Why now is an ideal time for startups in Canada

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Erin Bury | Oct 15, 2012 10:51 AM ET | Last Updated: Oct 15, 2012 11:00 AM ET
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This week is Small Business Week in Canada — an entire week devoted to all things entrepreneurial. It’s a chance to reflect on the successes Canadian entrepreneurs have had this year, while also examining the state of entrepreneurship in the country.

There have been several notable Canadian small business milestones this year, fromEloqua’s IPO, to HootSuite’s $20-million funding from Canadian venture capital fund OMERS Ventures in March, to Salesforce acquiring GoInstant for a reported $70-million in July. Not to mention classes of startups graduating from accelerators including MaRS’ JOLT, Communitech’s HYPERDRIVEExtreme StartupsInCubes, andTheNext36.

To get some insight into the current small business landscape, I decided to poll some Canadian entrepreneurs and investors. I asked each of them one question: Why is right now a great time to start a small business in Canada?

One entrepreneur, Kunal Gupta, Polar Mobile founder, said starting a business today is easier than it was five years ago, when he was starting his app development platform, which has worked with more than 380 media companies around the world.

“Entrepreneurship is widely recognized, celebrated and supported by the larger ecosystem of government, education providers, corporate industry and mainstream press,” Gupta said.

“This is seen through the number of entrepreneurship related degrees, startup tech incubators, grants and funding assistance programs, and mentorship opportunities. Many of these support programs did not exist even a few years ago.”

“The barrier to entry in terms of technology has never been lower, and today anyone that knows how to use email can effectively start their own online business,” said Harley Finkelstein, chief platform officer at Ottawa-based Shopify, when asked the question. The platform lets any merchant create an online store and hosts more than 35,000 online stores (2,500 in Canada) that have sold more than $1-billion worth of products on the platform.

“Moreover, the financial risks typically associated with launching a traditional company — payroll, leaseholds, inventory, and capital expenditures — are essentially non-existent in the current economy.”

On the investor side, Chris Arsenault ofiNovia Capital says his fund has invested in more than 10 Canadian tech companies in the past year, among them Top Hat Monocle, and several pre-revenue companies.

“Entrepreneurship is at its best across Canada, and we are seeing ambition now being matched by execution,” Arsenault said. “I’m driven by the high level of motivation and connectivity our entrepreneurs are showing. Feels like nothing can stop them. If we don’t fund them, then a U.S. VC firm will.”

Mark MacLeod, a partner at RealVentures, says access to funding, both via traditional avenues or through crowdfunding, is one reason it’s a great time to start a business. The fact that Canada has one of the highest Facebook penetration rates in the world means Canadian businesses can easily find local customers online, he said. (There are 18 million monthly active Facebook users in Canada, while Canada is 5th globally in terms of having the most small business professionals on LinkedIn.) MacLeod said there are additional examples of million-dollar business leaders, both in the offline and online space, that new entrepreneurs can learn from.

“Whether it’s Ryan Holmes from Hootsuite publicly stating his desire to build a $1-billion company or Harry Rosen building a globally respected fashion brand, we have great role models to learn from,” MacLeod said.

There will always be challenges to starting a small business in Canada, with an investment scene that isn’t as active as it is in Silicon Valley and a constant need for development talent. But the experts — investors and entrepreneurs — agree the barrier to entry has never been lower.

Erin Bury is managing editor at BetaKit, an emerging tech publication launched by Sprouter.com. If you have emerging tech news get in touch at erin@betakit.com.

Source:  Financial Post

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