Canadians Startups Not Thinking Long-Term, Simply Want to Get Acquired: Report

According to a report released this week by PwC, Canadian startups want to be acquired, but are cautious about going public and aren’t thinking about building for the long haul.

PwC’s 11th annual Emerging Companies Survey, Canadian startups are indeed looking to leave the market, rather than grow their business in Canada, as 78% are looking at some sort of exit strategy. 63% of all respondents are eying an acquisition—up from last year’s 44%—while just 7% are looking towards an IPO. Businesses are also looking to exit quickly—40% plan to leave the market in between one and three years.

“The results show that Canadian startups are not looking to build business for the long term—instead, they want to build to a proof point and then sell,” says Eugene Bomba, Canadian Emerging Company Services Leader at PwC.

“This trend impacts the made-in-Canada market, as with so many companies looking towards an acquisition, it’s expected that large US companies will be looking to acquire Canadian businesses predominantly for talent through M&A activity,” Bomba added.

When asked what their biggest challenge was in their most recent fiscal year, 35% of respondents said funding. In second was revenue generation at 28%, and well back at 10% was attracting and retaining talent—the top challenge for startups just two years ago.