Montreal Startup ecoSySteM report Digital anD technological PersPective 20 16
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Montreal Startup
ecoSySteM report
D i g i t a l a n D
t e c h n o l o g i c a l P e r s P e c t i v e
2 0 1 6
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table of contentS
Main acronyms
Conceptual and Methodological Framework
About
Section 1 - The Montreal Ecosystem, in Numbers
Section 2 - Economic Impact of Montreal Startups
Section 3 - Interviews with Key Players of the Montreal Ecosystem
Recommendations
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4
1 4
2 7
6 2
6 5
8 4
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Main acronyMS
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k$, M$, B$ - thousand dollars, million dollars, bill ion dollars
MTL - Montreal
Nb - "number"
MSER - Montreal Startup Ecosystem Report
R&D - Research & development
VCs - Venture Capital
Main acronyMS and terMinology
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conceptual and Methodological fraMework
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Scope and liMitationS of the Study
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The purpose of the study is to take a detailed look at the reality of Montreal startups, not to assess the general state of the situation at the provincial or federal level.
The MSER portrait is a snapshot of the Montreal ecosys-tem taken in summer 2016. We believe that it characte-rizes the reality of all startups surveyed for this study. It may be used as a basis for comparison in subsequent studies and in other regions and provinces. The data collection methods used in compiling this por-trait are described below. In order to provide a thorough and realistic portrait, we have, in particular, established the definition of a “startup” (inclusions and exclusions) within the MSER framework, reached through the survey of targeted startups and interviews with targeted key players, as well as through the use of targeted external databases for the completion of certain analyses (see methodology). The MSER is based on data taken from within the Montreal startup ecosystem.
Approximately 400 startups active in the Montreal eco-system were identified based on external databases. However, we believe that the number of startups in the ecosystem is, in reality, much larger. According to work carried out by Startup Genome (formerly Com-pass Research), the total size of the ecosystem should be between 1,800 and 2,600 startups, which we believe
reflects reality. The difference between the number of estimated and identified startups can be explained by certain limitations encountered during the startup iden-tification process. Identified startups are known, i.e. they come from external databases and sources such as lists monitored by VCs, grant recipients and support orga-nizations, participation in incubation and acceleration programs, media appearances, etc. Therefore, while we initially identified thousands of potential candidates via many data sources, it is likely that several startups, ha-ving not yet raised enough capital or operating discreet-ly, avoided our process. Moreover, note that the use of a criterion-based definition of a “startup” ensured sample homogeneity.
Over the course of our process, we had the privilege of discovering many early-stage businesses. These com-panies often possessed strong, innovative business mo-dels, but, unfortunately, were not in line with one or more significant components of our methodology. It is impor-tant that we highlight this factor, as well as the quality and growing number of young businesses that exist in Montreal. Other studies will allow for further research not covered within the scope of this report.
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“Last year Compass / Startup Genome, working with GEN,
CrunchBase and more than 60 partners from all over the
world, led the broadest and most in-depth research on
startup ecosystems, assessing 32 cities across 5 components
and more than 50 resource and performance metrics, and
publishing the Global Startup Ecosystem Ranking 2015, the
first Ecosystem Lifecycle Model, and the Waterloo and Hong
Kong startup ecosystem reports. The reports have become
the most popular publications on tech ecosystems, directly
reaching more than 150,000 global investors, entrepreneurs
and other stakeholders, and more than 1 million leaders
through quotes in more than 100 articles in global and local
media (e.g. WSJ, the Harvard Business Review, The Economist,
Financial times, Bloomberg, etc).”
“The South East Queensland Startup Ecosystem report
provides valuable data about the contribution startups
make to Queensland's economy. It quantifies the
ecosystem around early stage digital technology
companies—identifying key people, organisations,
events and hubs that drive innovation. It's an in-depth
insight into the diversity and unique aspects of the South
East Queensland startup environment and associated
infrastructure, which contributes to a robust ecosystem.”1
During the preliminary planning stage of this report, we identified and studied similar, and sometimes comple-mentary, processes undertaken throughout the world over the last few years. We retained two reports, sum-marized below, on which we based the establishment
of the following conceptual and methodological frame-work. These reports were retained as comparisons due to the quality of the content presented and their com-patibility with our approach.
1 Government of Queensland
conceptual fraMework comparabil ity and Best Practices
The Global Startup Ecosystem Ranking 2015 , conducted by Startup genome
South East Queensland 2014 Startup Ecosystem Report , carried out on behalf of government of Queensland
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Period Considered
This study primarily looked at the past five years (2011-2015), as well as the current portion of 2016 with regard to the presentation of data and associated analyses.
Geographical Area Considered
The geographical area on which this study focuses is the island of Montreal, excluding the North and South shores.
Startup Ecosystem or Community
A vibrant, constantly changing network that brings to-gether the main players, organizations, and groups, and that involves the existence or implementation of strate-gies and means to support startups in effectively meet-ing their objectives..
Startups
Even in 2016, the definition of a “startup” tends to vary considerably depending on the location, the person asked, etc. For the needs of this study, we have defined a “startup” as :
1 a business founded less than five years ago;
2 for which digital technology and innovation
form the core of its scalable business model.
Suppliers of Capital and Investors
When the report mentions suppliers of capital, it is in reference both to organizations working in venture cap-ital and others offering more traditional financing (loans), such as banks. When a situation or analysis specifically concerns venture capital (also called investment capital), it is stated. Venture capital involves the investor taking a stake in the startup being funded, either as stock or other instruments used to obtain stock in the future (e.g.: con-vertible note).
Rounds of Financing
The term “round of financing” refers to a transaction during which the startup received capital from suppliers of capital and/or investors. Generally, we refer to capital originating from investors in the venture capital industry.
Supporters
For the purpose of this study, several types of enti-ties are considered to be offering vital support to the Montreal startup community, such as interest groups, clusters, incubators, accelerators, universities, gov-ernment and paragovernmental agencies, non-profit organizations, etc.
INTEREST GRouPS — interest groups consist mainly of community groups and those found on Meetup.com that come together to informally dis-cuss the different aspects of entrepreneurship, technology, and startups. While groups other than those listed on Meetup.com can be found, we deemed this existing base a reliable indicator re-flective of the interest groups active in Montreal. The platform is used worldwide and is widely em-braced by the startup community.
INCuBAToRS — an incubator is typically an orga-nization offering support services, work space, and other resources that help a newly formed startup to grow. In spite of the fact that an incubator sup-ports startups with their fundraising efforts, they do not usually provide capital. Programs offered by incubators are often open, of longer duration, and loosely structured.2
ACCELERAToRS — accelerators are similar to in-cubators, however, unlike the latter, they tend to assume a stake in the startups they accept into the program. Accelerators frequently offer structured programs lasting from three to six months, after which time the startups graduate.3
CLuSTERS — Clusters are geographic concentra-tions of interconnected companies and institutions in a particular field. Clusters encompass an array of interconnected industries and other entities that are important for competitiveness.4
Precisions on the Definition of a “Startup”
The often multidisciplinary reality of technology compa-nies sometimes makes it difficult to categorize a startup within a single industry. In this regard, we have chosen to limit the definition of a “startup” as follows, and to refer
2 South East Queensland 2014 Startup Ecosystem Report
3 South East Queensland 2014 Startup Ecosystem Report
4 Montreal Clusters
conceptual fraMework Definitions Used in this report
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to the inclusion and exclusion criteria mentioned below when reading the report :
CoNSuLTING SERVICES CoMPANIES — in the definition of startups that we use, one of the quali-fying factors is a scalable business model. Given the strong correlation between the size (on a financial level) of a technology consulting service company (digital design, digital and web strategy consulting, custom programming, etc.) and the number of em-ployees, we have excluded this type of business from our definition of a “startup”. However, if con-sulting services companies also develop and mar-ket technological products, they may be considered (based on the relative importance of the technology products in comparison to their consulting activities).
ESTABLIShED TEChNoLoGy CoMPANIES — as presented in our above definition of a “startup”, we have excluded companies founded more than 5 years ago. However, we occasionally refer to “es-tablished” technology companies so as to intro-duce bases of comparison. In these cases, it will be specified that the company is “established” and not a “startup.”
PuRE PLAy hARDwARE — remaining consistent with the criterion of scalability, we have excluded companies whose business model is based solely on hardware. Many companies, however, have an of-fering that is built on both hardware and software, in which case they were considered.
BIoTECh, NANoTECh, AND CLEAN TECh — this study focuses on startups, more specifically those in the digital technology sector. The needs of biotech/nanotech/cleantech companies differ significantly in terms of lifecycle. In order to generate consistent analyses using the most homogenous sample possi-ble, we have chosen to exclude these sectors.
As a follow-up to the study's conceptual framework, let us now turn to the methodologies specific to the three sections of the report.
conceptual fraMework Definitions Used in this report
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Presented here are the methodologies used to complete the three main report sections:
1) The Montreal ecosystem,
in numbers, 2) Economic
Impact of Montreal Startups,
and 3) Interviews with
key stakeholders in the
Montreal ecosystem.
Methodology
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Methodology section 1 - the Montreal ecosystem, in numbers
Survey
So as to be as inclusive as possible in our approach, cer-tain data in relation to different aspects of the Montreal ecosystem was obtained directly by surveying startups in a confidential manner. This approach relies on the strong working relationship and sense of trust between stakeholders in the Montreal startup community.
An online survey was used and sent to targeted start-ups. It was distributed by study partners and posted on the study website. Startups could respond to the survey on a self-serve basis, and their answers were saved au-tomatically. Survey responses were gathered through-out the summer of 2016. Once the survey closed, all responses were analyzed to ensure compatibility with the definition of a “startup” used in this report and com-pliance with the related inclusion and exclusion criteria (see above). Following analysis, nearly 100 startups were identified and retained for the purpose of the statistical portrait of the Montreal ecosystem.
Moreover, in order to confirm the validity of data ob-tained through the online survey, we retained random samples of respondents and verified the accuracy of the answers recorded for each of the sample subjects by questioning them individually in a telephone interview.
External databases
Several public and private databases were used when deemed relevant in order to complete the analyses pre-sented in this report.
PITChBooK — “Provides reliable, compre-
hensive data spanning the full lifecycle of
M&A, PE and VC transactions, along with
the firms and professionals involved.”5
CRuNChBASE — “Crunchbase is the destina-
tion for discovering industry trends, invest-
ments, and news about hundreds of thou-
sands of public and private companies
globally. From startups to Fortune 500s,
Crunchbase provides a depth and breadth
of knowledge that ensures its data is rec-
ognized as the primary source of company
intelligence by millions of users globally.”6
ANGELLIST — “A platform, which helps start-
ups raise money and recruit talent.”7
CANADIAN VENTuRE CAPITAL & PRIVATE EquITy
ASSoCIATIoN (CVCA) — “The CVCA is the voice
of Canada’s venture capital and private
equity industry. We are focused on broad-
ening industry awareness through market
research and networking opportunities so
that our members can make the best deci-
sions for their investments.”8
Data Processing and Analysis
As previously mentioned, we have chosen to use data from several reliable and relevant sources in order to be able to provide the most realistic portrait of the startup ecosystem possible. To do so, we have occasionally com-bined different sources so as to maximize the size of our samples, which explains the variation that may occur in the sample size used for each respective analysis. Gen-erally speaking, each analysis is based on data from over 100 startups.
5 PitchBook
6 CrunchBase
7 Naval Ravikant (co-founder of AngelList)
8 CVCA
1 11 1
Methodologysection 2 - economic impact of Montreal startups
One of the primary objectives of this report is to assess the economic weight of Montreal’s startups. To do so, we have partnered with IS&B - Économique simplifiée (IS&B), specialists in economic studies. Using an in-tersectoral model inspired by that of the Institut de la statistique du Québec (ISQ), IS&B estimated the startup ecosystem's contribution to production, employment, and public finances. The estimations presented in sec-tion 2 of this report are the result of this intersectoral model. This model draws mainly on input-output tables of Quebec produced by Statistics Canada.
The model employs the following logic: in response to its initial demand, a company must produce by using la-bour, capital, and intermediate products and services. This intermediate production concerns suppliers that, in turn, produce using labour, capital, and intermediate products and services. The sum of this iterative pro-cess represents the economic activity of the company studied. The IS&B model refines the analysis by break-ing down the impact on employment and government revenues through examination of data from the Survey of Labour and Income Dynamics (SLID) carried out by Statistics Canada.
In collaboration with the partners of this report, six eco-nomic sectors (based on the North American Industry Classification System - NAICS) with a certain concentra-tion of startups were targeted. The structure of the start-up ecosystem’s production for each of these sectors was estimated based on the expense and employment data of approximately 15 companies that were deemed representative of their respective sectors and agreed to share their data.
IS&B then evaluated the importance of the startup eco-system for each of these sectors. This evaluation was accomplished by combining data from Innovation, Sci-ence, and Economic Development Canada (2013) on the contribution of companies according to their size with that of Statistics Canada (2015). This last set of data made it possible to refine the proportion of production attributable to startups by targeting small businesses fewer than 5 years old, located in Montreal, with over 20% growth potential over the next 3 years, and having innovated over the past 3 years. The table below pres-ents the percentage of production for each sector har-bouring startups, as well as their financial representation in dollars.
