Home Technology Lack of investment leaves Canadian startups far behind U.S. counterparts, study finds

Lack of investment leaves Canadian startups far behind U.S. counterparts, study finds

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Caitlin MacGregor of Plum Inc.: "I can go to a party, talk about my idea and have people start writing cheques — if I was in the U.S.”National Post file photo

Companies with more money are more likely to grow and succeed.

This may seem obvious, but according to a University of Toronto study, it’s also a key explanation for the persistent problem of why the Canadian innovation sector lags so far behind that of the United States.

Canadian companies take longer to get investor funding than their American counterparts, and when they do raise capital, Canadians tend to get less money.

These observations come from Class of 2008, a report released Thursday by Charles Plant, senior fellow at the Impact Centre at the University of Toronto.

The report studied the trajectory of 2,429 companies founded in 2008 in Canada, the U.S., France, Germany and the United Kingdom, with a particular focus on the 983 startups that got at least $100,000 in capital investment.

Compared with the other countries, Canada is fairly competitive, but when compared with the U.S., startups here are losing out.

“We fund them later, with less dollars, so they don’t grow as fast, so we’re not as attractive,” Plant said. “Canadians are learning that you need to apply lots of money in order to grow fast.”

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