Canadian entrepreneurs have much to smile about: Canada ranks as one of the best countries in the world to start a business, according to a report by EY.
The report applauded Canada’s low labour and startup costs, negligible insolvency rates, low tax burden, and said that the country has better access to funding than most other G20 countries. Yet, EY also noted three in four entrepreneurs cited that financing remains a hurdle in Canada, while 36% said business failure is a barrier to future venture opportunities.The 2013 Entrepreneurship Barometer report, released by the consulting firm ahead of the G20 Leaders Summit next week, studied conditions for startups in the bloc. The second annual findings placed Canada among the top five in the G20, behind the United States and United Kingdom on conditions for entrepreneurs, but ahead of France and Germany.
“It’s a very positive story with respect to Canada in the world stage,” said Colleen McMorrow, EY director of Entrepreneur of the Year. The cost of starting a business has been cut in half in the past decade. Canada came second, bested only by Saudi Arabia, for its supportive regulatory and tax regime.
The top ranking quartile consisted of mature markets such as the U.S., U.K., Australia, South Korea, and Canada, but emerging markets are “nipping at our heels,” Ms. McMorrow said. “The job’s not done. There is lots of room for improvement.”
A national stigma for failure is also a barrier to entering the entrepreneurial class, Ms. Deans said.Canada scores below average on perceptions of entrepreneurship as a viable career choice, a sentiment that doesn’t bode well for the general ecosystem with relatively low self-employment figures. “The challenge we have with the high youth unemployment rate is going to steer our youth toward entrepreneurship,” Ms. McMorrow said. Young adults need to start considering running a business as a feasible alternative to traditional career trajectories, such as medicine and engineering, she added.
Ms. McMorrow credited the federal government for trying to fuel the business climate, with initiatives such as the Startup Visa scheme that caters to innovative immigrants with 2,750 annual visas for at least five years.
The report surveyed more than 1,500 entrepreneurs on five areas: access to funding, co-ordinated support, education and training, tax and regulation, and entrepreneurial culture.
The job’s not done. There is lots of room for improvement
Canada’s weakest pillar, at 16th place, was “co-ordinated support” from mentors, incubators, and accelerators — “the glue that holds everything together,” described Ms. McMorrow. Public spending on education is high in the country, but informal training channels, especially corporate mentors, are limited.
While Canada ranks high for accessing domestic funding — primarily venture capital and private equity versus bank lending — the matchmaking of mentoring relationships between angel investors and startups are few and far between, she said. “It’s making sure that young entrepreneurs in particular understand that there are different sources of funding at different stages of growth along the entrepreneurial journey.”
Canadian entrepreneurs need to take advantage of incubating programs such as The Next 36 that conflate academic expertise, capital access, and mentoring, Ms. McMorrow said.
Many of these accelerators are concentrated in central and Western Canada, said Ms. Deans, which could account for lack of satisfaction with networking services.
“In some [provincial] markets, finance is much more readily available. In Saskatchewan, for instance, there are no accelerators. If you’re a young entrepreneur in Saskatchewan, your options for developing your business are way fewer than they are in southern Ontario,” she said.
Forty-five per cent of Canadian entrepreneurs said access to capital has improved in the past three years, compared to 35% G20 average.