venture capitalists to hold companies to higher standards.

“Founders are required to provide more traction than ever before,” she said.

“There’s a lot of up-front work that founders need to do with non-dilutive funding, friends and family rounds, with early angel investment, to help secure that early, relevant traction before a priced round is even in the conversation.”

Lockhart said startups in Atlantic Canada face rising costs for both computer programmers and sales and marketing staff.

One company Lockhart works with is expecting to pay about $140,000 or $150,000 per employee per year for a duo of machine learning engineers. In general, Lockhart said few programmers in Atlantic Canada are likely to be earning less than $80,000 and many can earn as much as $100,000, with very senior developers banking even more.

Sales and marketing staff, meanwhile, are unlikely to be earning less than $70,000 to $80,000, although Lockhart noted that entrepreneurs can often find strong sales talent within their existing teams.

“We often say (to founders), ‘You’ve got to be the best salesperson,’” she said. “We get a little bit nervous when companies want to outsource sales immediately.

“We find that very risky, because no one can sell your product better than you.”

Asked to describe her expectations for the labour market, Lockhart said it remains unclear when prices and availability of staff will normalize. She added that the impacts of the shortage are likely to continue to disproportionately affect startups, which tend to be less able to bear higher costs than larger companies.

One step toward fixing the problem, Lockhart argued, would be to more aggressively promote Atlantic Canada as an appealing place to live for knowledge-sector workers. She and the heads of several other startup organizations are in the process of preparing a major public relations push on that front.

“There's a fascinating opportunity for us, as a region, to get really loud within a singular, Atlantic Canadian voice,” said Lockhart.

“You’ll see really interesting awareness campaigns coming through, with the likes of (industry group) TechImpact and (CEO) Cathy Simpson leading the charge.”