3.2. Canada has a smaller proportion of Seed-funded Startups This chart also illustrates how reduced seed rounds are ‘inherited’ by later stages: reading horizontally across the top row (i.e. the pre-VCAP period), it is clear that the 30% fewer seed funded companies (in Canada Tier 1 in 2011-13, compared with US Tier 1) was a major contributor to the 40% fewer Series A funded companies, and the 50% fewer Series B firms. It is important to understand this ‘inheritance’, since a disparity in later-stage funding is often a consequence of a disparity in earlier-stages, several years earlier. Policymakers sometimes assume that late-stage gaps must require late-stage interventions, without appreciating that they were really the result of gaps at earlier stages, some time previously. To provide more detail of the missing seed-stage firms, we can examine the proportion of startups that receive seed funding over time, relative to the US. The chart below shows this, over a longer time period, with the US indexed to 100%. As this chart makes clear, the apparent ‘catching up’ of Canada in the period up to 2020 (which might be inferred by the reducing gap of the first column in Figure 1) hit a ceiling, and on average Canadian ecosystems are still funding a lower proportion – 14% fewer – of their startups at seed stage than their peers .
Figure 3: Comparison of Proportion of Seed-Funded Startups (Canada Tier 1 and US Tier 2 shown as percentage of US Tier 1, 3 year moving average)
This is critical to address because, whilst ‘gaps’ are inherited at later stages, the converse is also true: increasing the seed-funding success is also ‘inherited’ by later
Startup Genome | San Francisco • Berlin • London • Delhi • Tokyo • Abu Dhabi • Bangalore • São Paulo
p. 18
Powered by FlippingBook