Canadian tech companies may be starting up at home, but they’re growing up elsewhere.
Driving the news: A new index from research firm StartupBlink ranked Canada sixth out of 125 countries for ease of launching, operating, and scaling a tech startup. StartupBlink cited Canada’s institutions, digital infrastructure, and high levels of mobility as its keys to success.
Yes, but: This high ranking belies underlying issues in Canada’s startup ecosystem — mainly, brain drain to the No. 1-ranked U.S. A recent study found that in 2024, a paltry 32.4% of startups founded by Canadians that raised more than $1 million were actually based in Canada.
That number was over 67% between 2015 and 2019. Meanwhile, nearly half of these high-potential startups in 2024 were located in the U.S., almost double 2019 levels.
Why it matters: This slippage is alarming. A decade ago, homegrown talent seemed to be more resistant to the gravitational pull of Silicon Valley. But Canada’s benefits (e.g., healthcare, political stability) no longer seem to outweigh the U.S.’s obvious tax and regulatory perks — and, most importantly, what is arguably the world’s most dynamic tech ecosystem.
A departure of startups is ultimately bad for Canada's tech scene, as fewer mature startups erode the availability of capital, talent, and knowledge for new entrepreneurs.
What’s next: Things could get worse before they get better. Y Combinator, regarded as the world’s top startup accelerator, recently changed its policy to no longer accept companies domiciled in Canada.—QH.