It's tough to grow a startup in Canada.

The latest report from the Global Entrepreneurship Monitor on entrepreneurship in Canada was released at the Canadian Council for Small Business and Entrepreneurship (CCSBE) meeting in Calgary.

The report shows how hard it is to grow a startup in Canada. A couple of metrics from the report explain this.

1.???? The level of start ups in Canada is very high.

The graphic below shows the level of early-stage entrepreneurship (TEA) and established businesses (EBO) in Canada compare with the other G6 countries - Canada, USA, UK, Germany, France, and Italy. Canada has the highest rate of early-stage startups. This is defined as the percentage of the adult population engaged in the active planning stage or up to 42 months after launch.

?2.???? The level of established businesses is much lower.

??An established business is one that has existed for three and a half years or more. So, a great many startups fail to grow to three and a half years. In other words, there is a big churn in startup activity – many starts and many failures.

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?There are a large number of reasons why businesses were discontinued in Canada, as shown in the graphic below.

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But there is also plenty of good news in the report.

The population is increasingly supportive of entrepreneurship.

Since 2026 the attitude of the public towards entrepreneurship has increased in many ways, as shown in the table below. More people know an entrepreneur, see opportunities for new businesses, feel they have the skills to start a new business and actually plan to start a business. The exception to this is fear of failure, which has increased significantly. Fear of failure can make people not go ahead with a plan to start a business.

Startups have the second highest use of digital technologies in the G6 countries, behind the UK.

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?Established businesses have the highest usage of digital technologies in the G6.

Small businesses in finance and insurance, information and culture, professional services and wholesale trade industries were consistently among those reporting the highest digital tech adoption rates.

There are more women startup entrepreneurs than in any other G6 country.

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Canada has the highest level of business angel investing in the G6.

Business Angels as an important source of funds for new businesses, particularly in Canada and the USA. The rate of business angel activity for Canada increased by 3% in 2023, while the USA rate decreased slightly from 2022 levels. Rates for the other G6 economies were similar to 2022 levels.

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There are a number of other interesting facts that emerge from the report.

Franchising. This is the first year we have asked the franchising question. Almost a quarter of total early-stage entrepreneurial activity is based on the franchise model, with just over one in ten established businesses based on the franchise model. It could be that the high rate of franchising is related to the high fear of failure rate, as franchising reduces the risk of starting a new business.

The peak age for startup entrepreneurs is 25-34. This is the same as all the other G6 countries. The second largest cohort is the 18-24 age group, followed by the 35-44 age group.

Education level. GEM measures educational level of startup entrepreneurs in four categories – some high school or lower, high school diploma, post-secondary degree, and graduate experience. In Canada, the “high school diploma “group has the highest rate of startups, by a small margin. The other three categories are all approximately equal.

Framework for entrepreneurship.

GEM evaluates the support system for startup entrepreneurs according to thirteen metrics. A comparison between Canada and the other G6 countries is shown below.

Canada’s highest score was in general physical infrastructure and its lowest score was in entrepreneurial level of education in primary and secondary.

None of Canada’s ratings scored either the highest or the lowest amongst G6 countries. By comparison, the USA has two of the lowest scores (R&D level of transference, and government programs) and two of the highest scores (culture and societal support, and general physical infrastructure).

Conclusion. It is difficult to grow and scale up a startup in Canada. Entrepreneurs have a very supportive population, use digital technologies more than peer countries, have more women start up entrepreneurs than other G6 countries and more Angel investors.

Working to improve the supports for startups will help more of them grow to become established businesses.

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Peter Josty

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