The most important business startup statistics in Canada

Canada's startup scene has been growing exponentially in the last few years, so we've decided to create a roundup of the most important bits of data that we could about this success story. At Fundsquire, we chat with and help startup founders every day, so it's fascinating to understand the statistics behind the whirlwind of everyday business.

We've structured this article around the main questions we've heard from small businesses about startups, so if you're curious about the various statistics on Canadian business, here is your map:

801,940

Active companies in Jan 2020

95,000

Companies founded per year

260

Companies founded every day

11

Companies founded every hour

Headline Figures on Canadian SMEs

How many companies are there in Canada overall?

  • 801,940 businesses were active as of January 2020, this then went down to 689,907 in May 2020. [1]
  • Covid-19 seems to have affected business closures significantly while leaving business openings relatively robust. In January 2020 37,676 were opened in Canada, while in May there were 37,724 new openings. Closures practically doubled from 39,190 in January to 62,560 in May, reaching a height of closures in April at 87,998. [1]

How many people work for SMEs?

  • Small and Medium Enterprises provide almost half of the country’s employment – 5.1 million people work for SMEs totaling around 48.3 % of Canada’s workforce.[2]

How much do small and medium-sized companies contribute to Canada’s GDP?

  • Between the years 2010−2014, small businesses contributed on average 38.4% to the country’s GDP. [3]
  • Medium-sized companies accounted for an additional 11.8 %  taking the total for SMEs to around half the country’s GDP.[3]
  • Large businesses, on the other hand, though much fewer in number accounted for the other 49.8%.[3]

Startup Failure Statistics

How many Canadian startups survive the first 10 years?

  • There is a slight difference in survival rates between goods-producing companies and service-producing firms. [4]
  • In the first two years after starting up, these two sectors have similar failure rates – 86.8% of all Canadian startups make it to year 2.[4]
  • After the third year, the rate of survival drops more precipitously and is higher for the goods-producing sector than for companies providing services. 66.8% of companies producing goods were still there in the third year and only 63.3% of service sector companies. [4]
  • After 10 years, almost half the companies that were involved in the manufacturing of goods had survived, at a rate of 47.8%. In services that number was significantly lower, though not far off at 42.9% survival.[4]

Why do startups fail?

A survey by CBInsights that covered employees and founders from 101 startups analyzed the reasons why those companies failed. The main results were as follows:

  • 42% of startup businesses fail because there’s no market need for their services or products.
  • 29% failed because they ran out of cash.
  • 23% failed because they didn’t have the right team running the business.
  • 19% were outcompeted.
  • 18% failed because of pricing and cost issues.
  • 17% failed because of a poor product offering.
  • 17% failed because they lacked a business model.
  • 14% failed because of poor marketing.
  • 14% failed because they ignored their customers.

Frequently Requested Stats

How many businesses fail in the first year?

To found a startup means to risk a high failure rate. 20% of businesses fail in their first year and around 60% will go bust within their first three years.

Which types of startups are most profitable?

According to TechCrunch, the most profitable startups are, in order:

  1. E-commerce
  2. Chrome extensions
  3. Mobile apps
  4. Enterprise SaaS
  5. SMB SaaS

What is the best small business in Canada?

According to a review by IbisWorld, the industry with the highest profit margins in Canada is Healthcare (given high fixed costs and educational barriers, not a viable small business for everyone) followed by Real Estate, with an average profit margin of 46.5%.

What are the most profitable industries in Canada?

What distinguishes the top of profitable Canadian businesses is the fact that they are dependent on fairly laborious qualifications. One exception is Real Estate, as mentioned above. The top industries are, in order of profitability [5]:

  1. Healthcare: Primary Care Doctors
  2. Real Estate Investment Trusts
  3. Commercial Banking
  4. Law Firms
  5. Apartment Rental
  6. Gambling
  7. Accounting and Bookkeeping Services
  8. Physical therapists
  9. Dentists
  10. HR Consultants

Startup Finance Statistics

How much have Canadian startups raised through crowdfunding?

  • The transaction value in the Crowdfunding space is expected to top out at C$27.0m in 2020, with a downturn of 7.8% compared to last year.[6]
  • The transaction value is estimated to have a yearly growth rate (CAGR 2020-2024) of around 4.1%, with a projected sum of C$31.7m by the year 2024.[6]
  • The average amount raised per Crowdfunding campaign is C$6,246 in 2020.[6]
  • Compared globally, Canada ranks comparatively high, with the highest transaction value being in the United States ($448m in 2020).[6]

How much have Canadian startups raised through alternative financing (Crowdfunding & Crowdinvesting)?

  • The transaction value in the Alternative Financing segment (defined by Statista as the total transaction value of Crowdfunding – rewards-based and Crowdinvesting – equity purchase) is projected to top out at C$60.1m in 2020.[6]
  • The yearly growth rate (CAGR 2020-2024) is expected to reach 9.2% with the result that by 2024 it could reach the projected amount of C$85.5m.[6]
  • Crowdinvesting is by far the largest segment, seeing steady growth and having a projected cumulated transaction value of C$33.1m in 2020.[6]
  • Even though Canada is a relatively large player in the alternative finance space, the US still leads the pack with a projected $1.2b in total transaction value in 2020.[6]
Chat to us about Startup Finance Options

Sources

[1]https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3310027001

[2]https://www.startupcan.ca/wp-content/uploads/2012/01/Statistics-on-Small-Business-in-Canada_StartupCanada.pdf

[3]https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html#point3-1

[4]https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html#point1-3

[5]https://www.ibisworld.com/industry-insider/analyst-insights/top-10-canadian-industries-by-profit-margin/

[6]https://www.statista.com/outlook/297/108/alternative-financing/canada?currency=cad

https://techcrunch.com/2019/03/08/which-types-of-startups-are-most-often-profitable/

https://www.cbinsights.com/research/startup-failure-reasons-top/


Alex Kepka

Alex is a tech-focused funding expert, helping innovative companies grow through innovative funding through her work at Fundsquire. She also has a background in journalism, having written for outlets like Vice and many others in the past on topics ranging from philosophy to economics.