INVESTMENT ACTIVITY IN 2021 Spotlight on Atlantic Canada
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While the pandemic is one reason for the slowing growth, founders and support organizations tell us there is another culprit: the rising cost of talent. We’ve heard that the salaries for programmers in Atlantic Canada now start at $80,000 a year and go much higher. It means young companies – even those that have secured some equity and/or non-dilutive funding – have a hard time paying to produce a minimum viable product. The situation is fluid, but we have heard that this dynamic is changing the environment for fundraising because founders need more money, and have to convince funders they have the wherewithal to cope with soaring staff costs.
Having said that, Atlantic Canadian companies – even those at early stages – are raising money from angels, or from support organizations that make similar investments, like Innovacorp in Nova Scotia and the New Brunswick Innovation Foundation. We looked into the band of funding you’d tend to associate with angel funding – we chose $100,000-$999,999 – and found that 45 companies raised money within this band in 2021. More than one-third of these companies raised more than $500,000. All ‘n’ all, 2021 was a great year for funding of Atlantic Canadian innovators. The biggest deal was the $198 million raised by Halifax- based Meta Materials Inc when it
listed on the Nasdaq. The largest VC deals were by two companies with dual headquarters in the U.S. and Fredericton: Introhive (US$100 million) and Sonrai Security (US$50 million). In total, high-growth innovation companies in Atlantic Canada raised $638.4 million in 2021. Startup revenues increased 53.8 percent, the first time in four years they fell below 70 percent. The slower growth is due to the fact that the region now boasts more mature companies, and they tend to grow more slowly. If we strip out the companies whose sales exceeded $5 million, revenue growth increases to 70.8 percent.
BY PETER MOREIRA
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