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Category: Job Creation

Category: Job Creation

New Survey Highlights Impact of COVID-19 On East Coast Startups

Our COVID-19 Startup Impact Survey offers an in-depth look into the impact of COVID-19 on Atlantic Canadian startups. Atlantic Canadian entrepreneurs are resilient and dedicated to their visions even through challenging times. Evidently, COVID-19 has brought new challenges to many startups. While some sectors are harder hit than others, there is no doubt that everyone shares the burden of decreased economic activity and increased concern for the health of friends and family.

The impact of COVID-19 on jobs

We have compiled the results and broke them down into three startup categories: pre-revenue, early stage and established startups. 

Layoffs are one of the first topics that come to mind amongst employees and employers during any crisis. Since the beginning of the pandemic, 15.84% of respondents reported laying off staff. Of those layoffs, 63% have come from early stage startups, 31% came from pre-revenue startups and established startups represent only 6%.

On the flip side to this, entrepreneurs are optimistic about revenue growth. Early stage startups appear the most optimistic, representing 62% of those anticipating revenue growth. Pre-revenue startups and established startups represent 23% and 15% of those anticipating revenue growth respectively. It is important to note the forward-looking statements should not be read as guarantees of future performance.

The impact of COVID-19 on investments

The investment environment is changing rapidly throughout the pandemic. Investors initially went on the defensive to support existing portfolio companies, creating a new challenge for those companies attempting to raise funds. There are a few interesting things to note related to investment activities from this survey:  

  1. The majority of entrepreneurs are actively seeking investment. Pre-seed and angel investments are the most sought after.
  2. The majority of entrepreneurs feel their valuations will stay the same or increase as a result of COVID-19.
  3. 74.7% of startups have less than 12 months of runway. With the majority having less than 9 months.

Entrepreneurs appear optimistic about the investment environment. One of the key things that help drive investment and valuations are progress towards meaningful milestones. A conflicting statistic present in the data was that close to half of the respondents indicated that COVID-19 had a negative impact on their business yet entrepreneurs are optimistic about their valuations. There appears to be a disconnect here.

What’s more, many respondents indicated challenges related to sales and marketing, specifically generating top of the funnel leads. If sales and marketing activities fail to yield results it will jeopardize important milestones and will affect a startup’s ability to raise follow-on financing. With the majority of entrepreneurs holding the opinion that things will return to normal late 2020 or early 2021, it is important to remember runways will be extremely short at that time.

Government support

The Federal Government has been spending a tremendous amount of resources on supporting Canadians throughout the pandemic on all fronts. While our data details which programs are being used by entrepreneurs, it is important to recognize that there is still more support needed in the community. 16.83% of respondents indicated that their business is not eligible for any programs, and pre-revenue companies are feeling left out when it comes to these support programs.

In terms of additional support, the top three requests coming from the survey center around raising capital, sales/marketing and runway extension. All three of these requests show that entrepreneurs, while optimistic, are still cautious about what lies ahead.

While there remains optimism in the ecosystem, we must be careful not to glaze over the risks should the challenges of COVID-19 last longer than anticipated.

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Job creation Q1 2021

The Q4 2019 job creation data shows a large reduction of jobs in the startup ecosystem in Atlantic Canada. The number of jobs declined by about 350, bringing the number of employed by the sector to 7,950. I anticipated that trend to continue in Q1 2020 with the COVID-19 outbreak.

However, a number of startups continued to hire in Q1 2020. About 261 net new jobs were created across 978 startups. The total amount employed in the startup scene reached 8,211. I believe most of the hiring happened in January and February then stalled out in March.

The job creation data reveals a number of startups that did lay off employees in industries that were hard hit by COVID-19 such as travel, hospitality, sports, etc… It seems the layoffs didn’t really hit hard in other industries, but I anticipate that will happen in Q2 2020. I’ve already received reports of a number of layoffs in April.

I started tracking job creation numbers of a number of Atlantic Canadian startups in November 2016 to better understand what was happening in the ecosystem. I started taking it seriously in July 2017.

Job Creation in the Atlantic Canadian Startup Ecosystem for 2019 and Q4 2019

The database has grown a lot over this time.  In fact, I am now tracking 947 companies across Atlantic Canada.  As it has grown, so has the complexity. With this complexity, it means the data isn’t perfect but my data collection methods are improving each time.

Even though the data isn’t perfect it usually paints a pretty interesting picture of what is happening in the ecosystem.

Year over year the startup community has grown a lot, boosting the local job creation.  From my count, there have been roughly 1,500 net new jobs created in the ecosystem.  

However, in the last quarter, the region saw the largest contraction of jobs that I’ve seen since I started doing this.  The number of jobs declined by about 350, bringing the number of employed by the sector to 7,950. That is even with 47 new companies that I started tracking last quarter.

The good news is there are a lot of relatively young companies that are growing at a rapid pace year over year with no visible signs of slowing down.

Who hired the most in 2019?

Company NameEmployee CountNet New Employees for 2019
Genoa Design15545
Dash Hudson10735
Mysa (previously Empowered Homes)4815
CarbonCure Technologies4113
Kinduct Technologies7011

Who hired the most last quarter (Q4 2019)?

Company NameEmployee CountNet New Employees (Q4 2019)
Genoa Design15514
CarbonCure Technologies415
Procedure Flow215
Dash Hudson1074
Mysa (previously Empowered Homes)484
Colab Software214
ABK Biomedical Inc.274
VMO Solutions113
LuminUltra Technologies573
Eigen Innovations Inc263
Solid State Pharma Inc.203
Rayleigh Solar Tech43

We release job creation data each quarter for Atlantic Canada. If you’d like to receive future job data from the industry, please subscribe to our newsletter, by clicking here.