As global venture capital markets continue their rapid contraction, the labour market for Atlantic Canadian startups could be facing a sea change.
Data from Halifax early-stage VC fund Concrete Ventures shows that for the first time since General Partner Patrick Hankinson began keeping records, net job creation among the region’s innovation-driven companies fell to almost zero in the third quarter.
The news represents an apparent reversal from a September survey of regional tech companies by Saint John-based industry group TechImpact that found nearly half of respondents were ramping up hiring — although those figures include established businesses, not just startups.
“With funding drying up, more startups are hitting the brakes on hiring or alternatively are ‘right-sizing’ their teams,” wrote Hankinson in a blog post.
A faltering global economy, inflation rates not seen in decades and hawkish central bankers have contributed to international VC funding decreasing by more than a third in the third quarter, falling to its lowest level in more than two years, according to market intelligence company CB Insights.
In Canada, the news is even grimmer. Total funding dropped by almost two thirds last quarter and the number of deals decreased by 19 percent — meaning even those companies that managed to close rounds raised less money on average.
Hankinson -- who analyzes employment at Atlantic Canadian startups based on LinkedIn data -- found that in the third quarter, Atlantic Canadian startups added a mere 16 new jobs, compared to 179 in the second quarter and 478 in the first quarter. He added that 13,194 people now work for Atlantic Canadian startups.
The Concrete analysis included a list of the top startups in terms of job creation last quarter, led by: Vidcruiter, Moncton; Meta Material, Dartmouth; Novonix, Bedford, NS; Smart Skin Technologies, Fredericton; and Dash Hudson, Halifax.
The slowdown in startup jobs was in contrast to Canada’s overall job growth figures, which dramatically outperformed economist expectations during the same period, per Statistics Canada and Bloomberg.
And just two months previously, the news for knowledge sector workers looked cheerful.
In September, TechImpact surveyed 52 tech companies and compiled the results into a Workplace Insights Report. The full results are available only to the survey respondents, but speaking at Entrevestor Live last month, TechImpact CEO Cathy Simpson said the study had found that 47 percent of respondents were actually increasing hiring at the time.
Only four percent reported that they were slowing hiring and just two percent said they had instituted hiring freezes. The remainder had either not changed their hiring plans or were in the process of reevaluating them.
“The dynamics of hiring have changed,” said Simpson in October. “But it’s not dropping off in a significant way at this moment in time. That might change.
“I think people are being more cautiously optimistic. I think product companies are much more concerned than maybe some of the services companies.”
The current hiring slowdown was not without foreshadowing. In June, just a year after raising the largest equity funding round in New Brunswick history, Fredericton- and Miami-based Introhive announced it was laying off about 16 percent of its workforce as the company braced for economic headwinds.
Introhive’s gangbusters US$100 million Series C funding round in 2021 made it a star of the Atlantic innovation ecosystem and a potential bellwether for other, smaller businesses.
At the time of the layoffs, CEO Jody Glidden said Introhive would continue to employ about 300 people. He did not reveal how many staff the company has in Atlantic Canada, but the region hit hardest by the cuts was India.
“We’re focusing on more conservative growth until the recession, and then once the recession is over we’ll be pushing the pedal down again,” he said.