By Peter Moreira, founder of Entrevestor
As in all startup ecosystems, there’s a crying need for more capital and coding talent on Canada’s East Coast. But in terms of structural improvements that would lead to economic growth, the region most needs expertise in helping established companies to scale.
To get an idea of the potential of Atlantic Canada’s startup community, consider a company like Kinduct Technologies. This Halifax-based tech startup assembled a library of medical information, accessible on a single platform, and has sold the product to a range of professional and college sports teams, such as the New York Rangers and the University of Louisville Cardinals. Kinduct’s sales growth has averaged 518 per cent over three years.
“It is a little skewed of course because of our first year,” said Kinduct CEO Travis McDonough, referring to a year of 1,380 percent growth. That was followed by years with 69 percent and 107 percent increases in sales.
Kinduct is one of the more successful East Coast startups, but it’s not the only one with significant and growing traction. There are now about 80 Atlantic Canadian high-growth innovation companies with annual sales of more than $100,000 and growing. Also, according to data collected by Entrevestor, the average revenue growth in 2014 of all startups in the region was 38.5 percent, following growth of 30 percent in 2013.
Entrevestor is mainly a news service – it covers startups in Atlantic Canada and, more recently, Kitchener-Waterloo. However, it also collects data on startups in the Atlantic region and last year polled 153 of them, with 122 startups providing revenue data.
What Entrevestor found is an extremely young startup community, with 55 percent of the companies less than four years old. More than 40 percent of the startups are pre-revenue. The community really only began to develop after social media analytics company Radian6 sold out to Salesforce.com for $326 million in 2011 – a deal that ignited interest in tech in the region. Now, the regional accelerator Propel ICT is aiming to launch 420 new companies over five years.
The fact that company formation is so strong in Atlantic Canada is nothing to sneeze at. The players in the ecosystem had to overcome considerable obstacles for this to happen. With the exception of a few notable billionaires, Atlantic Canada has a weak tradition in entrepreneurship, and economic growth in the Maritimes has rarely (if ever) topped 1 percent per year in this century. Also, the four provinces historically have had a poor record of working together to support economic initiatives.
Inspired by private sector leadership and the example set by Propel co-founder Gerry Pond, Atlantic Canada’s founders, funders and support agencies have created a unified startup community spanning four provinces and two time zones. How vast is this geographic area? If you’re in Fredericton, you can drive or fly to Toronto in half the time it takes you to get to St. John’s.
The cornerstone of this pan-regional ecosystem is Propel. Working with local partners, the accelerator held four different cohorts this summer. Six companies ready for seed investment met at the Venn Centre in Moncton, while 27 earlier-stage companies went through programs at Planet Hatch in Fredericton, Volta Labs in Halifax, and Common Ground in St. John’s. Propel’s accelerator program is complemented by a range of academic programs like Dalhousie University’s Launch Dal, St. Mary’s University’s Master of Technology, Entrepreneurship &Innovation (MTEI) program, and the University of New Brunswick’s Technology Management & Entrepreneurship (TME) programs. Good programs? You bet.
But they are targeted at early-stage companies, and more needs to be done for the dozens of ventures like Kinduct that have solid traction and need to scale. They include Dartmouth-based multi-channel marketing platform SimplyCast; St. John’s-based film production software company Celtx; and Moncton-based Industrial Internet of Things company RtTech Software.
Entrevestor has been reporting recently on the Kitchener-Waterloo ecosystem and the lessons from that region are striking. The Communitech Rev program focuses on sales growth, and the most recent CAIP funding will develop programs for later stage companies. Atlantic Canada needs to implement similar programs.
The process is beginning. The Volta startup house in Halifax has recently doubled in size, which has allowed for more late-stage companies to benefit from its offices and programs. Propel is examining how to do more with its graduate companies and Pond offered $500,000 to any university that comes up with a program in international technology sales. An announcement by Pond and a university is expected soon and should benefit scaling startups.
Investments like these open doors to valuable expertise, motivation, and inspiration for Atlantic Canada’s entrepreneurs. Everyone from early-stage to established startups stands to benefit, which will foster a stronger and more cohesive startup community overall. Potential is bubbling in Atlantic Canada. It’s time to unleash it.
Peter Moreira is the founder of Entrevestor (www.entrevestor.com), which provides daily news on the startup communities in Atlantic Canada and Kitchener-Waterloo. Leave your email address at the bottom of our home page to receive our daily updates.