Canada holds a peculiar status in the global tech ecosystem. Developing groundbreaking ideas, it seems, is a matter of course. Our researchers nurture and develop them in universities thanks in large part to government funding. Then, something tragic happens. We sell them at a steep discount to global players. We have become, as Daniel Muzyka put it, “a net exporter of ideas”.
One of the main reasons for this is the disconnect between what’s happening in Canadian universities and what’s happening in Canadian industry. The result? Multi-billion-dollar companies like Google can patent Canada’s revolutionary AI research and use it throughout their entire business to make bank.
So what’s the problem? Why can’t Canada turn billion-dollar ideas into a larger volume of billion-dollar companies? One major cause is the lack of access to seed stage or early-stage funding. Disruption requires the application of either new technology or new approaches, and this equals risk. Historically, risk takers in places like Silicon Valley have had access to funding to develop their ideas into products and then test, iterate, and sell them.
Canadian companies – not so much.
If early-stage funding in Canada is tricky, then it’s a downright challenge – if not near impossible – in the Prairies. With provinces like Ontario and Quebec attracting most of the larger tech world’s attention, it’s difficult for Prairie provinces such as Alberta, Saskatchewan, and Manitoba to secure the funding they need. It’s a shame, too, since that funding would be well placed. Over the past few years, new tech companies have rapidly emerged in the Prairies and the region’s entrepreneurs are shifting from natural resources to technology.
Activating this entrepreneurial energy and converting it into a tech ecosystem requires the money to generate early success stories and create momentum. Promisingly, some of that money is already here. In 2020, Alberta, Saskatchewan, and Manitoba attracted over $300 million, $10 million, and $29 million in VC funding, respectively.
If you’re a Prairie entrepreneur, how do you go about securing a piece of this funding? How early do you start looking for funding? How do you articulate why you need funding? What do you need to say to convince someone to give you money? And how do you make heads or tails of the types of funding available?
To answer these questions, we’ve consulted with experts at Harvest Builders as well as experienced players in the Prairie tech ecosystem to develop, “The Harvest Guide to Funding”. This guide will help you to identify:
There’s something stirring in the Prairies.
While Venture Capital (V.C.) deals slowed down in Canada during the tail end of 2020, cities like Calgary broke records for private investment despite pandemic-related challenges. In 2020, more than $200 million of venture capital flowed into the Prairie city, up from $136 million the previous year. Over the past year, startups in the Prairies have raised $1 billion. This success suggests that the region is gaining momentum, a key ingredient for developing a thriving tech ecosystem.
Injecting the capital necessary for growth
Today, venture capital’s presence signals potential for the Prairies. It’s also the thing hindering its growth. While the region has attracted record amounts of private capital over the past year, it will need more funding for early-stage companies – the riskiest type of funding – if it’s to sprout meaningful innovation. Last year, U.S. companies had access to V.C. inflows of roughly $156.2 billion. Over $10 billion of that went to seed stage companies while early-stage startups received $41.8 billion. U.S.-based innovators have the opportunity to nurse their ideas past their most vulnerable state. By comparison, Canadian seedlings don’t have that luxury. In Q3 2020, only 8 per cent of V.C. funding went to seed stage companies. A Canadian founder must have institutional support, a previous successful exit, or access to global capital.
Canada has an enormous amount of innovative energy waiting to be exploited. Fortunately, a combination of previously successful founders and forward-thinking regional governments is creating the ideal environment for raising Canada’s next unicorns.
Harvest helps enrich the startup environment for future entrepreneurs. With this in mind, we’ve spent the past few months reflecting on the trends in the Canadian startup ecosystem, with a focus on the Prairies. We’ve used this analysis to help entrepreneurs understand how to proceed in 2021. We offer the following recommendations:
Develop a thorough understanding of the value chain and market size in your target vertical
Define and validate the core assumptions of your business plan
Develop a business model that outlines the unit economics of your product, key milestones, and the resources required to achieve them
Continuously test and iterate
Within this almanac, we’ve focused on areas of technology innovation that we consider most promising for Canadian tech investors. In the past, Prairie farmers relied on almanacs to make their plans for the year’s crops. Today, The Builders' Almanac will help Prairie entrepreneurs and innovators across industries take a look into the trends that will shape the region’s technological and commercial activities in 2021.
We hope you enjoy Harvest's inaugural almanac, and are able to put the following trends and insights to use.
Adam Froese, Venture Builder at Harvest
Every good idea must find its market to become a business.
If you’re a seed stage startup chasing Series A funding, this is easier said than done. Limited time, money, and people leave founders scrambling to capitalize on as many opportunities as possible.
According to the experts, this isn’t the way to go.
Turns out, the startups that pass the seed stage and secure funding take a deliberate, focused approach to building their business. They devote their energy to four objectives:
Growth marketing is the activity that helps companies succeed on all four fronts in a measured, focused, and sustainable way. In fact, growth marketing takes companies even further by maturing along with the business and adapting to evolving business needs as the company pursues post-Series A funding.
But what exactly is growth marketing? If you’re a founder with limited time, it’s important to walk away with more than just buzzwords. In our Harvest Guide to Growth Marketing, we focus on clear learning objectives. In this guide, you will:
Let’s get started.