1 2
Innovation, Science, and Economic Development Canada (2013)SME Research and Statistics
Online - consulted September 5, 2016
http://www.ic.gc.ca/eic/site/061.nsf/eng/02812.html
Institut de la statistique de québec (2016) Le modèle intersectoriel du québec : Fonctionnement et applications.
Online - consulted May 15, 2016
http://www.bdso.gouv.qc.ca/docs-ken/multimedia/PB-01608FR_FonctApplication2016H00F00.pdf
Statistics Canada (2015) Survey on financing and growth of small and medium enterprises, 2014.
Online - consulted June 10, 2016
https://www.ic.gc.ca/eic/site/061.nsf/eng/request.html?Open&id=6441FFED95C1146385257F030050B-CF7&p=2&ref=02997.html
econoMic iMpact of the Startup ecoSySteM
bibliography
Manufacturing
Information and cultural industries
Finance, insurance, realty services, and rental, leasing, and holding company services
Professional, scientific, and technical services
Educational services
Arts, entertainment, and recreation
% of gdp produced by the StartupS
aMount of gdp produced by the
StartupS ($M)
0 , 1 2 1 %
0 , 0 3 4 %
0 , 1 4 7 %
0 , 3 3 7 %
0 , 2 6 0 %
0 , 1 3 0 %
1 7 7 . 0
6 . 4
9 3 . 0
9 7 . 8
2 . 2
6 . 0
Methodologysection 2 - economic impact of Montreal startups
1 31 3
Methodology
In order to benefit from both a qualitative and quanti-tative viewpoint of the ecosystem, we conducted over 50 interviews with key players on the Montreal startup scene. Our objective was to obtain a qualitative portrait of the ecosystem based on the point of view of key indi-viduals and organizations that experience the success-es and challenged directly related to its strengths and weaknesses on a daily basis.
It is important to note that the results of these interviews solely represent the perspectives of the persons inter-viewed and do not, by any means, reflect the opinions of the authors and partners of this report.
Profiles of Interview Candidates
Three categories of key individuals (definition above) were interviewed in order to compare the perspective of each and to bring to light the areas of consensus and the differences of opinion: 1) investors, 2) supporters, and 3) startups.
Data Collection
The interviews were conducted throughout Summer 2016. They were carried out with twenty (20) investors, eighteen (18) supporters, and fourteen (14) startups.
The interviews were conducted in an open and explor-atory fashion so as to avoid skewing the respondents’ perspectives. The interviewees were also able to artic-ulate their vision of and experiences within the startup environment by means of their personal understanding and experience. The sessions were divided into three parts: 1) an analysis of the ecosystem's strengths, weak-
nesses, opportunities, and threats; 2) the ecosystem’s trends and characteristics; and 3) the level of accessi-bility to resources.
Analysis and Interpretation
Answers were anonymized prior to analysis. The inter-view content analysis allowed the development of a framework that reflects the respondents’ comments. We aim to identify the conditions necessary for the suc-cess of startups, which, in turn, will determine the eco-system's success. Three important conditions emerged from the content analysis of the perspectives of the key individuals interviewed:
— TALENT (SKILLED woRKERS);
— FuNDING;
— ThE ECoSySTEM.
Quotations from the interviews and from a group dis-cussion support certain statements made in Section 3 of the report.
section 3 - interviews with Key Players of the Montreal ecosystem
1 4
about
1 51 5
while a number of reports and analyses have examined the environment and challenges facing mature Quebec companies in recent years, the situation confronting startups in the greater Montreal area has only been sparsely documented. the authors of this study have seized the opportunity created by this lack of quantitative and qualitative data to develop a reference tool for the rapidly expanding Montreal startup ecosystem.
the Montreal Startup ecosystem report (MSer) describes the reality facing startups and other ecosystem stakeholders, as well as the overall impact of this sector on the city of Montreal. the objective of the MSer is to provide tools to the community by developing statistical indicators, evaluating economic repercussions, and compiling the viewpoints of a number of key stakeholders in the sector. the authors and partners of the MSer hope that this resource will both strengthen the Montreal startup sector and help to identify the most promising opportunities for continued growth, while making the information accessible to all .
1 61 6
a word froM the authorS and partnerS of the Study
authors
christian bélair
President and cofounder, Credo
Breather, Busbud, Frank & Oak, Lightspeed, Maker-bloks: not too long ago, these companies barely ap-peared on our radar, and yet today, their names echo here and abroad. They have become undeniable pil-lars of the Montreal startup landscape. It is by looking at these companies that it becomes evident that Mon-treal has a wealth of entrepreneurial success stories.
Startups with high potential for growth are emerging at a staggering pace and in growing numbers. The rising popularity of accelerators, incubators, and uni-versity entrepreneurship centers is also a testament to the startup ecosystem’s unprecedented expansion. Given our startups’ ability to innovate and their import-ant contributions to the economy, our entrepreneurs must be supported, accelerated, and duly recognized.
The Demo Day that took place June 9th highlighted the results of such efforts. The key? Collaboration between five major accelerators who joined their strengths to extend their reach within the community.
At Credo, we have witnessed the benefits of collab-oration through our multiple projects. At La Gare, in-dividuals from diverse backgrounds contribute their skills and expertise to equip entrepreneurs for suc-cess. Through la Tournée des Entrepreneurs, we pair Montréal entrepreneurs with counterparts from rural parts of the province to exchange knowledge and ex-perience to accelerate their respective projects. Fi-nally, our event Startup Open House, which opens the
offices of nearly 500 startups across Canada to the public, highlights the importance of joining forces to amplify our voices. These examples demonstrate that collaboration is our greatest asset, and that together, we can go farther.
These elements also made clear the importance of collaborating to paint an accurate picture of the cur-rent state of the startup ecosystem in Montréal. Thus, Credo instigated the Startup Ecosystem Report, with the OSMO Foundation and Startupfest, as well as other important partners such as the Ministry of Economics, Science and Innovation, the City of Montreal, and the Chamber of Commerce of Metropolitan Montreal, and the Chamber of Commerce of Metropolitan Montreal. The startup ecosystem report emphasizes the impor-tance of collaboration to make key data accessible to all, to help startups benchmark themselves, and to provide tools to propel them towards greater success.
The future of Montreal will be traced in part by our entrepreneurship ecosystem. We believe it is critical to identify the strengths and weaknesses of our envi-ronment and to strive together to improve collectively. We were motivated to perform this study to support homegrown entrepreneurs, and to contribute to im-proving the ecosystem and ensuring its continuous flourishing.
With this report, which serves as an initial assessment, we hope to instigate a broader conversation and in-spire actions to improve our startup ecosystem. This document is not an end in itself. Rather, we consider it a tool to support entrepreneurs, investors and key community actors of the Montreal startup community
1 71 7
Sylvain carle
Partner at Real Ventures, Managing Director at FounderFuel.
For the oSMo Foundation
I remember vividly that meeting in a pub in 2006, with a gent that had just moved to Montreal. He was looking to connect with the local startup community. I smiled as I explained to him that we had a small community, a really short list of people, but with great potential.
There was a lot to do. We were bootstrapping this com-munity and organizing the meetups, breakfasts, uncon-ferences and demo pitch nights as we went. The en-ergy, the passion, the authenticity were all there. But we sure lacked scale. I joked by saying that we needed more density, and a good way to get it would be to cram all the startups into a small space, et voilà!
He started sketching on a napkin a series of concentric circles, talking about “osmosis” and “breaking silos” and “network effects”.
A few months later, we had a community gathering in the hotel at the corner of St-Laurent and Sherbrooke, smack dab in the middle of the city. It was a warm early evening on a terrace, and after a while I realized that this was quite a large group, much bigger than I had thought, and quite diverse.
We went to visit a house across the street, an old her-itage building that was so run down, people were ac-tually shooting horror movies in the back portion. The crazy idea, the conclusion from that napkin drawing, was to create a non-profit to help catalyze the Montreal startup community. The first project would be to buy this old house and make it “the house of the web”, a home for all tech startups, past, present and future.
We envisioned a big future. We did not fully understand at the time that this would be a huge project, that it would cost twice as much as expected and take a long time to finally open… The OSMO Foundation was creat-ed in 2007 and the Notman House officially opened in June 2014.
Brad Feld has famously written that startup communi-ties usually take twenty years to build. In 2014, when I moved back to Montreal, I felt we were halfway through.
I could not believe that my office would now be in that room in Notman house where we had so many meet-ups, events, drinks and amazing conversations. John Stokes, the gent I had met years ago was now a part-ner at Real Ventures, an active Seed Stage VC fund, along with Alan MacIntosh, whom I had also met on the OSMO board. There was a startup accelerator up and running, the house was full of startups, entrepre-neurs and community groups. It seemed like there was so many more events happening than in 2006. Many more startups blooming.
I knew from anecdotal data that hundreds of companies were applying to the accelerator, thousands of attend-ees where at Montreal’s StartupFest in the summer, the sheer level of activities all across town was intense. Something important was happening. I still could not answer that one precise question, the one I got asked in every media interview: how many startups are there in Montreal? And maybe more importantly: why does this activity matter?
Is it true that the “new economy” is becoming “the economy”?
We needed data. Real good, validated, trusted data. A serious methodology. Results that could be shared, discussed, critiqued, put in perspective.
We collectively decided that we should apply the meth-od we had seen being so effective: let’s do it ourselves. All together. By the community for the community.
This report is a first iteration, a line in the sand, what will hopefully be a benchmark for years to come. The startup ecosystem journey taught us how to get better togeth-er. Montreal has been claiming to be a “creative city” for years, and rightly so. We can now also proudly say that we are a startup city. Innovative AND collaborative.
This report is a testimony to this new reality and a trib-ute to the people who are creating it.
a word froM the authorS and partnerS of the Study
authors
1 81 8
phil ippe telio
Founder STARTuPFEST
Startups, and the ecosystem that supports them, are essential to economic growth.
Without startups, innovation and productivity languish; with them, cities accelerate their productivity, educa-tion, and global influence. Today, innovation is not only how nations and cities fill their treasuries, it’s how they maintain their autonomy, extend their policies world-wide, govern their citizens, and guarantee their stan-dard of living.
Innovation comes from organizations of all sizes. But there are remarkable distinctions between innovation in a big company (the office of the CTO at a big bank, for example) and innovation in a small one (a new financial technology startup.) The following describes just some of the most important differences.
Startups have a higher speed of innovation : Big companies are often constrained by regulatory and approval processes. They budget annually. Once they innovate, they do so at scale. By contrast, a startup releases product improvements constant-ly, because it has nothing to lose, and everything to gain, from being hasty.
Startups focus on a business idea : Large organi-zations demand a business plan before proceed-ing. But in an unknown environment, asking for a business plan is like asking Columbus for a map of the world before he sets sail. Instead, startups use an idea of how they might extract profit from a market, often in the form of a business model they want to test.
Startups emphasize learning: The filter a startup uses is “can I find a sustainable business model?” This is in stark contrast to big companies that try to estimate the profitability of an initiative. At Start-upfest, Travelocity founder Terry Jones explained that he had an idea for using IBM’s Watson AI prod-uct in the travel industry. IBM decided not to build it themselves because they estimated the market size for the product at only $2B. Startups have dif-ferent filters.
Startups handle failure : As long as there’s clear learning from an experiment, it’s valuable. In a big company, employees and shareholders are reward-ed on short-term success and predictability. Failure is to be avoided in favor of safety.
Startups rely on informal networks : When an indus-try is established, it has its own professional associ-ations, certifications, and networks. But in industries that have only recently been created, or that span verticals, few formal networks exist. Startups tend to get financing, find partnerships, and achieve exits at more open, unstructured events (like Startupfest).
Startups don’t comply, they ask for forgiveness : Legislation happens in hindsight. It often takes a toxic spill or market crash to prompt lawmakers into passing new laws, particularly in the face of rapid technological advancement. Laws around biohack-ing, drones, robotics, and artificial intelligence hav-en’t yet been written.
Apple, Microsoft, Google, Facebook, and Amazon are corporate icons of the modern age. They are the larg-est companies by market cap in 2016. Where did these companies come from? Many of them didn’t even ex-ist two decades ago. And yet they fuel the Western world’s growth. Tesla is re-imagining power and driv-ing; Uber and AirBnB are upending centuries of focus on capital ownership. They grew because they began as startups. They braved uncertainty, found new busi-ness models, and scaled quickly through technology, software, and networks.
Ultimately, startups are the accelerator of innova-tion. They aren’t just good for the economy. They’re essential for innovation, education, our standard of liv-ing, and our cities competitiveness. Long live the start-up mindset in Montreal.
a word froM the authorS and partnerS of the Study
authors
1 9
denis coderre
Mayor of Montreal
The approach used in this study aptly illustrates the spirit of collaboration and innovation driving Montréal’s startup community. Since the first accelerator opened in 2012, Montréal’s ecosystem has continued to im-press with its dynamism and the passion of its entre-preneurs. This vitality, I hasten to add, has not gone unnoticed on the international stage. By way of proof, Startup Genome and the Fast Company Magazine have both cited Montréal as one of the world’s leading start-up ecosystems. Indeed, the sector’s partners played a preponderant role when Montréal was named the 2016 Intelligent Community of the Year by the Intelligent Community Forum.
