Atlantic Canadian startups have raised more than $1 billion in growth capital in the last 30 months, according to research released today by Entrevestor.
Today we're publishing the 2020 Atlantic Canadian Startup Data Report, which shows that East Coast startups rebounded with vigor from the initial shock of the pandemic. Though the creation of new companies slowed down, employment and revenue growth matched the levels of recent years and the community overall raised $206.2 million in equity funding.
In fact, that wave of funding carried over into 2021, and we estimate Atlantic Canadian companies raised $243.4 million in equity funding in the first half. That brings the total investment of growth capital in the region to about $1.1 billion since the beginning of 2019.
Ian Munro, Chief Economist at the Halifax Partnership, said the data shows innovation-driven companies featuring more prominently in the East Coast economy.
“It shows the impact of the institutions [in the area] like COVE and Dalhousie University and their success in supporting startups,” said Munro at the launch of the Halifax Index on Thursday. “This just leads to more and more confidence so that more people will step forward and try to launch their own startups.”
Each year, Entrevestor publishes its Atlantic Canadian Startup Data Report to give policy-makers and community members the metrics needed to assess the evolution of the region’s innovation economy. We gather our information by surveying founders and CEOs (We got 163 responses this year) and conducting hundreds of interviews as journalists. This is Entrevestor’s eighth annual report on high-growth, innovation-driven companies in the region. The Atlantic Canada Opportunities Agency, Innovacorp and the Halifax Innovation District led a group of backers that allowed the study to be conducted and made public.
Though the pandemic disrupted the global economy, Atlantic Canadian startups had a banner year, with St. John’s-based Verafin announcing its US$2.75 billion exit and Halifax’s CarbonCure securing investment from Breakthrough Energy Ventures, Amazon and others. The 2020 Atlantic Canadian Startup Data Report found that the region’s life sciences companies benefited from the new focus on medical innovation, while IT companies capitalized on the digital transformation accelerated by lockdowns.
The 74-page report, co-authored by Avery Mullen and Carol Moreira, also found that:
- We tracked 738 companies in the Atlantic Canadian startup community – up 5.9 percent from 2019. It was the slowest growth we’ve witnessed as the number of companies usually increases by about 15 percent annually.
- Atlantic Canadian startups employed about 7,200 people, 700 more than a year earlier. (Total employment would have been higher, but we removed Verafin from the databank when it exited.) Overall, companies grew their staffs by about 23 percent.
- Companies sharing revenue data with Entrevestor reported revenue growth of about 72 percent – the fourth year in a row of 70 percent growth or higher.
- Atlantic Canada launched 106 new startups – the weakest level of company launches in four years.
- The life sciences sector continued to grow, driven mainly by publicly listed companies that raised almost $55 million in funding.
- Rural innovation is increasing, especially in Nova Scotia, with more structured collaboration between rural entrepreneurs and urban support organizations.
- Some 14 percent of the companies are led by female CEOs or Co-CEOs. These companies only raised $5.3 million in funding (3.5 percent of the total, even after we stripped out funding by publicly listed companies). What’s more, $1.2 million of this money was invested by the founders themselves.
- Though the ecosystem is adding programs for minority entrepreneurs, we found only 0.7 percent of the Atlantic Canadian startups had Black founders or CEOs who were born and raised in Canada, and 1.6 percent had Indigenous founders or CEOs. Overall, 13 percent of the companies were led by visible minorities.
In the last week, we also added up the total funding for the first half – an exercise sparked by Introhive’s US$100 million (C$122 million) venture capital round announced last week. There have been a lot of big deals this year, including major fundings by Goodleaf, Outcast Foods, Cape Privacy and others.
We found the total funding so far in 2021 to be $243 million. Adding this funding to the totals of $206 million last year and $680 million in 2019, we got a total of $1.13 billion in funding in the last 2 1/2 years.
Let’s compare that to funding five years ago: In the three years to Dec. 31, 2016, Atlantic Canadian startups raised $275.2 million. It was a longer period of time and didn’t take place during a pandemic, but funding was only one-quarter in 2014-16 of what we’ve witnessed in the past 2½ years.