by Christine Wong
Startup Grind is the newest entry on Canada’s red hot tech startup scene.
The U.S.-based organization, which already has branches in Los Angeles, New York, Austin, Tx., San Francisco, Tempe, Az. and Marin, Ca., just opened new bases in Ottawa and Toronto. The group’s goal is to foster startup activity in each of those regions by bringing together local entrepreneurs, investors, designers, programmers and mentors.
The Canadian startup scene seems to be turbocharged. It also seems to be getting crowded.
Within the last few months alone there’s been a string of additions like the Startup Grind announcement: new incubators and accelerators (Jolt, Hyperdrive, Driven, and one within InvestOttawa), new organizations (Startup Canada and the aforementioned Startup Grind), new funding (including about half a billion dollars for startup ventures in the federal budget) and new media outlets (PostMedia bought Sprouter which begat BetaKit, respected blogger Mark Evans just launched a weekly newsletter, newcomer Startup Canada now sends out a daily digest, we here at IT Business Canada are doing a daily startup news round-up, and the National Post and Globe and Mail have beefed up their small business and entrepreneurship coverage with a heavy emphasis on the tech scene).
There’s even a service called Clarity.fm offering startups advice from successful businesspeople over the phone, launched by east coast serial entrepreneur Dan Martell.
Will this onslaught of funding, support services, and media coverage actually translate into stronger Canadian tech startups?
Too early to tell.
But having more players in any game usually breeds competition. And that can’t be a bad thing. It probably means all these startups are vying more fiercely for talent to hire, which admittedly causes headaches for recruiters and tech firms trying to fill key spots on their teams. It might also mean, however, that all these groups, services and media outlets will be forced to constantly improve their offerings to survive.
It’s easy being the only game in town and enjoying a monopoly. New competition in a market that’s getting a bit crowded makes you take a look at yourself and up your level of play, to not only stay afloat but beat your rivals.
Survival of the startup services fittest, you might say. It’s a game playing out not just among the emerging tech firms themselves but perhaps among the services catering to them now here in Canada.
Startup headlines vs reality?
There may be a disconnect going on between all the headlines trumpeting the flurry of global startup activity and what’s really happening in the world of entrepreneurship.
The U.S. startup business creation rate hit an all-time low of 7.87 per cent, according to the latest figures from the U.S. Census Bureau. The startup business rate peaked at an all-time high of 13.02 per cent in 1987.
Entrepreneurial companies accounted for just 12 per cent of all American employment in 2010 compared with 20 per cent in the 1980s, the study showed.
Entrepreneurs’ share of job creation has also fallen to 30 per cent in recent years, down from over 40 per cent in the 1980s. And only 35 per cent of all American companies are within the startup range (in business for five or less years), down from almost 50 per cent in the early 1980s.
The takeaway: despite all the media coverage about startups and president Obama’s Startup America initiative to fund and support entrepreneurship, new business creation is hitting new lows, at least south of the border.
It’s not something to be taken lightly. A Reuters story on the data quotes warnings from some U.S. economists and researchers that without stronger rates of entrepreneurship, the American economy will continue to stagnate and not really recover from the U.S. recession that officially ended in 2009.
It’ll be interesting to check for similar statistics in Canada a year or two from now, to see if all the startup activity and coverage will really translate into more new businesses and jobs up here.