We can certainly take pride in this mark of recognition, but by no means should these distinctions lead us to rest on our laurels. Rather, in light of the recommenda-tions set out in the Montréal Startup Ecosystem Report, they should serve as added motivation to redouble our efforts. In particular, it’s important that we accelerate innovation, boost local entrepreneurship rates, devel-op the competencies of our entrepreneurs, and forge ties with other ecosystems at the local and internation-al levels. The PME MTL network provides an important lever for achieving these objectives.
Montréal’s ecosystem has come a long way. We need to continue on this course, driven by a hunger for success. I therefore invite all the ecosystem’s entrepreneurs and actors to use the recommendations in this report as an inspiration to contribute to the growth of Mon-tréal-based companies. As a dedicated partner and firm believer in this adventure over the past several years, our administration will continue to invest its energy in the success of local startups.
Happy reading!
a word froM the authorS and partnerS of the Study
Funding Partners
2 02 0
a word froM the authorS and partnerS of the Study
Funding Partners
To ensure optimum growth in a highly competitive global economy, Québec must increase its emphasis on entrepreneurship, innovation, and new technology integration. Scientific and technological breakthroughs are occurring at breakneck speed, and we must keep acquiring new knowledge and innovate more and bet-ter if we want to adapt and stand out.
Ministère de l’Économie, de la Science et de l’Innova-tion is therefore proud to contribute to the Montréal Startup Ecosystem Report. The report will help us un-derstand the importance of this vital ecosystem, assess its impact on the Québec and Canadian economy, and find new ways to support and consolidate entrepre-neurship and business viability in Montréal.
Montréal is ranked among the world’s top 20 cities for its startup ecosystem and is also considered one of the 10 most connected cities. It offers a range of benefits for new entrepreneurs, including a geographically stra-tegic location, a highly qualified workforce, competitive operating costs, advantageous tax rates, and excep-tional quality of life. In a nutshell, Montréal has what it takes to start a successful business!
Encouraging entrepreneurship in Québec is a govern-ment priority, and we want to ensure that every step we take to that end is effective.
Clearly, making Québec an entrepreneurial leader is a goal we can only achieve by working together.
dominique anglade lise thériault
Minister of Economy, Scienceand Innovation and Minister responsible for the Digital Strategy
Deputy Premier, Minister responsible for Small and Medium Enterprises, Regulatory Streamlining and Regional Economic Development, Minister responsible for the Status of women, and Minister responsible for the Lanaudière region
2 12 1
Michel leblanc
President and CEoChamber of Commerce of Metropolitan Montreal
The city is abuzz with activity. Several of our startups are enjoying remarkable international success. Over the past few years, Montréal has seen the development of a true ecosystem, bringing together businesses, investors, and supporting players. Several factors have converged to make Montréal one of the best cities to promote startup growth: its pool of talent, access to funding, and a mul-tiplication of forums for exchange that foster innovation and collaboration.
Already very active among the city’s SMEs, the Chamber wants to get further involved in startup growth by pro-viding these new companies with activities and services adapted to their particular reality. In fact, this is why we have joined with Ubisoft to create the InnoBahn Ubisoft Ubisoft event series, in which startups endeavour to dis-tinguish themselves in innovative ways to address a spe-cific problem presented by a big company.
The Chamber is pursuing its involvement and is taking part in the present study in order to showcase the start-up ecosystem, measure its importance in the metropoli-tan region, and suggest ways of ensuring growth and de-velopment. It is notably by comparing our performance with that of other booming startup ecosystems around the world that we will be able to get inspired by best practices and identify opportunities to be seized.
We therefore need to focus on our strategic assets so that our innovative, technological, and creative compa-nies can proliferate. Without a doubt, the development of this ecosystem will contribute to the prosperity of Quebec and its metropolis.
a word froM the authorS and partnerS of the Study
Funding Partners
2 22 2
“Disruption” describes a process whereby a smaller company with fewer
resources is able to successfully challenge established incumbent businesses.
Specifically, as incumbents focus on improving their products and services for
their most demanding (and usually most profitable) customers, they exceed the
needs of some segments and ignore the needs of others. Entrants that prove
disruptive begin by successfully targeting those overlooked segments, gaining
a foothold by delivering more-suitable functionality—frequently at a lower price.
Incumbents, chasing higher profitability in more-demanding segments, tend not
to respond vigorously. Entrants then move upmarket, delivering the performance
that incumbents’ mainstream customers require, while preserving the advantages
that drove their early success. When mainstream customers start adopting the
entrants’ offerings in volume, disruption has occurred.10
Throughout the world in 2016, the language of entrepre-neurship is more pervasive than ever. Thought leaders everywhere are showing growing interest in subjects such as disruption, innovation, the digital realm, and many others. Some stakeholders even estimate the eco-nomic impact of the current technological revolution in the trillions of dollars (1 trillion = 1,000 billion, or 1,000,000 million). In a 2013 study, the McKinsey Global Institute identified 12 disruptive technology sectors whose com-
bined potential economic impact could reach up to USD 40.4 trillion in 2025.9
“Disruption” can be defined in several ways, and there is often a grey area between this term and “innovation.” Clayton M. Christensen, professor at the Harvard Busi-ness School and leading expert in the field, provides a definition that accurately illustrates the concept while establishing its link with the startup reality.
Naturally, this definition does not apply to all start-ups. As Christensen’s Uber example shows, innovation does not necessarily imply disruption. That being said, a large number of startups have become successful by addressing the needs of consumer segments ne-glected by the market, or by creating new markets. In a 2015 Forbes article on the 25 most disruptive brands of the year, 48% of the companies studied had tech-nology-based, pure play business models (Airbnb, Facebook, etc.), 12% had business models greatly fa-cilitated by technology (Rent the Runway, Birchbox, etc.), and 40% were part of more conventional indus-tries (Coke, Under Armour, etc.)11. It is also worth noting that the average age of the more traditional business-es was 20 years, as compared to 11 years for the tech-nology-based businesses. One plausible explanation for this is the fact that technology not only increases
target audience reach for both startups and mature businesses – it also makes it possible to offer a prod-uct or service fundamentally different from the ones already available.
In their 2015 study, Deloitte clearly indicates the likely results of technological change and increasing entre-preneurship for Canadian industry.
“The way Canadians live and work
is about to change profoundly. Rapid
advances in technology are poised to
disrupt many of the sectors that anchor
Canada’s economy.”12
9 McKinsey Global Institute
10 Harvard Business Review
11 Forbes
12 Deloitte
the iMportance of Startup ecoSySteMS
“
“
2 32 3
Based on Christensen’s definition of disruption, startups appear to be ideally positioned for these changes. The startup scene has already been very active in Canada for a number of years. The ecosystem is characterized by a dynamic and participatory landscape. One example of this reality was the 2012 launch of Startup Canada; af-ter only four years of existence, the network has already reached 120,000 entrepreneurs, concluded partnership agreements with 400 companies, and mobilized 300 vol-unteers in 22 startup communities across the country.13
In September 2015, the Centre for Digital Entrepreneur-ship and Economic Performance (DEEP) released a sig-nificant report commissioned by the federal government and the government of Ontario. The results and impli-cations of the report, which made recommendations to help Canadian technology startups achieve international success, are currently under review by the relevant po-litical bodies. Six priorities for the Canadian government were identified14 :
13 Startup Canada
14 Financial Post
Focus on better identifying companies with high potential and help them scale up.
Improve accountability by demanding better reporting and more data transparency from startup assistance groups — like business incubators and accelerators. It ’s seen as a way to shed more light on the actual return on public investments.
Attract more large corporations to participate in the success of Canadian incubators and accelerators. These partnerships are much more common in the united States.
Boost the quality of mentor programs by connecting more high-potential companies with business leaders who have experienced building bill ion-dollar tech firms.
Increase the exposure of startups to international markets.
Explore new models to increase the role of investors in startups.
the iMportance of Startup ecoSySteMS
“
“
2 42 4
According to the DEEP Centre, the adoption of these recommendations would accelerate and increase the volume of Canadian startups’ with world-class poten-tial. The study examined the best ways to provide fed-eral government support to startups – it did not discuss whether or not this would be a worthwhile initiative, which already indicates a significant and promising direction. The fact that this study was commissioned shows that the government believes in the importance and potential of startups. At the World Economic Fo-rum in Davos in January 2016, Prime Minister Trudeau expressed his support for developing the potential of Canadian resourcefulness.
“My predecessor wanted you to know Can-
ada for its resources. I want you to know
Canadians for our resourcefulness.”15
A closer look at startup activity in Canada does indeed suggest great resourcefulness throughout the nation-al ecosystem. In 2015, venture capital funds invested over $2.3 billion in 536 transactions.16 Using venture capital investments as an indicator of startup activity, the three provinces with the most activity are British Columbia (19.9%), Quebec (30.7%), and Ontario (41.6%). These provinces account for 92.2% of total venture capital investments.
It is also worth noting that although Alberta represents only 4,6% of the funds invested, the average size of transactions is larger than in any other province. At $5.78 million, Alberta’s average transaction is 115% above the
national average of $2.69 million per transaction, and 20% higher than the second-highest average transaction size (British Columbia).
15 CBC
16 CVCA
ontario
Quebec
britiSh coluMbia
alberta
nova Scotia
new brunSwick
Manitoba
prince edward iSland
newfoundland and labrador
SaSkatchewan
4 1 , 6 % 3 0 , 7 % 1 9 , 9 % 4 , 6 %2 , 3 %0 , 4 %0 , 2 %0 , 2 %0 , 1 %0 , 1 %
Share of venture capital inveStMent of canadian provinceS in 2015
the iMportance of Startup ecoSySteMS
2 52 5
alberta
britiSh coluMbia
ontario
Quebec
prince edward iSland
nova Scotia
Manitoba
SaSkatchewan
newfoundland and labrador
new brunSwick
1 1 5 % 9 5 % 7 0 % 5 3 % - 2 6 % - 3 0 % - 5 0 % - 6 3 %- 8 1 %- 8 2 %
Size of average tranSaction per province coMpared to national average in 2015
growth in voluMe of tranSactionS vS. growth
in fundS inveSted
average Size of venture capital tranSactionS
in canada
As a whole, the canadian startup ecosystem shows sig-nificant growth in the number of transactions. Total funds invested are also growing, but at a slower pace. The fact that the number of transactions is rising faster than total funds invested indicates that the average size of transac-tions is going down, specifically at a rate of - 11% in 2014
and - 6% in 2015. Multiple hypothesis could explain this consecutive decline. One is that the number of startups that merit venture capital invest investment is growing faster than available funds. As long as VCs can rapidly meet demand for capital by worthy startups, the overall situation remains positive.
2 0 1 3 2 0 1 4 2 0 1 5
$ 6 M
$ 5 M
$ 4 M
$ 3 M
1 0 0 %
8 7 %
7 5 %
6 2 %
5 0 %Siz
e o
f a
vera
ge
tra
nsa
ctio
n
Re
lati
ve s
ize
(20
13 =
10
0%
)1 0 0 %
8 9 %
8 3 %$5.18M
$4.62M
$4.29M
2 0 1 3 2 0 1 4 2 0 1 5
1 6 0 %
1 4 0 %
1 2 0 %
1 0 0 %
8 0 %Re
lati
ve g
row
th (
2013
= 1
00
%)
Volume of transactions Average size
Volume of funds invested Relative size
the iMportance of Startup ecoSySteMS
2 62 6
17 Startup Genome
18 Martin Prosperity Institute
19 Bureau de la ville intelligente et numérique
20 Faire Montréal
21 FounderFuel
22 La Presse
the iMportance of Startup ecoSySteMS
In their study The Global Startup Ecosystem Ranking 201517, Startup Genome ranks Montreal 20th among cities around the world in terms of the strength of its startup ecosystem. According to the five main criteria of this study, Montreal now has the capacity to compete with big names in the industry such as Silicon Valley. Start-up Genome highlights Montreal’s cultural diversity and high quality of life, which have played an important role in creating fertile ground for entrepreneurs and startups. A similar observation was made by the Martin Prosperi-ty Institute following the publication of their 2013 study Startup City Canada.
“Canada’s major cities have all the attri-
butes required for success in the venture
capital and startup sector. Toronto, Van-
couver, and Montreal are all examples
of dense urban living that is attractive to
technology talent. All three have excellent
research institutions. And all three embody
the openness and tolerance that is key to
attracting talent from around the world.”18
On June 9, 2016, 800 people gathered for Montreal Demo Day 2016 at Quai Jacques-Cartier in the Old Port for the largest startup exposition ever held in the city. The event was made extra special by the participation of the five Montreal business accelerators that cospon-sored the Demo Day. Innocité MTL, District 3 (Concor-dia), Founder Institute Montreal, ETS Centech, and Tan-demLaunch jointly brought together 21 startups, who all shared the fruits of their labour and the next phases of their fascinating journeys. The event was held in a spir-it of collaboration and solidarity, a valuable attitude for a community that is extremely aware of the obstacles facing startups. As Mayor Denis Coderre expressed in his speech at the event: “alone, we go faster, but together, we go farther.”
