An increasing number of technology entrepreneurs are leaving Canada to grow their businesses elsewhere, and that needs to stop, according to a CEO advocating for Canada’s tech and innovation economy.
One solution is to create policies that make it easier for them to stay, Lisa Zarzeczny,CEO and co-founder of Elevate told BNN Bloomberg in an interview on Monday.
“We need to really incentivize people to want to build companies here,” said Zarzeczny.
A recent Globe and Mail survey found that 67 per cent of startups launched by Canadians last year are set up outside Canada. That number has doubled in the last decade. The survey found that the lack of funding, regulation and tax policies all play a role in Canadian entrepreneurs setting up shop elsewhere.
A federally proposed tax hike in the capital gains inclusion rate last year was met with significant push back from Canadian entrepreneurs. It proposed to increase the inclusion rate from 50 per cent to two thirds for gains over $250,000.
One tech founder said it drove entrepreneurs out of the country who feared high taxes, low capital and less ownership in their intellectual property.
This spring, Prime Minister Mark Carney canceled the proposed hike.
“I’m happy to see that that’s removed because that’s a big thing, right?” said Zarzeczny.
“You go to university, you work your butt off, you take all this risk, and at the end of the day, you have to have that financial incentive to do it,” said Zarzeczny.
She highlighted Canada as a leader in the academic world, producing a large number of entrepreneurs on the global stage, but not being able to support them.
“Our schools are top notch. And really the question that you posed is, how do we retain that talent?” said Zarzeczny.
A study on Canadian talent leaving the country called Reversing the Brain Drain: Where is Canadian STEM Talent Going? published in 2018 showed that one in four STEM students were working outside of Canada, and the majority of them were leaving to go to the U.S. with the motivation for high salaries, and bigger companies.
Building global businesses within Canada
Zarzeczny said Canadian companies have already proved that it is possible to build a globally relevant business from within Canada.
She mentioned companies like Shopify, an e-ecommerce platform, StackAdapt, an AI marketing platform, and Cilo, a legal technology provider– all serving a global audience within Canada.
“It’s exactly those discussions that we look to have at Elevate,” Zarzeczny said ahead of the Elevate Festival that kicks off on Tuesday in Toronto spotlighting Canadian innovation across different sectors.
She said that Canada can take advantage of the visa fees imposed on U.S. companies and attract talent to Canada.
“So I think there’s a lot to be done,” said Zarzeczny.
Government support needed
Zarzeczny said the government needs to include private sectors in conversations to foster a supportive environment for Canadian companies.
She said the government’s A.I. task force announced recently is a positive sign of their involvement.
Last week, Abdullah Snobar, the CEO of DMZ Ventures told BNN Bloomberg that startups need government support to keep intellectual property from leaving Canada.
“How do we retain startups and make it really attractive for them to want to build a business? (That) is a question we need to think about .” Zarzeczny said.
