Finding a buyer is no longer a key exit strategy for Canadian startup CEOs. In fact, only 44% of the surveyed companies are looking towards a merger or an acquisition to exit the market, a stark contrast to the 76% who were eyeing this route just a year ago, finds a PwC study. Further, 21% anticipate a partial sale of the company, while 30% have no plans to exit at all. This means the trend is moving towards building the business and bringing it to the next growth stage.
The study also suggests CEOs are staying put for good reason. More than one-third report profitability, while 28% expect to get there within one year, and 26% within two years.
Startup CEOs are also staying close to home. With Canada’s economy continue to grow at a steady pace, nearly 70% of respondents generate most of their revenue at home in Canada, well ahead of the U.S. (23%) and overseas (9%).
“Emerging companies in Canada are in a good place, and the prospects for profit are high,” says Eugene Bomba, national emerging company services leader at PwC. “Larger businesses are more willing to work with, and give a chance to, startup ventures, and this friendly climate is helping CEOs to truly develop their businesses while growing their revenue on home soil.”
But even with the future looking bright for emerging companies in Canada, startup CEOs are still uncertain about today’s market. Survey results show leaders cite revenue generation (41%) and funding (19%) as their biggest concerns, ahead of attracting and retaining talent (11%), which topped the list for the first time last year at 26%.
“Tech services are in high demand and smart operational and financial decision making are the tools to bringing a company’s vision to life and seeing it thrive,” adds Chris Dulny, PwC’s national technology sector leader.
Other survey highlights include:
- Women make up only 27% of the workforce and 24% of their management teams;
- At 64%, private funding from family and friends continues to be the primary source of funding, compared to 16% who rely on angel investors and 9% who sought private venture funding. And almost half declared they did not need to raise funds at all;
- 50% tap into at least one government funding source. Among these, 35% took advantage of the “Scientific Research and Experimental Development” tax credit program (SR&ED), while 20% say they dipped into the Industry Research Assistance Program (IRAP);
- Startups continue to hold on to full-time staff, with 72% reporting losing less than 5% of employees to voluntary turnover. To keep talent, 36% use stock compensation as a way to build closer ties between performance and results, and to increase employee engagement.
This originally appeared at Avisor