In recent years, the municipality, the Ville de Montréal, has clearly demonstrated its commitment to support-ing the city’s startup ecosystem. In spring 2014, it an-nounced the creation of the Bureau de la ville intelligente
et numérique (BVIN – Digital and Smart City Bureau), with the stated aim of “making Montreal a world model for digital smart cities by 2017.”19 Less than a month later, Mayor Denis Coderre launched InnoCité MTL, “an accel-erator that aims to support and accompany startups in the smart city niche”20. Given that there were no accel-erators in the city only five years ago21, it is clear that the government has lost no time in following through on its decision to provide concrete support to startups. The year 2016 saw the creation of Capital intelligent MTL, a $100 million venture capital fund dedicated to compa-nies working in sectors related to the creation of a digital smart city. In addition to the contributions from 23 firms, including the Fonds de solidarité FTQ, Fondaction CSN, Québecor, the Caisse de dépôt et placement du Québec, BDC Capital, Desjardins Entreprises and Teralys Capital, Capital intelligent MTL will also benefit from a $400,000 investment from the City over the next three years.22 In-vestments of this size are a clear vote of confidence from private and public project funders in Montreal’s potential as a startup hub.
The Montreal startup ecosystem benefits not only from the backing of investors and project funders, but also from a diverse network of supportive resources, includ-ing: open access tools (Built in MTL), networking events (Startup Open House, Startup Drinks, HackerNest Tech Social), demonstration and development opportuni-ties (Startupfest), corporate collaborations (InnoBahn Ubisoft), governmental and paragovernmental organi-zations, and NPOs (Quartier de l’innovation, PME MTL, Fondation Montreal Inc., Montreal international, Cham-ber of Commerce of Metropolitan Montreal, Ministère de l'Économie de la Science et de l’Innovation).
But who are these startups benefitting from our collec-tive support in the greater Montreal area? What is their reality? What are their needs? What is the impact of the startup ecosystem in Montreal? These are some of the questions we will examine in this report.
2 7
1
the Montreal ecoSySteM, in nuMberS
In this first section of the report, we present a statistical and quantitative portrait of the ecosystem from several angles.
First, the dashboard provides an overview of general information, followed
by the profile of startups in Montreal, the funding they receive, the talent
sustaining them and the main actors with whom they interact.
2 8
daShboard overview of the ecosystem
Nb of startups identified
Approximate number of startups that we individually identified for the purposes of our report.23
≈400
Total Nb of startups
Estimated number of startups currently active on the Island of Montreal, as presented by our collaborator Startup Genome in their study The Global Startup Ecosystem Ranking 2015.
≈1,800 to 2,600
Nb of companies involved
Estimated number of companies and organizations (excluding startups) involved in the Montreal startup ecosystem.24
≈350Nb of founders
Estimation of the number of startup founders onthe Island of Montreal.
≈4,000 to 6,000
Nb of individuals involved
Estimated number of individuals involved in the Montreal startup ecosystem, based on employees of startups and support bodies.
≈10,500Nb of employees
Estimation of the number of employees working in startups on the Island of Montreal.
≈8,000
Nb of Meetup groups
Estimated number of groups formed on Meetup.com with activities relating to the Montreal ecosystem.
≈125
Nb of members of Meetup groups
Estimated number of members belonging to Meetup.com groups with activities relating to the Montreal ecosystem.
≈45,000
2 8
23 see scope and limitations of the study section for more details.
24 a list of actors identified as having a connection with the Montreal startup ecosystem based on a review of the main
support groups, events, online resources, etc.
2 9
breakdown of founders according to their gender and respective age group
breakdown according to gender average age
1 8 - 2 4
8 0 %
6 0 %
4 0 %
2 0 %
0 %
2 5 - 3 4 3 5 - 4 4 4 5 - 5 4
Age bracket, in years
% o
f th
e t
ota
l sa
mp
le
age and gender of founderS
20
80% 33 29
WomenMen
2 9
daShboard our founders
3 0
representation of the highest level of studies completed by startup founders on the island of Montreal.
portrait of the most frequent f ields of study for startup founders on the island of Montreal.
field of Study of founderS
3 8 %
2 9 %
9 %
8 %
8 %
7 %
2 %
4 5 %
1 5 %
1 2 %
8 %
7 %
7 %
3 %
1 %
1 %
1 %
bachelor or eQuivalent
MaSter or eQuivalent
cegep, college or other non-univerSity certificate or diploMa
univerSity certificate or diploMa under the bachelor level
univerSity certificate or diploMa above the bachelor level
doctorate or eQuivalent
high School or eQuivalent
buSineSS, ManageMent and public adMiniStration
MatheMaticS, coMputer ScienceS and Science
architecture, engineering and related ServiceS
other
phySicS and life ScienceS, and technologieS
viSual artS and interpretation , and technologieS
huManitieS
Social and behavioural ScienceS, and…
health and related doMainS
education
higheSt level of Schooling achieved by the founderS
3 0
daShboard our founders
3 1
creation of the StartupS in the paSt 5 yearS
StartupS baSed on the Size of teaMS
1 0 0 %1 3 2 %
2 0 5 %1 6 8 %
2 3 7 %
2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5
3 0 0 %
2 0 0 %
1 0 0 %
0 %
Sta
rtu
p f
orm
ati
on
ra
te
(20
11=1
00
%)
3 11 - 1 0 1 1 - 5 0 5 1 - 1 0 0 1 0 1 - 2 0 0
8 0 %
6 0 %
4 0 %
2 0 %
0 %
Team size brackets, according to number of employees
% o
f th
e t
ota
l sa
mp
lin
g
indicates the speed of creation of startups in relation to subsequent years.
portrait of startups based on the size of their respective teams.
3 1
Funds invested in Montreal startups during the last 5 years
Nb of rounds raised
Estimated total funds invested in Montreal startups according to publicly available data (ex-cluding transactions of undis-closed amounts).
Estimated number of funding rounds raised by Montreal start-ups based on publicly available data (excluding undisclosed transactions).
This dashboard provides indicators on the Montreal startup ecosystem, our founders and our startups.
≈$360M
≈200
7 0 %
2 7 %
2 % 1 %
daShboard our startups
3 2
StartupS in Montreal geographical presence
3 2
the thermal map above shows
the geographical concentration of
startups on the island of Montreal,
according to the latest available
data on the location of compa-
ny headquarters. We can observe
a marked concentration in three
main areas of the city - Downtown,
the Mile end, and the old Port (in
no particular order). it is not sur-
prising to observe a strong pres-
ence of startups in the city centre
and the old Port, given the con-
centration of economic activity
in this area. the Mile end, mean-
while, offers different advantages
that seem to attract a particular
pool of startups. indeed, in 2014,
the newspaper Les Affaires already
underlined this attractive situation
in its article “Mile end is a veritable
startup district in Montreal.”25 For
example, as illustrated by means
of an interactive map produced by
radio-canada in June 2015, rents
appear significantly lower in Mile
end compared to the city centre
and the old Port.26
25 Les affaires
26 Radio-Canada
thermal map of startups
Mile-End
Old Port
Downtown
3 33 3
NB oF STARTuPS BASED oN ToTAL VENTuRE CAPITAL FuNDING RECEIVED
this graph shows the development stage of
Montreal startups as measured by the total fun-
ding received. Firstly, we observe that over 60%
of startups that received venture capital funding
received a total amount of less than $1M. this
figure is halved (≈ 30%) in the case of startups
which received between $1M and $10M and falls
to less than 10% for the category $10M to $100M.
this trend is however reversed if we consider the
total amounts received per development stage
(≈ 5%, 35% and 60% respectively). It seems logi-
cal to see a decline in the number of startups
funded as we move towards larger amounts of
funding. some startups funded initially will fail
and others will have more modest growth pros-
pects which do not justify more funding.
$ < $ 1 M $ 1 M < $ < $ 1 0 m $ 1 0 M < $ < $ 1 0 0 m
8 0 %
6 0 %
4 0 %
2 0 %
0 %
MakerblokS - MakerBloks are
electronic building blocks that com-
bine real world play with a digital
story — Received $360K in funding
— Launched in 2014.
ariel - The future of home au-
tomation is with a single device
— Received $400K in funding —
Launched in 2015.
aMpMe - Sync your phone with
friends to create the world’s most
portable sound system — Received
$9M in funding — Launched in 2015.
SaleSfloor - Customers can
now shop online with their local store
and associate — Received $3.4M in
funding — Launched in 2013.
crew - Where the world’s best
talent prefers to work — Received
$13.5M in funding — Launched in 2012.
frank & oak - An exciting ex-
pression of streamlined shopping
where stylish menswear and helpful
advice help you step up your life +
style — Received $22.4M in funding
— Launched in 2012.
% startups having received venture capital financing
% of total value of capital raised by startups
6 2 %
3 0 %
8 %
StartupS in Montreal Development stage
3 43 4
it is interesting to observe some trends more
closely in each funding bracket period. For ex-
ample, if we divide each range into quartiles and
indicate in this the average and median amounts
of funding received by startups, we see that all
these measures are in the first two quartiles of
the range. this means that within the ranges, the
startups funded were closer to the lower limit
than the upper limit. in other words, total funding
of $1M is more representative of startups in the
$1M-$10M range than funding of $10M.
Median Average
$ < $ 1 0 0 k $ 1 0 0 k < $ < $ 5 0 0 k $ 5 0 0 k < $ < $ 1 M $ 1 M < $ < $ 1 0 M $ 1 0 M < $ < $ 1 0 0 M
4 0 %
3 0 %
2 0 %
1 0 %
0 %
Total financing received (brackets)
Nb
of
sta
rtu
ps
nuMber of StartupS vS. total value of venture capital received – Micro view
% of startups
$ 1 m $ 1 0 m $ 1 0 0 m
$ 2 2 9 , 9 1 6
$ 2 8 1 , 9 7 9
$ 2 , 7 2 7 , 6 3 3
$ 3 , 4 8 1 , 1 8 5
$ 1 6 , 2 6 7 , 0 5 2
$ 2 4 , 3 1 5 , 0 0 9
2 1 %
2 8 % 3 0 %
8 %
1 3 %
StartupS in Montreal Development stage
3 5
Startups and creativity
Percentage of startups that have patents
Startups and their products for a smarter city
Montreal startups and the international market
Portrait of the startups who see themselves as part of the creative industry.
Patents are a commonly used measure acting as an indicator oftechnological innovation.
Portrait of the startups who believe they offer prod-ucts and services for the smart cities market, keep-ing in mind that there are many definitions. Below is the definition provided by Montreal’s Bureau de la ville intelligente et numérique (Smart and Digital City Office) for the purposes of this report :
“Montreal’s smart and digital city project is a collection of mobilizing projects that work to optimize the efficiency of services provided to the population. In a collaborative and open ap-proach, this is achieved by putting to use the experience and ingenuity of our citizens, our municipal employees, public institutions, and corporations. Technology is used to leverage economic growth and make concrete improve-ments to Montrealers’ quality of life.”27
Out of all the Montreal startups that took part in the survey, a little more than half (52%) said they have clients outside of Canada. This group mentioned two main markets as sources of revenue. The two most important foreign markets mentioned were the United States (72%) and Western Europe (26%), with less than 3% of respondents indicating in oth-er markets.
If we refer to the graph below representing the number of international clients for startups, we notice that about one quarter of them actually have more international clients than local clients. On the other end of the spectrum, more than two thirds of startups in our sample show a much low-er percentage of international clients (between 0 and 25%). These results indicate a certain polar-ization between startups that have many interna-tional clients versus those who only have a few. As an example, less than 8% of startups claim to have between 25 and 50% international clients.
of startups
claim to have
at least one
patent.
73%YES
22%
67%of startups claim they offer a product or service that caters to the needs of the smart cities market.
0 1 - 2 5 % 2 6 - 5 0 % 5 1 - 7 5 % 7 6 - 1 0 0 %
6 0 %
4 5 %
3 0 %
1 5 %
0 %
% of client base that is foreign
% o
f th
e t
ota
l sa
mp
le
3 5
27 Bureau de la Ville intelligente et numérique de Montréal
StartupS in Montreal creativity
3 6
Startups and coworking
Over the last few years, Montre-al has seen a significant rise in the number of coworking spac-es. In 2011, the city had about 5 of these spaces and now, at the time of the writing of this report, there are more than 30. This means that within five years, the number of coworking spaces in Montreal has multiplied by 6. In the survey, the five most men-tioned spaces (in order of im-portance) were: District 3, We-Work, Notman House, La Gare, and Nexus Montreal.
Note that coworking spaces are in proximity to the startups we looked at on the previous map. This seems to support the theory that the value proposition of coworking corresponds to the needs of startups.
3 6
Map of collaborative workSpaceS 28
creation of collaborative workSpaceSin Montreal
2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6
4 0
3 0
2 0
1 0
0
Year
Nb
of
coll
ab
ora
tive
w
ork
spa
ces
28 PME MTL
StartupS in Montreal support network
3 73 7
incubation and accelerator prograMS and More
ServiceS offered by pMe Mtl
According to data gathered from the survey, more than two-thirds of startups participated in a program that provided entrepreneurial sup-port during founding and growth stages. The following programs were mentioned: District 3, Centech, Innocité MTL, The Founder Institute, Fondation Montréal Inc., Incubateur hEC Ban-que Nationale, TandemLaunch, The Next Found-ers, Launchhouse, Défi Montréal, L-SPARK, Fu-turepreneur, CLD St-Laurent, Capital Innovation, Montréal Startup in Tech, Techstars, Inno-cen-tre, Griffincamp and FounderFuel.
