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Atlantic Canada sees 355 startups as of last year

Atlantic Canada sees 355 startups as of last year

Posted by PanamericanWorld on April 07, 2016

In many ways, Tanya Collier MacDonald exemplifies what was happening in the Atlantic Canadian startup community in 2015. She not only started a company, but guided it to success in a provincial competition and major incubator.

Collier MacDonald is the founder and CEO of Orenda Software Solutions, the one-year-old Sydney startup that won the Cape Breton region in Nova Scotia’s I-3 competition, and is now working with the IBM Innovation Centre in Toronto.

“Orenda is developing its platform and heading into the commercialization phase,” said MacDonald of the company, which produces social media analysis technology that analyzes in real-time the overall reputation of an organization, usually a medium to large enterprise. “And we’ve formed one partnership with a national company.”

Orenda was part of a wave of company launches across Atlantic Canada in 2015. In our preliminary tally, Entrevestor has counted a total of 355 startups in Atlantic Canada as of Dec. 31, 2015 — an increase of 24 per cent over a year earlier. The big reason for the increase is that we’ve counted 93 companies that formed last year, with the heaviest concentration in the IT sector.

“This isn’t surprising, if you look at what the universities are doing, if you look at what Propel is doing, and what’s happening in other programs,” said Dhirendra Shukla, the Dr. J. Herbert Smith ACOA chair in the engineering faculty at University of New Brunswick. “If you talk to investors, they say the capital these days is restricted, but they’re really excited about the deal flow.”

Calculating company formation is always tricky. Consider this: In the autumn of 2014, the New Brunswick Innovation Foundation received 62 entries for its Breakthru competition, which targets the hottest new startups in the province. A year later, Innovacorp in Nova Scotia received 188 applications for its I-3 Technology Startup Competition. And the regional accelerator Propel ICT took 33 companies through its 2015 cohort, and then received 162 applications for its first cohort of 2016.

So, how do we end up with only 93 new startups in 2015?

The answer is that there is high attrition in startup teams. Within the selection process, these organizations weed out people who are thinking about starting a business, but decide against it for various reasons. And as the accepted teams go through the programs, several drop by the wayside. Last year, there was considerable attrition within the Propel Launch program.

Most of the 93 rookie startups are in the IT space. A full 73 new IT startups entered the databank — or 78 per cent of the total startups founded in 2015. That’s an even larger weighting in IT than you’d expect, as IT accounts for just two-thirds of the broader Atlantic Canadian startup community.

The creation of 93 new startups marks a dramatic increase over the two previous years, when we counted about 60 companies launching each year. We also witnessed a decrease in companies that failed — there were 33 of them in 2015, about half the number a year earlier. (There was also a handful of companies that exited, left the region or became service companies, thus leaving our databank.)

There is stronger company formation in both Newfoundland and Labrador (12 new companies) and Prince Edward Island (seven new companies) than we witnessed previously.

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