In early 2016, Canada’s Minister of Finance convened the Advisory Council on Economic Growth to examine the long-term potential of Canada’s economy. In February 2017, the Council released a series of reports with their recommendations for improving the prospects for inclusive economic growth in Canada.
Of their five interlocking recommendations to accelerate innovation and help more Canadian start-ups and SME’s achieve scale, they stated that Canada should build a value-added growth capital strategy focused on Canada’s fastest-growing firms. These initiatives would help Canada raise its global competitiveness, achieve inclusive growth goals and create a more resilient economy and labour force.
One of the fundamental problems they noted with Canadian innovation is that entrepreneurs are good at launching companies, but very few achieve significant scale. Canada ranks second in ease of establishing a new firm, but the problem is that many companies do not grow beyond a certain point. The reasons noted include a small and fragmented local market, shortages of experienced business talent, a lack of at-scale sources of growth capital, and an aversion to risk on the part of some of Canada’s established companies.
Part of this challenge in achieving growth is finding and hiring experienced business talent. Canada has relatively few companies that have scaled through all stages of growth and doesn’t possess a community of large companies to train this type of talent.
Another challenge that was identified is the limited access to value-added growth capital in Canada. As compared to their peers in the United States, more than twice as many fast-growing companies in Canada cited insufficient access to risk capital as their greatest concern. In addition to funding, CBGF provides entrepreneurs with access to its Talent Network which is designed to connect entrepreneurs with seasoned executives that bring relevant experience and connections, including access to the operational expertise, strong customer relationships, and top industry talent needed to scale a business.