If we look at the number of startups that use PME MTL’s services, more than one third of startups (36%) say they benefit from the organization’s offering. It seems that in PME MTL’s mission to provide guidance and funding to entrepreneurs and business owners, it has successfully add-ed value to the technology startup segment. This is even more impressive knowing that PME MTL’s structure (a product of the reorganization of CLD and CDEC in Montreal) has only existed since 2014.29
29 PME MTL
StartupS in Montreal support network
3 8
external challenges faced by startups
crit ical factors that affect the growth of Montreal’s startup ecosystem
3 8
When we asked startups to identify external challenges they face, three categories were mentioned. Financing was a key issue for 74% of them, talent and skilled workers for 37% and market access was a challenge for 30% of the group. To put this data into perspective, we can compare these three chal-lenges to the fourth most frequently mentioned challenge faced by startups: mentoring and a support network. Com-pared to this 4th challenge, financing affects startups 4.2x more, talent and skilled individuals 2.1 x more and market ac-cess 1.7x. According to startups, these three challenges are significantly more difficult to overcome compared to other external challenges mentioned in the survey.
In this segment, we asked startups what critical factors they think affect the growth of Montreal’s startup ecosystem. It is in-teresting to note that the three biggest challenges mentioned previously (funding, talent and market) were the same here. It seems that startups and the ecosystem face the exact same challenges.
1 2
7 4 %
3 7 %
3 0 %
1 8 %
1 3 %
1 0 %
8 %
4 %
financing
talent and SkillS
acceSS to MarketS
MentorShip and Support networkS
public policy
infraStructure
other
culture
1
6 5 %4 1 %3 3 %2 9 %2 4 %2 4 %1 8 %1 8 %1 3 %
8 %8 %4 %
financing
talent and SkillS
acceSS to MarketS
culture
leaderShip
SenSitization of the general public
public policy
collaboration and networking
education
infraStructure
other
procureMent
2
StartupS in Montreal Perceived challenges
3 93 9
during the process of writ ing this report, we discovered that Montreal startups are geographically concentrated in three main areas of the city: downtown, the Mile-end and in the old port ( in no particular order) . in addition, we pinpointed Montreal startups that were in the three f irst stages of development (pre-seed, post-seed and growth stage) based on the total capital received. as of today, no Montreal startup has yet reached to reach the $100M mark in terms of funding (according to our data), although some are getting close. More than 60% of startups are currently in the pre-seed stage. if one thing is for certain, it ’s that Montreal has quality startups with huge potential . creativity (3 out of 4 startups) and innovation (1 out of 5 startups possess one or more patents) are at the core of the Montreal startup identity. nearly 70% of startups say they are aligned with the market in terms of providing products and services that cater to “smart cit ies.” we also learned that some Montreal startups operate internationally; more than one third of them had over 25% of their cl ients located outside of canada. and lastly, startups have a strong support network with more than 30 coworking spaces made available, as well as several incubator and accelerator programs and more. currently, startups feel confronted by 3 key challenges: f inancing, talent and skilled workers and market access.
Montreal startups, in conclusion
StartupS in Montreal
4 0
funding Profile of Funded startups
4 0
Montreal’s Best-funded Startups
RANKING STARTuP NAME yEAR CREATED NB oF FuNDING RouNDS ToTAL FuNDING
The following table shows the 50 startups that received the most venture capital funding in the past five years. This list is based on funds raised and also includes some startups that have made exits, via an acquisition, IPO, etc.
123456789
1011121314151617181920212223242526272829303132333435363738394041424344454647484950
BlockstreamBreatherFrank & OakOMsignalSonderCrewLANDRBusbudNoviflowLagoaAmpMeIMMUNIOPlotlyFélix & Paul StudiosMobeewavemnuboWalking ThumbsReactsTransit AppNeptune ComputerSalesfloorAlgoluxFunifierSPORTLOGiQRevol TechnologiesSmartRenoSharethebusChronogolfnGUVUTrackTikWorximityNetlift9SharpProvenderFloop TechnologiesSeevibesE-180INSTANT FinancialLIFT SessionMotion EngineOfficevibePPLCONNECTErudite ScienceFlightfoxCoPowerHyasynth BioUnique MicroguidesUnitoThirdshelfCloudswave
20142012201220112014201220122011201220122015201320132013201120122011201420132012201320142013201420142012201420122014201220112012201220132012201120112015201420132014201320132012201320142011201520142012
25231342331221121141122223421216155221111152141111
$ 85,261,791 $ 30,851,306$ 22,437,313
$ 20,840,000$ 17,837,664$ 13,490,471$ 11,374,038$ 11,218,657$ 10,096,791$ 9,357,976$ 8,974,925$ 8,638,366$ 7,772,926$ 7,628,687$ 7,292,127$ 5,611,246$ 5,000,000$ 4,487,463$ 4,212,000$ 3,926,530$ 3,365,597$ 3,300,000$ 3,197,317
$ 3,000,000$ 2,804,664 $ 2,750,000$ 2,705,266$ 2,700,000$ 2,600,268$ 2,500,000$ 2,243,731$ 1,826,673$ 1,808,314$ 1,590,806$ 1,524,615$ 1,346,239$ 1,200,000$ 1,200,000$ 1,121,866$ 1,121,866$ 1,121,866$ 1,121,866$ 964,472$ 954,685$ 953,586$ 650,682$ 645,073$ 645,073$ 625,626$ 560,933
4 14 1
Total financing granted to startups according to team size
The following table shows the median fund-ing raised by startups, based on the size of their respective teams. It is interesting to note the significant increase in this amount when a team of 1 to 10 people grows to a team of 11 to 50 people. Whereas the me-dian for the 1-to-10 employee group was
slightly over $235K, this rose to $2.75M for the 11-to-50 group. We speculate that a sig-nificant influx of new capital is required to hire new personnel, thereby allowing the workforce to grow from around ten to sev-eral dozen staff members.
1 - 1 0
1 1 - 5 0
5 1 - 1 0 0
1 0 1 - 2 0 0
$ 2 3 5 K
$ 2 . 7 5 M
$ 1 1 . 3 7 M
$ 1 1 . 4 9 M
Tea
m s
ize
Median of total financing granted
funding Profile of Funded startups
4 24 2
The highest-funded and most valued startup characteristics
This analysis attempts to identify the key characteristics of startups that appear to have the most traction with investors. Using a sample of startups from Crunchbase, we noted the frequency of each characteris-tic (i.e., how many startups applied this characteristic to themselves), and the amount of funding raised per characteristic. This enabled us to establish a funding/frequency ratio that we used to create the fol-lowing table. Zero (0) represents the average ratio for all the observed characteristics. Characteristics that have a value greater than zero have higher- than-average funding, with the opposite being true for values below zero. Interestingly, character-istics with above-average funding tend to correspond to those areas most affected by technological rev-olutions. For example, Community and lifestyle, Consumer goods and Food and beverages (the top three least-funded characteristics, ac-cording to the funding/frequency ratio), seem to belong to more tradi-tional sectors than do the top three most-funded: Design, Platforms, and Biotechnology
Design
Platforms
Biotechnology
Real estate
Consumer electronics
Hardware
Security and protection
Software
Music and audio
Education
Information technology
Internet services
Mobile
Media and entertainment
Business
Data and analytical services
Financial services
Messaging and telecommunication
Travel, tourism and transport
Agriculture
Gaming
Applications
Sports
Healthcare
Energy
Sustainability
Manufacturing
Video
Science and engineering
Advertising, sales and marketing
Professional services
Events
Navigation and cartography
Publishing and content
Community and lifestyle
Consumer goods
Food and beverages
- 3 , 0 0 0 , 0 0 3 , 0 0 6 , 0 0 9 , 0 0
funding Profile of Funded startups
4 34 3
we must remember that the previous graph does not show the total value of funding rounds for startups having these attri-butes. Taking a look at the second graph, for example, we see that although Design seems to be proportionately the best-fund-ed characteristic, the absolute value of funds allocated to that category is still well below many others. If we measure accord-ing to the sum of transactions, the top five most valued char-acteristics then become Software, hardware, Consumer elec-tronics, Internet services, and Mobile, while some categories - Community and lifestyle, Consumer goods and Food and bev-erages – remain at the bottom of the list.
$ 2 4 0 M
$ 1 8 0 M
$ 1 2 0 M
$ 6 0 M
$ 0
4 0
3 0
2 0
1 0
0
Attributes of a startup
Nb
of
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Fin
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freQuency and financing received for variouS Startup attributeS
Sum of financing receivedSum of the occurrences
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funding Profile of Funded startups
4 44 4
Size of funding roundS in Montreal
The following graph shows the proportion of funding rounds provided to startups, by size of round. The first thing we see is that nearly 64% of rounds are below the $1 million mark, leading to the assumption that a substantial portion of rounds are intended for companies in the seed phase. Next, we see that nearly 31% of rounds were between$1 million and $10 million, pre-sumably for companies in the post-seed phase. Finally, less than 6% ( ≅≈5.8%) of rounds will exceed the $100 million mark. It is, of course, logical to as-sume that the number of rounds should decrease as the amount increases, based on the principle that many are called but few are chosen. Moreover, a startup that requires funding of over $10 million within five years of its launch may seem to display extraordinary growth. however, such growth also occurs in other startups elsewhere in the world.
Average size of a funding round
Median of funding rounds
Average based on all the sample rounds evaluated.
Median based on all the sample rounds evaluated.
≈$2.3 M ≈$420 k
$ < $ 1 M
$ 1 M < $ < $ 1 0 M
$ 1 0 M < $ < $ 1 0 0 M
6 4 %
3 1 %
6 %Siz
e o
f fu
nd
ing
ro
un
ds
% of the total sample
funding Funding rounds
4 54 5
facebook - Launched in 2004
1st funding round - $500 K1st round of over $10 M - May 2005, $12.7 M / series a
1st round of over $100 M - october 2007, $240 M / series c
airbnb - Launched in 2008
1st funding round - $20 k1st round of over $10 M - July 2011, $112 M / series B
1st round of over $100 M - october 2013, $200 M / series c
uber - Launched in 2009
1st funding round - $200 k 1st round of over $10 M - février 2011, $11 M / series a
1st round of over $100 M - août, 2013, $258 M / series c
Snapchat - Launched in 2012
1st funding round - $485 K1st round of over $10 M - February 2013, $12.5 M / series a
1st round of over $100 M - December 2014, $485 M / series D
lyft - Launched in 2012
1st funding round - $300 K1st round of over $10 M - January 2013, $15 M / series B
1st round of over $100 M - april 2014, $250 M / series D
doordaSh - Launched in 2013
1st funding round - not disclosed
1st round of over $10 M - May 2014, $17.3 M / series a
1st round of over $100 M - March 2016, $127 M / series c
thalMic labS - Launched in2012
1st funding round - $1.1 M1st round of over $10 M - June 2013, $14.5 M / series a
1st round of over $100 M - september 2016, $120 M / series B
vidyard - Launched in 2011
1st funding round - not disclosed
1st round of over $10 M - January 2015, $18 M / series B
Most recent funding round - January 2016, $35 M / series c
crowdcare - Launched in 2013
1st funding round - not disclosed
1st round of over $10 M - July 2013, $15 M / series B
Most recent funding round - June 2016, $33 M / series D
When citing examples like these, it is clear the geopolitical con-
text in which these startups were launched is different from the
one in which Montreal has found itself over the past five years.
rather, they are used to show that it is possible for a startup to
create the kind of value that justifies a funding round of over
$100 million in less than five years. We can see similar perfor-
mances within the same timeline below (i.e., past five years).
although fewer canadian startups have managed to raise over
$100 million in capital in the past five years, some have never-
theless been able to do so. others that have not yet passed this
milestone seem well positioned to succeed.
exaMpleS of aMerican StartupS
canadian StartupS launched in the paSt 5 yearS
StartupS launched in the paSt five yearS
funding Funding rounds
4 64 6
tiMe needed to raiSe funding
Based on data from the startups themselves, more than three quarters of those capable of raising capital manage to do so in under a year, with close to 70% able to close the transaction in less than six months. only 20% of startups seem to be able to raise capital in less than three months. one might think that these lead-times are related to the size of the transac-tion, but no significant positive correlation has been noted in the sample between the time needed to raise funding and the amount of funding re-quested. Although one might assume that, for borderline cases involving very large or very small transactions, the lead-time would vary significant-ly, we did not always observe this variation for the size of Montreal’s fund-ing rounds. Also of note is the fact that many startups never succeed in raising capital. The graph below shows only data from startups that have successfully raised funding rounds.
