SOURCE: The Impact Centre

The Impact Centre

February 13, 2017 09:00 ET

Canadians are creating financially unattractive tech companies

TORONTO, ON--(Marketwired - February 13, 2017) - A study released today by the Impact Centre at the University of Toronto (www.impactcentre.ca) has shown that Canadians are creating financially unattractive tech companies.

The study compared 49 of Canada's largest funded tech companies to 49 US based Unicorns (private companies valued at over $1 billion USD) and found that:

  1. Canadian companies wait longer before they start raising funds.
  2. They raise funds less often.
  3. They raise less money over time.

These fundraising patterns demonstrate remarkable differences between high-tech firms in North America. What US companies raise in four years, Canadian companies take ten years to raise. With their extra funds, US based companies have six times as much money to spend on marketing and sales. As a result of this difference, US companies grow at a rate of 63% a year compared with 47% for Canadian companies.

These funding trends create companies that do not look attractive from an investment perspective and could lead to a cycle of underfunding and an inability to scale.

Policy experts and innovation practitioners have criticized Canada's innovation system for its inability to grow and scale companies. This issue has persisted despite the success of Canada's technology sector at starting companies and generating innovations with high potential. The Impact Centre is undertaking a research program to understand why we lag so much of the developed world in our capacity to innovate and precisely what we need to do to improve.

You can get a full copy of the report at: http://www.impactcentre.ca/research/failure-to-scale/

About The Impact Centre at The University of Toronto

The Impact Centre is a research institute at the University of Toronto. With a strong focus on innovation and entrepreneurship, the institute promotes the belief that science is the foundation for a better quality of life. Its vision is to be a place that connects exceptional research, talent, training, innovative companies, and government to create products and services that benefit society.

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