Canada is experiencing a surge in young entrepreneurs, but the nature of these ventures is shifting. While there are more self-employed young Canadians than ever, the number of those building businesses that hire employees has dropped by 40% compared to 20 years ago. Today, only 1 in 57 young Canadians (aged 20-39) owns a business with employees, down from 1 in 35 two decades ago. This trend raises concerns about the future of scalable entrepreneurship in the country.
Despite this, young Canadians exhibit strong entrepreneurial ambition. Two-thirds see good opportunities to start a business, and three-fifths believe they have the skills to do so, both above the OECD average. Canada ranks fourth among OECD economies in early-stage entrepreneurial activity among young people (24%), but only eleventh in established youth business ownership (5%). Fear of failure is a significant barrier, with nearly 60% of young Canadians citing it as a reason not to pursue entrepreneurship, the highest rate among OECD peers.
The majority of self-employed young Canadians operate one-person shops, accounting for 80% of self-employment. The types of entrepreneurs who hire employees, referred to as 'builders', have declined, while those in the public sector have increased. The window for transitioning from solo self-employment to employer status is narrow, with more than 90% of incorporated businesses hiring within the first five years. However, hiring rates peak in the first year and decrease annually thereafter.
Founders highlight a 'scale-up gap,' noting that Canada's support ecosystem diminishes precisely when young firms need it most. Access to capital and mentorship are persistent challenges, with many entrepreneurs seeking funding outside Canada due to the country's risk-averse investment culture. Addressing these issues is crucial for reversing the decline in youth entrepreneurship and fostering a dynamic economy.