M o n t h < 3
3 < M o n t h < 6
6 < M o n t h < 1 2
1 2 < M o n t h
2 0 %
4 7 %
1 7 %
1 7 %
Tim
e p
eri
od
4 6
funding Funding rounds
4 74 7
The most active investors in the Montreal ecosystem
The following is a list of the most active in-vestors in Montreal startups. The investors listed below are based on the number of transactions in which they participated. It is important to note that this classification does not contemplate transactions with companies outside our present scope of study. Moreover, this classification is based on the number, and not on the size, of the transactions recorded, primarily due to the fact that the data for the transactions in
which they participated are more accessi-ble than the data on the value (sometimes not disclosed). This measurement is there-fore not an indicator of the significance of an investor itself, but rather of its activity with Montreal-based technology startups formed during the last five years. The idea of this classification is to provide an overall picture of the stakeholders involved, and not to rule on the performance of each one.
Investor Country
Real Ventures
BDC
FounderFuel
District 3 Innovation Center
iNovia
Founder Institute
Canadian Technology Accelerator Digital NyC
Anges québec
TandemLaunch
white Star Capital
SoSV
FTq
Fondation Montréal Inc.
Canada Media Fund
Transactions
4 0
2 0
1 7
1 3
7
7
7
6
5
4
4
4
4
4
City
Montreal
Montreal
Montreal
Montreal
Montreal
Montreal
New York
Montreal
Montreal
London
Princeton
Montreal
Montreal
Toronto
Canada
Canada
Canada
Canada
Canada
Canada
United States
Canada
Canada
England
United States
Canada
Canada
Canada
funding Funding sources
4 84 8
Investors by geography
The most active investors with Montreal startups by city
The most active investors with Montreal startups by country
The following two graphs illustrate the most active cities and countries based on the number of investments completed with Montreal startups. This analysis is based on the location of the main office of the inves-
tor. For example, an investor based in Spain but having an office in Canada would be considered a Spanish, and not a Canadian, investor.
From a country perspective, the significance of the US investor market is again apparent. Based on the number of transactions, the US participates in almost 1/3 of Canadian
investment activity. England, as well as the other countries considered, represent about 7% of the volume of transactions.
At the level of the most active cities, it is noted that two of the five most active cities are located in the US. Given the geograph-ic proximity and the high level of venture capital development, this is not surprising. It would seem that the proportion of transac-tions attributable to Montreal investors sig-nificantly exceeds that of the other cities list-
ed below. The inference could, however, be made that this picture would change if the amount, rather than the number, of trans-actions were assessed. We have chosen to proceed with the volume of transactions given that several transactions are confiden-tial with respect to their financial value.
M o n t r e a l
s a n f r a n c i s c o
t o r o n t o
n e w yo r k
l o n d o n
o t h e r s
6 1 %
9 %
8 %
5 %
3 %
1 3 %
% of the total Nb of transactions
C a n a d a
U n i t e d S tat e s
o t h e r s
E n g l a n d
7 1 %
2 2 %
4 %
3 %
% of the total Nb of transactions
funding Funding sources
4 94 9
Crowdfunding in Canada and in Montreal
Crowdfunding is an alternative financing source for business who’s popularity is growing in Canada and abroad. In the con-text of this report, the National Crowdfund-ing Association of Canada (NCFA Canada) has contributed the following data and information regarding crowdfunding in general and in Montreal. NCFA Canada pro-vides education, research, leadership, sup-port and networking opportunities to over 1300+ members and works closely with in-dustry, government, academia, community and ecosystem partners and affiliates to create a strong and vibrant crowdfunding industry in Canada.30
Crowdfunding represents an emerging fi-nancing alternative for SMEs to raise funds through the collection of small contribu-tions from the general public (known as ‘the crowd’) using the internet and social media to leverage the power of online commu-nities to extend a project’s promotion and financing opportunities. Crowdfunding has its origins in the concept of crowdsourc-ing, which is the broader concept of an in-dividual reaching a goal by receiving and leveraging small contributions from many parties. Crowdfunding potentially solves two major challenges for new ventures and small businesses; access to cash and the ability to expand the power and reach of their marketing within existing and new online/offline communities.
The Canadian industry is not without challenges. Many industry experts are advocating to tweak the com-pliance rules to make it more cost effective for star-tups to raise rounds via crowdfunding markets without putting unnecessary financial and reporting burdens on small businesses. Additionally, having different exemptions in different provinces makes it more diffi-cult for new funding portals and fundraising companies
to comply. Canada now has two crowdfunding specific exemptions: the Start-Up Crowdfunding Exemption and the Integrated Crowdfunding Exemption. Entrepre-neurs can also use the accredited investor exemption and the offering memorandum exemption to raise capi-tal on online funding platforms (available in every juris-diction across Canada).
W o r l d w i d e C a n a d a
key factS
In Oct 2013, the World Bank re-leased a report that predicted the global crowdfunding indus-try to grow into to a $96 billion per year industry by 2025.
In the US, online alternative fi-nance markets surged to $36 billion in 2015.31
The Canadian crowdfunding industry raised $150M+ in 2015 across all types of models with the majority of dollars being raised via reward/donation-based crowdfunding.
The Canadian crowdfunding directory, hosted and maintained by NCFA Canada, lists the majority of online funding portals in the country, including 61 donation/reward focused platforms, 17 equity focused plateformes, 8 lending focused platforms and almost 30 service providers.
Quebec represents 11.5% of the Canadian market infrastructure
In Q4 in 2014, Montreal ranked 4th for total funds pledged by ‘backers’ or ‘funders’ per capita (Vancouver $17.7M, Waterloo ($14.9M), Toronto ($7.3M) and Montreal ($4.7M)
30 NCFA Canada
31 KPMG
funding Funding sources
5 05 0
32 SmartHalo Kickstarter campaign
33 UBIOS Gotroo campaign
Main benefitS of crowdfunding
Crowdfunding spurs economic growth, creates jobs, generates revenue and stimulates innovation and entrepreneurship.
It unlocks a new source of efficient and transparent capital to fill ‘Funding Gaps’ in the Canadian economy.
It improves the quality and levels of venture capital funding in Canada to support the next generation of young, innovative firms.
Crowdfunding provides support for underserviced communities across verticals, geography and social economic tiers.
It helps SMEs achieve strong growth through regional and global market diversification and helps con-nect scalable ventures to angel and venture capital investment groups.
Crowdfunding accelerates the commercialization of new products, ideas and services in Canada that can com-pete globally and ultimately works to strengthen Canada’s entrepreneurial backbone at grassroots levels.
Montreal-baSed crowdfunding exaMpleS
S m a r t H a l o
R e wa r d s - b a s e d c r o w d f u n d i n g
K i c k s ta r t e r 3 2
A u g u s t 2 0 1 5 - S e p t e m b e r 2 0 1 5
$ 5 3 8 , 7 2 3 C A D
U B I O S
E q u i t y c r o w d f u n d i n g
G o t r o o 3 3
A p r i l 2 0 1 6
$ 1 5 6 , 5 0 0 C A D
CoMPANy
DEAL TyPE
FuNDING PLATFoRM
CAMPAIGN START-END DATES
ToTAL AMouNT RAISED
CoMPANy
DEAL TyPE
FuNDING PLATFoRM
CAMPAIGN END DATE
ToTAL AMouNT RAISED
funding Funding sources
5 15 1
as evidenced by the list of the 50 best-funded startups in Montreal , several startups have demonstrated the abil i ty to raise s ignif icant venture capital f inancing. furthermore, i t is evident that once a startup exceeds the threshold of 10 employees, the average amount of funding granted increases s ignif icantly. the 11-50 employees category would appear to be a turning point , requir ing a s ignif icant contr ibution of capital to support the growth of a startup from a talent standpoint .
our startups demonstrate great diversity in the types of products and services that they offer, as i l lustrated by the charts showing the value assigned by investors to certain attr ibutes. an overlap can also be seen between the sectors that have been the subject of technological revolutions, and the attr ibutes of the best-funded startups. although not all startups wil l have the means to raise capital , those that do are able to do so wil l raise within 3 to 6 months in almost 50% of cases. as regards sources of capital , Montreal based investors continue to be the most act ive suppliers of f inancing, based on the number of transactions. however, two uS cit ies rank among the f ive most act ive, coming in 2 nd and 4 th place (San francisco and new york) . toronto and london rank 2 nd and 5 th, respectively.
In conclusion, with regard to financing
funding
5 2
According to the data collected from Montreal start-ups, the proportion of managers and business people in startups is essentially equivalent to the proportion of engineers. The average for each of these two types of employees across all the startups studied (0-5 years of operation) diverged by less than two percentage points. It would therefore seem that startups have a compara-ble need for technical expertise and business expertise during the initial years of operation.
It is also interesting to note that the average time re-quired to find and hire business people and engineers differs. Indeed, startups require on average 9 days lon-ger in the case of engineers. A possible explanation for this could be that engineers are less well acquainted with the world of startups than business people. An-other explanation could be that demand for engineers is higher, and it is therefore more difficult to hire them quickly due to competition with other employers.
≈40%
≈42%
≈28
≈37
Average percentage of employees who are businesspeople
Average percentage of employees who are engineers
Average Nb of days required to find and hire businesspeople
Average Nb of days required to find and hire engineers
talent
≈7%
Equity compensation for mentors in the startups that they advise
Startup employees and equity compensation
Just under half of startups (≅≈45%) have at least one mentor or advisor who assists them and who has an equity stake in the company. Excluding startups that do not have any mentors, an average of 3 men-tors and advisors per startup own equity. Taking the sample as a whole, this figure
falls to 1.3 on average. Our hypothesis is that deciding to give equity to mentors and advisors is beneficial for startups, gi-ven that risk-taking could encourage sup-porters of startups to be more actively in-volved with them.
Indicates the aver-age equity in a startup granted to employees. At first sight, this figure
would appear to be low. Indeed, values ex-ceeding 10% can be seen in other startups
and ecosystems. Given the young age of the startups studied in Montreal, one explana-tion for this could be the fact that the shares reserved for employees have not yet been fully distributed.
5 2
engineerS and buSineSS people in StartupS
5 3
talent
5 3
eMployeeS with experience in StartupS
This analysis aims to build a portrait of the proportion of teams that include employees with prior experience in a startup environment. At first sight, al-most 70% of startups claim to have at least one (1) employee among the launch team (first 10 employees) who has prior startup experience. however, in more than half of the startups surveyed, employees with prior startup experience account for less than 20% of the launch team. It would therefore seem that we are beginning to see the involvement of a previous wave of Montreal entre-preneurs (who have been successful or whose previous startup failed) in the current wave of new startups. This ratio remains low for the moment, however, because the Montreal ecosystem is still young in comparison to others (such as Silicon Valley), where the pool of ex-employees or founders of startups has been built up over a good number of years.
0 % 1 - 2 0 % 2 0 - 4 0 % 4 0 - 6 0 % 6 0 - 8 0 % 8 0 % +
4 0 %
3 0 %
2 0 %
1 0 %
0 %
% of the first 10 employees having startup experience
% o
f th
e s
am
pli
ng
stu
die
d
5 4
The survey data indicates that more than 70% of startups claim that their team includes at least one woman. The graph below indicates that for up to a third of the startups surveyed, between 1% and 25% of employees are female. It also indicates that for around 27% of startups, between 25% and 50% of employees are women. The overall average is around 22%.
5 4
talent
0
1 - 2 5 %
2 5 - 5 0 %
5 1 - 7 5 %
7 5 % +
% o
f w
om
en
re
lati
ve t
o t
ota
l n
um
be
r o
f e
mp
loye
es
3 0 %
3 3 %
2 7 %
5 %
4 %
StartupS eMploying woMen
woMen eMployed in StartupS
29,7
70,3
%
Yes No
≈41%
≈38%
≈13%
of the employees in Montreal startups are born abroad.
of startups have product team members who work from outside of the country
of the product team that is based abroad
women employed in startups
95% of the time, women are in the minority.
5 55 5
Montreal startups seem to be able to surround themselves with mentors who have their hearts set on seeing businesses grow successfully. a l ittle under half of startups claim to have at least one mentor who has an equity stake in the company, which suggests that they would maintain longer-term relationships with the startups that they assist . with regard to the amount of equity granted to employees, the average is around 7%, which at f irst glance would seem a l ittle low. one explanation for this is that the portion of equity reserved for employees has possibly not yet been fully distributed. this would be consistent with the younger age profile of the startups we have studied.
in terms of the composition of startup teams, the number of engineers and business people is roughly the same, but it has been noted that on average it takes longer to recruit an engineer (9 days more). on a more general note, 70% of startups maintain that at least one of their f irst 10 employees has previous experience in a startup environment, but for more than 50% of startups, less than 20% of init ial employees have startup experience. on the whole, the majority of launch team employees are new to the startup environment.
in terms of diversity in the startup workplace, 70% of startups employ women, but they continue to be in the minority in 95% of cases. overall , women account for approximately 22% of employees in startups. foreign talent accounts for 41% of startup employees. there is also a significant number of staff who work from outside the country for startups based in Montreal.
In conclusion, with regard to talent
talent
5 6
StakeholderS in the Montreal Startup ecoSySteM
5 6
List of stakeholders, by organisation type
Below is a list of important stakeholders in the Mon-treal startup ecosystem. Since it is constantly evolv-ing, it is quite possible, and indeed likely, that some stakeholders will not have not been included on this
list. This is not indicative of a lesser degree of impor-tance in the Montreal startup scene, but rather of the continuous nature of the work required to build a rep-resentative portrait of the current reality.
