Canada Has Some of the World’s Best Startup Ecosystems. Here’s How to Make Them Even Better

A recent study by Telefonica Digital has listed both the city of Toronto and Vancouver in a list of the top 10 global startup ecosystems.

With the MaRS Discovery District flourishing in Toronto and GrowLab picking up in Vancouver, both of these cities have slowly encouraged Canadian talent to stay at home for their startup ventures. But although this data sounds promising, these global startup ecosystems still struggle to attract venture capitalists and entrepreneurs as effectively as startups in major US cities.

Let’s discuss why Canada continues having trouble keeping their talent and what it needs to address in order to improve the situation.

Despite major issues with the overall economic state of the nation, one of the most enduring problems facing Canada is keeping its talented individuals. Over a third of employers agree that a shortage of talent at all levels was the biggest challenge Canadian organizations faced in 2012, according to a survey by Right Management.

“Canada is developing a desperate labor shortage, and resolving it is the key to the continued success of Canadian businesses and the economy,” concluded the Canadian Chamber of Commerce in their recent Top 10 Barriers to Competitiveness report.

A strong financial backing is crucial for Canadian businesses to grow and flourish. Many entrepreneurs lack the assets to satisfy the bank’s collateral requirements, so they have to heavily rely on venture capital instead. As a result, these generous investments need to be awarded in the earliest stages of a startup in order for it to be successful.

“By accessing venture capital, entrepreneurs can transform breakthrough ideas and the technologies that spring from their research and development efforts into successes in the marketplace that drive productivity and economic growth,” said the Canadian Chamber of Commerce.

“Canada’s venture capital industry has been struggling for more than a decade, hindering our ability to develop leading global enterprises and competitive Canadian brands,” the organization added. “Canada’s Venture Capital and Private Equity Association reports that fundraising continues to be the major challenge facing the venture capital industry.”

Experienced venture capitalists can also offer some additional help such as taking part in major company operations, planning business strategies, providing input into hiring members of management and staff, along with general marketing and sales mentoring. So without these valuable investors, it will be nothing short of impossible for startups with great ideas to not only acquire the funding they need get their feet off the ground, but also properly organize and build a successful business.

Canadian startups might also need foreign direct investments to assist in capital equipment purchases, skills development and innovation. These international investments can strengthen Canadian global competitiveness by providing cost advantages due to expansion along with their own brand of business strategies.

In order to improve their global startup ecosystems and retain domestic talent, Canada will have to continue to take steps that will attract foreign direct investments that include lowering business taxes, keeping up with current fiscal and macroeconomic strategies, and providing strategic funding for organizations that would attract international investors.

In addition, Canada should cooperate with its private venture capital associations, provincial and territorial governments, educational institutions, stakeholders, investors and entrepreneurs to cultivate a strong venture capital industry within its borders.

Young entrepreneurs must also discuss these matters with their local legislators to work together on a suitable solution that will benefit everyone. As the competition to retain domestic talent continues, bold changes must be made both to improve its global startup ecosystems, and inspire a new generation of innovators.