Now in its 10th year, the Startup Outlook Report from Silicon Valley Bank (SVB) evaluates the innovation economy in the US, the UK, China, and for the first time, Canada, too. From the technologies that will shape tomorrow to the biggest hurdles faced by Canadian startup businesses today, the 14-page report gives a look at the state of startup culture in Canada as seen by those directly involved in it.
A total of 1,400 tech and healthcare founders took part in the survey, and overall 90% of Canadian respondents said they were optimistic about the outlook of the innovation economy in 2019. While 56% think conditions will be better in 2019, 31% believe conditions will stay the same, and 13% believe conditions will worsen in 2019.
The majority of Canadian startups expect to be acquired (only 1 in 5 Canadian startups expect to stay private). Over half (56%) of those surveyed expressed that their biggest long term goal was to get acquired. A total of 13% saw an initial public offering (IPO) as the objective, and 12% said they simply didn’t know their long term goal.
AI is the most touted technology expected to shape 2019 and beyond — 73% of respondents cited AI as the biggest game-changer, and 69% saw it still being influential in a decade.
Following AI was big data with 35% saying it’s the most promising technology in 2019. The report says the 13% see it being influential in a decade. Autonomous transportation and cleantech are among the sectors that respondents also think to be promising in a decade.
Below is the breakdown of sectors that Canadian founders expect to be a big part of today (2019) and years to come (a decade). Note: respondents could choose up to three responses.
AI: 73% in 2019; 69% in a decade
Big data: 35% in 2019; 13% in a decade
Life science: 17% in 2019; 30% in a decade
Digital health: 22% in 2019; 22% in a decade
Cybersecurity: 20% in 2019; 13% in a decade
Fintech: 28% in 2019; 13% in a decade
Enterprise technology: 24% in 2019; 6% in a decade
Autonomous transportation: 13% in 2019; 28% in a decade
Cryptocurrency/blockchain: 14% in 2019; 21% in a decade
Cleantech/energy innovation: 15% in 2019; 28% in a decade
Advanced manufacturing/robotics: 12% in 2019; 17% in a decade
Augmented reality/virtual reality: 12% in 2019; 17% in a decade
Consumer internet: 5% in 2019; 3% in a decade
Space: 4% in 2019; 15% in a decade.
The biggest hurdle felt by Canadian startups is raising capital with eight in 10 of respondents saying the current fundraising environment is extremely (24%) or somewhat challenging (57%), and 19% of respondents said fundraising was not challenging.
As for the main source of funding: 48% expect the most financial support to come from venture capitalists. Twenty-eight percent look to angel, micro VC and individual investors, while 7% see private equity as the main source of funding, while 5% of respondents noted corporate investors as the next source, and 5% said they expected to receive support through a government grant.
More than 80% of Canadian startups say they plan to add employees in 2019, but 89% say it is extremely or somewhat challenging to find talent. The most in-demand help needed is in product development/research and development (R&D), technical and sales positions.
Forty percent of Canadian startups recorded having at least one woman on the board of directors and 60% report having at least one woman in an executive position within the company. Silicon Valley Bank (SVB) will publish an new report on Women in Technology Leadership in coming months.
Forty-six percent of respondents see mergers and acquisitions (M&A) activity as being healthy, 40% expect no change in M&A in 2019 and 14% of founders said they expect fewer acquisitions in 2019.
In addition to finding talent, founders say consumer privacy (32%), cybersecurity (29%), international trade (26%), labour/workforce requirements (24%), infrastructure (23%), and banking/payments regulation (23%) are the most important public policy issues affecting companies like theirs.
Six in 10 of those surveyed said their startups received government benefits designed to support the innovation economy. Just over 60% say government support has made a positive impact compared with 29% which cited no impact at all. Ten percent reported a negative impact.
Read the full 2019 Startup Outlook Report for Canada here.