StartupS
· 04h11
· 1 AM App
· 1dev
· 1science
· 2GUID
· 2Klic
· 2ps
· 360medlink
· 9Sharp
· AcceleratorApp
· Adapt2me
· Adenda
· ADloop
· Advise Auto
· Aerial
· Ahvoda Recruitment
· AIRY 3D
· Airzurv
· Ajah
· Alfred
· Algolux
· AlmaSKY
· Alvéole
· Amilia
· AmpMe
· Anagraph
· Apollo Music Store
· Appart Ô Sud
· Appifier
· Arcade
· Artstation
· Ask PAM
· Asportsmanager
· Atombit Wallet
· Automat
· Bankme
· Barracks
· Beehivr
· Beeye
· Beta Bloc
· BidVine
· Biglig
· Binder
· BioMindR
· BitCredits.io
· BizCollab
· BKEY
· Blobon
· Blockstream
· BLOOM
· BonApp
· Booxi
· Bottlebookings
· Brainer
· Brandicted
· BRATie
· Breather
· Buddypilots
· Budgeto
· Buildingo
· Busbud
· Bylls
· Cake Mail
· Capbeast
· Carafe Data
· Card Coffer
· Cargo
· Cellier Domesticus
· Celliers Intelligents
· Certimail
· ChainIt
· ChallengeU
· Chic Marie
· Chopchop
· Chronogolf
· Chronometriq
· Cicadasecurity
· Circlad
· Cirqles
· ClassCraft
· ClassTrak
· Clever Today
· Click4time
· Community Sift
· Comparjobs
· Connect&Go
· Connectedfields
· Constructeur virtuel
· Context.IO
· Cooked4u
· CoPower
· Core Cruiters
· Créatifs Autrement
· Crema App
· Crew
· CrowdBase
· Crowdsourced Testing
· Cryptocat
· Cubeler
· CycleLabs
· Daneel.ai
· Dasbox
· Datacratic
· Datatoweb
· Decode Global
· Delve Labs
· Detego Technologies
· Digital State
· Dinr
· Distant Job
· DoBundle
· DogSync
· Dotted Block
· Dovetail
· Drop&Go
· Dubdub
· E-180
· E-panneur
· Elysia
· Engagement Labs
· Epilogger
· Equalit.ie
· Everpay
· Evinance Innovation
· ExitList
· Faimdata
· Felix & Paul Studios
· Find Me A Pro
· FinDynamics
· Fiscal VL
· Fit.jobs
· Fiteo
· Fitness Health Match
· FlavorChat
· Fleexer
· Flightfox
· Floop
· Fluent.ai
· Fluttrbox
· Flystro
· Foodcombo
· Foodora
· Frank & Oak
· FreshMint
· Friimi
· Fundica
· Funifier
· Fuzzy.io
· GetFloop
· GMR solutions mobiles
· Gnito
· GooRoo Messenger
· Goowi
· GOrendez-vous
· Grab It
· GradeSlam
· Greatify
· Greencopper
· Grizzly space
· GuestDriven
· Happy Stuff
· Hashtads Advertising
· Heddoko
· Hellowave
· Helpr Solutions
· Herd Wisdom
· Hexa Foods
· Hexoskin
· HIKSTER
· Hive.co
· Holodio
· Hook Me App
· Hopper
· Hoptimize.me
· Hubaway
· Humanitas
· Hykso
· Hyve3D
· Iammoving
IdeaPlaces
· iLOC Technologies
· Imagia
· Imaginary-spaces
· Imagination for people
· Imagine 360
· Immervision
· IMMUNIO
· Impak Finance
· In-sight.io
· iNNERSHiP
· Innovative imaging
technologies
· INsidde
· Instachef
· INSTANT Financial
·
5 75 7
· Instruments IO
· Intuitic
· ioTHEATRE
· Irys Tec
· iSenCore
· Jawb.io
· Jintronix
· Jobbook
· JOGOGO
· Kassis
· Keatext
· Kimoby
· Koodzo
· Kustom sportswear
· Kutoto
· Lagoa
· LANDR
· LaunchLeap
· LeanFrame
· LEXOP
· Lickstats
· Lift Digital
· LIFT Session
· Liliki
· Listn
· Local Connoisseur
· Local Logic
· Logrr
· Macromeasures
· MagnetEye
· Makeachamp
· MakerBloks
· Mantika
· Massfilter.me
· Medipense
· Mentorina
· Mentorum
· Meridex
· Mibelo
· Mighty Cast
· Miralupa
· Mirametrix
· Mnubo
· Mobeewave
· Mobi 724
· Mobicow
· Mobsen
· Modulis
· Moodhook
· Moving Waldo
· Mucity
· My Branch App
· MyCustomizer
· MySeat
· NameShouts
· Nawmal
· Neos Jobs
· Nepsu
· Neptune
· Netlift
· Netship
· Newknow
· Nexalogy
· nGUVU
· North Side
· Noteoriety
· Notetracks
· NoviFlow
· Now In Store
· Nox Mobile
· Nukern
· Officevibe
· Omnigate
· OmSignal
· ONCE
· Ontugo
· OOHLALA
· OPTiFi.io
· Opus44
· OSMOra
· Otolane
· Pandacaza
· Paparide network
· Peerio
· Philafy
· Pixiclip
· Planhub
· Planiclik
· Play The Future
· Plotly
· Poches & Fils
· Poka
· PotCoin
· Potloc
· Power2gether
· PPLConnect
· Praktice Health
· Pressbooks
· Priwen Systems
· Prkair
· Qarrot Performance
· QuantiScience
· Quantreex
· QuantumWhisper
· Questology
· QuickTask
· Raange
· RaisedDigital
· Reacts
· Recruitly
· ReelyActive
· REGIS360
· Relevant
· Rent Hunt
· Rental Escapes
· RentHunt
· Retinad
· Rezapark
· SalesFloor
· Salle Privée
· Scheduling Direct
· Scrute It
· Seamless Planet
· SecondLife
· Seevibes
· Semeon
· Sensequake
· Sensing Dynamics
· Shake
· Sharethebus
· Sharing Kit
· Shark Distribution
· Shipooling
· Simplicity Engine
· Smart Pay
· Smart Reno
· SmartHalo
· Smooch
· Snoobe
· Sociable Labs
· Socialbungy
· Sofdesk
· Sollum
· Sonder
· Soul.City
· Sparkup Inc
· Spokib
· Sportlogiq
· Spotfields
· SPOTR
· Stack8 Technologies
· Startr
· StudentSphere
· StudeTree
· Studyo
· Swapspot
· SweetIQ
· Swipecity
· Synaptecha
· Systèmes Agro MJ
· TagMyDoc
· Taste Filter
· TasteBay
· TasteFilter
· Techno readapt
· Technowait
· Techologies OPA
· TeekTak
· TenScores
· TermLynx
· TickSmith
· Ties
· Time Doctor
· TimeSavvi
· TrackTik
· TradeFan
· Trainer Workout
· Transit App
· Trovy
· True Player Gear
· TrueMeet
· Tylio
· UBI
· UbiFood
· Ubios
· Ululab
· Underdog Crowdfunding
· Unito
· UniYu
· UVolt
· Vanilla Forums
· VenueParking
· VOD2
· Vuru
· Walking Thumbs
· Wallrus
· Wavo.me
· WAYit
· WealthTab
· WeDo
· Weetab
· Whiteframe
· Wicastr.com
· WishBox
· Wixi Car
· Women In Mind
· WonderProxy
· Workland
· Worximity
· Worximity Technology
· Yakoma
· Zafe
· Zeropasswords
· Zilyo
· Zoomvisit
inveStorS
The following list includes
investors that have invested in
at least one montreal based
startup over the past five years.
This list includes national and
international investors.
· 50 Partners
· 500 Startups
· Accel Partners
· Accelerated Ventures
· Accomplice VC
· Aligo Innovation
· AME Cloud Ventures
· AngelList
· Anges Québec
StakeholderS in the Montreal Startup ecoSySteM
5 85 8
· Atlas Venture
· AXA Strategic Ventures
· BDMI
· Bessemer Venture Partners
· Birchmere Ventures
· Blockchain Capital
· Bloomberg Beta
· Boldstart Ventures
· Brightspark Ventures
· Business Development
Bank of Canada
· Campfire Capital
· Canada Media Fund
· Canadian Technology
Accelerator Digital NYC
· Capital Angel Network
· CDPQ
· Claridge
· CMW Startup Launch Pad
· Columbia Technology Ventures
· Comcast Ventures
· Cossette Lab
· Cycle Capital
· Desjardins
· Digital Garage
· District 3
· DMZ - Ryerson University
· Ecofuel
· EDGE Edtech
· Embrase
· Emerillon Capital
· Entrepreneurs Roundtable
Accelerator
· Eurofin Ventures
· Export Development Canada
· Ferst Capital Partners
- FCP
· Flextronics Lab IX
· Flight Ventures
· Fondation Montréal Inc.
· Fonds de solidarité FTQ
· FOOD-X
· Founder Institute
· FounderFuel
· Freycinet Investments
· Future Perfect Ventures
· Futurpreneur Canada
· Global Insurance Accelerator
· Globestart
· Golden Venture Partners
· Goodwater Capital
· gr0k
· GSoft Ventures
· Hacking Health
· HDGL
· Horizons Ventures
· Hoxton Ventures
· Ignite Venture Partners
· Information Venture Partners
· InnoCité MTL
· Innovation Endeavors
· Innovation Support
· iNovia
· Interaction Ventures
· Investissement Québec
· Investissements W3
· JCM Capital
· Khosla Ventures
· Kinetic Cafe
· Klass Capital
· LaunchCapital
· Launchpad LA
· LDV Capital
· LDV Partners
· Leo Capital Holdings
· Lightbank
· Lumira Capital
· Maple Leaf Angels
· MAS Holdings
· McGill X-1 Accelerator
· McRock Capital
· MHS Capital
· Mistral Venture Partners
· Mosaic Ventures
· National Research
Council of Canada
· New Technology Venture
Accelerator
· Nokia Bridge Incubator
· OMERS Ventures
· Otimo Retail
· PHI Group
· Plug and Play
· Plus Eight Equity Fund
· Polytech Ventures
· Primera Capital
· Principle Innovation
· ProMontreal Entrepreneurs
· Queen Mary University
of London Endowment
· Radical Ventures
· RBC
· Real Ventures
· Relay Ventures
· Revolution
· Revolution Ventures
· RevolutionGrowth
· Rho Ventures
· Ribbit Capital
· Right Side Capital
Management
· River
· Rothenberg Ventures
· Round 13 Capital
· RRE Ventures
· SAJE accompagnateur
d'entrepreneur
· SBT Venture Capital
· SDEVM
· Seed Equity Ventures
· Sherbrooke Street
Capital (SSC)
· Siemens Venture Capital
· Silicon Valley Bank
· SK Ventures
· Slaight Music
· Slow Ventures
· Société de développement
économique Ville-Marie
· Somel Investments
· SOSV
· Start-Up Chile
· StartMate
· Startup Next
· Startup Ottawa
· Startupbootcamp
· Stradigi Ventures
· Structure Capital
· Sustainable Development
Technology Canada
· TA Ventures
· TandemLaunch
· Target +Techstars Retail
Accelerator
· Techstars Ventures
· Telegraph Hill Capital
· The Mill
· The Next 36
· Townsgate Media
· Valar Ventures
· Vayner/RSE
· Version One Ventures
· VTF Capital
· W Investments
· W3
· Walnut Venture
Associates
· Warner Music Group
· Wayra
· White Star Capital
· Y Combinator
· YUL Ventures
· ZenStone Venture
Capital
incubatorS and
acceleratorS
The players listed below
have identified themselves as
incubators or accelerators.
