Mid-to-large-size tech companies like HootSuite, Global Relay, Vision Critical make up the minority in Vancouver.
And it appears it will remain that way, at least for now, after a May 12 study revealed most Canadian startups have no intention of sticking it out for the long-term.
Instead, 63% of emerging companies plan on leaving the market via acquisition, according to the report released by PricewaterhouseCoopers (PwC).
That’s a jump of almost 20% compared to last year when just 44% of polled CEOs said they wanted to be acquired by a larger company.
Meanwhile, 40% of companies want off the market within one to three years.
“It’s a lot harder to build a bigger business because the acquisitions are happening a lot earlier,” said Eugene Bomba, Canadian leader of PwC's emerging company services practice.
He said some businesspeople may just be risk-averse and jump on the opportunity to sell their company when the opportunity presents itself as opposed to stick with it in the long-term.
But he said Canada has been experiencing massive growth in terms founding startups and this is an easier issue to address than if not enough entrepreneurs were launching companies.
Bill Tam, president of the B.C. Technology Industry Association (BCTIA), said access to capital is one of the big challenges for startups.
“As a consequence, small capital raises tend then to attract the need for some sort of M&A (mergers and acquisitions) type of activity to pay off or be able to return that back to the early investors.”
He added B.C. has experienced a lot of growth the last few years, as large- to mid-size businesses have gone from making up 3% of tech companies to 4.5% of tech companies.
Tam said it’s critical to B.C.’s economic success that small businesses develop into anchor businesses.
“They’re the ones that spawn more spinoffs, more startups, they attract more capital, they’re the ones that hire more people,” he said.
“And that’s what builds a healthier ecosystem in the long-term.”
Tam said building on broader investment and reaching out to “role models” — larger companies that are willing to share their insights with startups — are among the significant steps that can be taken to help smaller businesses accelerate growth.