· ADI - (Accelerator)
· CENTECH - (Incubator and
Accelerator)
· CEIM - (Incubator)
· Défi MTL - (Accelerator)
· EcoFuel - (Accelerator)
· Founder Institute
- (Accelerator)
· FounderFuel - (Accelerator)
· Hacking Health - (Accelerator)
· Impact8 - (Accelerator)
· Inno-Centre - (Accelerator)
· InnoCité MTL - (Accelerator)
· Institut d’entrepreneuriat
Banque Nationale / HEC
Montréal - (Accelerator)
· MTLab - (Accelerator)
· TandemLaunch - (Accelerator)
· Cossette Lab - (Incubator)
· Défi 3737 - (Incubator)
· District 3 - (Incubator)
· EntrePrism HEC Montréal -
(Incubator)
· Griffin Camp - (Incubator)
· IC MTL - (Incubator)
· Incubateur J.-Armand
Bombardier - (Incubator)
· INGO - (Incubateur)
· La Cuvée (Univalor)
- (Incubator)
· Lab Innovation - (Incubator)
· Max TECH - (Incubator)
· McGill X-1 - (Incubator)
· Radio-Canada Lab
- (Incubator)
· Stradigi Ventures - (Incubator)
coworking SpaceS
· 6cent1
· Atelier numerique
· Bitcoin Embassy
· Boom
· Caravan
· Colectiv
· Crew Coworking Space
· Dok Station
· ECTO | Coworking coopératif
· Espace commun
· Espace Ludique
· Espaces Temps
· Esplanade
· Fabrik 8
· FoodRoom
· Gab
· Halte 24-7
· Hub305
· IDEAL Coworking
· Kiwili
· La Commune
· La Gare
· La Well
· Le 402
StakeholderS in the Montreal Startup ecoSySteM
5 95 9
· Le Plancher
· Le Salon 1861
· LoriHUB
· Nexus Montréal
· Nuwrk
· ORBIT Montréal
· Sensorica
· Startup Basecamp Montreal
· Station-C
· Tableau blanc
· Temps libre
· WeWork
· Xenospace
Meetup groupS
· MTL NewTech -
by&for Montreal Startups
Entrepreneurs
· Google Montreal Tech Series
· Parler en public
· MTL + ECOMMERCE
· YES Montreal
Entrepreneurs Corner
· HackerNest Montréal
Tech Socials
· MTL Data
· MSDEVMTL
· HTML5mtl
· js-montreal - montreal's
javascript user group
· Marketing & sales
Automation - Online
Growth Strategies
· The Montreal E-Business
Entrepreneurs Meetup Group
· Aspiring Entrepreneurs
of Montreal
· Montreal Business Networ-
king and Strategies Group
· Big Data Developers in
Montreal
· Visualisation Montréal
· Montréal Google Developer
Group - GDG Montréal
· Internet des objets, Objets
connectés, Montréal, Québec
· YES Montreal - Women in
Technology
· Reseautage Entrepreneurs
Montreal
· Montreal JUG
· Digital Entrepreneurs
· YulDev
· PHP Quebec
· UX-Teams-in-Montreal
· Hacks/Hackers Montreal
· Montréal Unity UG & Unity
Games
· Docker Montreal
· Montreal - Big Data
University Meetup
· Data Science, Business
Intelligence, Big Data... FR/EN
· Sprout Up Montreal
· Comment devenir
programmeur web ?
· Montreal Mobile .NET
Developers
· Bitcoin Embassy
· The Success Group of
Montreal TM
· CocoaHeads Montreal
· Strong Business Support
Network
· MTLVR: MONTREAL VIRTUAL
REALITY
· Montreal Business Owners
and Entrepreneurs Networking
· DecodeMTL: Learn to Code
· Meteor Montreal
· Montreal Front End
Developers
· Montreal Entrepreneurs
· Montreal Cloud Computing
Meetup
· Data + Marketing
· Montreal Embedded
· Drupal Montréal
· GDG Montreal Android
· MTL Machine Learning
· PyLadies Montréal
· Symfony Montreal
· Montreal Bitcoin Meetup
· Aspiring Entrepreneurs
Meetup
· Montreal Sharing Economy
(#MTLSHARE)
· ReactMontreal
· Noös Montreal
· Hardware Guild
· MonBUG - Montreal
Bioinformatics User Group
· DesjardinsLab - Évènements
& Ateliers
· Diginomics
· Robots, Androids, UAVs,
AUVs, ROVs, and Automated
Systems
· Swift Montréal Meetup
· Modern Tech, Future Tech,
Fringe Tech, and Alternative
Tech
· Edge Networking
· Maison Logiciel Libre
· Programming, Program
Development, and Program
Design Meetup
· Evolving Web Training
Montreal
· Growth Hacking Montreal
Functional Programming
Montréal Meetup
· Montréal-Django
· Cloud Foundry - Montreal
· Montréal AWS Users United
Innovation en liberté /
freedom & technology
· Data for Good Montreal -
Data Scientists & Devs doing
GOOD
· MTL.mktg - Digital Marketing
Meetup
· Laravel Montreal
· Montreal MongoDB User
Group
· Montréal Rust Language
Meetup
· Artificial Intelligence and
its applications Meetup
· Montréal Unreal Engine
Meetup
· Making electronic games for
all kinds of devices
· Montréal Open Data Meetup
· Mentors Montréal Meetup
· Montreal MedTech Network
· Gestionnaires de
communautés au Québec
· Montreal PowerShell
User Group
· Montreal Amazon AWS
User Group
· Using Social Media in
new ways! Market research
already done
· ProtoHack Montreal
· Agile Growth Montreal
· MTL Finance & Technology
Ethereum+ Side/Blockchain.
Smart Assets
· MTL Human Resources
Meetup : \Build a better
workplace\"
· Technology and what can be
done to improve it.
· Kids Code Jeunesse Meetup
· Alternative Energy, Off the
Grid, and Green Technology
· Oracle Developers Montréal
· Montréal Ideas and Business
Strategies Meetup
· CEO Space Canada™
· Using large scale datasets;
Big Data, innovative ideas!
· Montreal Software Defined
Networking Meetup
· Montreal Erlang User Group
(MEUG)
· ResponsiveOrg - Montreal
· TIBCO Montréal
· Nuwrk Creative Workspace
· Kx Community Montreal
Meetup
· Web Developers Network -
Joomla User Group
· The Montreal Scheme/Lisp
Users Group
· Montréal Micro-Entrepre-
neurship Group
· Eloquentia Montréal centre-
ville
· Montreal Ludology Research
Group
· Montréal Vegan Entrepre-
neurs
· Maptime MTL
· Montréal Computer Vision
Meetup
· Montréal Customer Rela-
tionship Management #CRM
#FideLead
· Corona SDK Montreal
· Innovations in mobile
technology, new ideas
and solutions
· Montréal Wearable and
Smart Technologies Meetup
· Creating/inventing/desi-
gning for a huge audience
- youth
· Montréal Astronomy and
Space Technology Meetup
· Montreal Blockchain Meetup
· Montréal Dart User Group
· MTL + SaaS
StakeholderS in the Montreal Startup ecoSySteM
6 06 0
The heat map below shows the main areas for event activities connected to the Montreal startup eco-system, based on Meetup events. It is important to note that other platforms besides Meetup (such as Eventbrite, Facebook, etc.) post events connected
with the Montreal startup ecosystem. We have used Meetup for our study because their data is public-ly available and has been used in similar analyses of other ecosystems.
the darker areas correspond to areas where more activit ies take place.
StakeholderS in the Montreal Startup ecoSySteM
startup activit iy in the city
heat Map of Meetup eventS
6 16 1
nb of people in the placeS MoSt uSed for Meetup eventS related to StartupS
Microsoft Montréal
1 , 4 0 8
Notman House
1 , 0 0 3
OVH
9 1 3
La Gare
9 0 1
Google Montréal
5 0 0
Desjardins Lab
4 6 3
Le Salon 1861
2 5 9
ctrlweb
2 4 0
Oracle
2 3 8
Richter
2 3 7
Notman House
2 , 7 8 3
Microsoft Montréal
1 , 7 9 2
Google Montréal
1 , 1 3 7
La Gare
6 8 9
Radialpoint
6 8 5
La commune
6 4 4
Oracle
5 9 8
Centre cloud.ca
4 6 1
ctrlweb
3 6 1
Cloud.ca Headquarters
3 2 5
Notman House
1 , 9 2 4
Microsoft Montréal
1 , 2 0 8
Radialpoint
1 , 0 4 8
Google Montréal
9 1 9
Hyatt Regency Montréal
3 5 1
Auberge Saint-Gabriel
3 4 4
Windsor bar et grill
2 7 3
Café République
2 3 9
La Commune
1 7 0
Pronexia
1 6 3
Google Montréal
1 , 4 5 7
Microsoft Montréal
1 , 3 9 1
Notman House
6 0 1
Atwater Library Auditorium
5 3 6McGill University
2 1 1
Holiday Inn Pointe Claire
1 6 9
Cafe Republique
1 4 4
Execution Labs
1 3 6
Centre St-Pierre
1 3 0
Edgar Hypertaverne
1 1 9
2013 2014 2015 mid-2016
1
2
3
4
5
6
7
8
9
10
StakeholderS in the Montreal Startup ecoSySteM
startup activit iy in the city
6 2
2
econoMic iMpact of Montreal StartupS
6 3
definitionS of MeaSureS aSSeSSed
The results of IS&B’s analyses are presented below, based on measures of direct and indirect impact.
Production
By direct production, we refer to production carried out by startups themselves. Indirect production corresponds to economic activity stemming from direct production by startups. To produce, they require intermediate goods and services purchased from their suppliers. This inter-mediate demand incurs expenses with other suppliers. The sum of indirect demands constitutes indirect produc-tion. Take the example of a startup producing software. The software is the company's direct production, whereas its intermediate input (offices, electricity, servers, etc.) is part of its indirect production.
Employment and Payroll
Direct employment created by a startup consists of its employees. If a startup has ten employees, it has created ten direct jobs. Indirect employment is created with star-tup suppliers and the suppliers’ suppliers by the same process outlined in the Production section. Total payroll represents the sum of salaries for all direct and indirect employment.
Fiscal benefits
Fiscal benefits include all amounts paid by the startups, their direct and indirect suppliers, and the employers of all these companies. In this case, we refer to taxes on pro-duction, taxes on goods, federal and provincial taxes, and the main payroll taxes (employment insurance, Régie des rentes du Québec, etc.).
The Ecosystem “Multiplier”
The “multiplier” measure provides an indication as to the impact of each dollar of startup production in the eco-nomy. In other words, we wish to know, for each dollar of startup production, how many are simultaneously gene-rated in indirect production. As such, the more a company needs to incur significant expenses with external sup-pliers, the higher its multiplier.
6 4
Main reSultS and coMMentS
The startup ecosystem contributes directly to Montreal's economy to the extent of $382.4 million ($M) per year and generates indirect production at a rate of $322.2M, for a total contribution of $704.6M. It is interesting to note that direct contribution accounts for around 55% of the total impact, compared with 45% for indirect contribution, mea-ning that startups stimulate a significant proportion of ac-tivity in their secondary economic sectors.
Compared with Montreal’s GDP in 2015 ($189B), the total contribution of the startup ecosystem is equal to around 0.4%.35 This percentage may seem low at first, but let us remember that this contribution is generated by com-panies founded less than five years ago and whose pro-duction is primarily software based. The very nature of startups implies they tend to develop and grow quickly (and, therefore, increase their production, employment, fiscal benefits, etc. in the same fashion). If they already show a significant economic impact early in their lifecy-cle, this impact will increase once they become major technology companies.
Startups provide direct employment to over 7,860 people in Montreal and create 1,955 indirect jobs, for a total of 9,815 jobs. The total payroll in connection with these jobs is $190M. It should also be noted that Montreal startups bring in nearly $92M in fiscal benefits for the different le-vels of federal and provincial government. These benefits include payroll taxes, taxes paid by the direct and indirect employees, taxes on goods, and taxes on production paid by the startups and their suppliers.
The multiplier for the startup ecosystem is 1.84, com-pared with 1.86 for the entire economy. This number de-monstrates the extent to which the ecosystem's produc-tion impacts the rest of the production chain. Even though one may think that startup spending is mostly incurred to pay salaries, this ecosystem also stimulates intermediate production for its suppliers.
Direct production ($M)
Indirect production ($M)
Number of direct jobs
Number of indirect jobs
Total Payroll ($M)
Fiscal benefits ($M)
Ecosystem multiplier
3 8 2 . 4
3 2 2 . 2
7 , 8 6 0
1 , 9 5 5
1 9 0 . 5
9 1 . 8
1 . 8 4
repercuSSionS 34
the econoMic iMpact of the Startup ecoSySteM
34 IS&B calculations
35 Montréal International, 2016. Grand Montréal - grande réussite
6 5
3As mentioned at the beginning of this report, the objective is not to review the overall Quebec and Canadian situation, but rather to plunge into the reality of Montreal-based startups
Thus, before presenting the findings of the interviews conducted in the
summer of 2016, here is a brief overview that takes into account the report
advisory committee’s discussion framework and of some of the issues raised
in interviews. The economic and business environment will first be sketched,
followed by a description of how startups fit in (do they share the same
advantages and challenges?).
interviewS with key playerS of the Montreal ecoSySteM
6 66 6
Overall, Canada is viewed as a country of choice for business, as demonstrated by Canada’s 2nd position in Bloomberg’s 2014 Best Countries for Business rank-ing.36 Using this finding as a starting point, and consid-ering that some specific contributions of the (federal and provincial) governments are set out below, let us now concentrate on Greater Montreal’s economic and business environment.
With 4 million residents (half of the total Quebec popula-tion) spread over 82 municipalities across the metropolis, Greater Montreal boasted a GDP of $189 billion in 2015 (half of Quebec’s total GDP).37 Greater Montreal is strate-gically located on the North American continent and has direct access to North and South American and interna-tional markets as an indispensable logistics and airport hub.38 It sits at the heart of strategic markets thanks to free trade agreements, including NAFTA, which provides the opportunity of reaching 500 million American con-sumers, bilateral agreements (ex: EFTA, Chile, Panama, etc.) and the Trans-Pacific Partnership (TPP).39 Montre-al’s international outreach is extensive. The city houses more than 60 international organizations, being the civil aviation capital of the world and a United Nations city, ranking as the world’s no. 1 city for international meet-ings, no. 2 city for video games and no. 4 city for visual effects, etc.40 Montreal was North America’s no. 3 city for ICT employment growth between 2008 and 2013.41 In education, Montreal ranked as the best city for Students in North America and the 7th in the world in the QS Best Student Cities 2015-2016.42
Greater Montreal offers a significant cost-benefit ratio in terms of operating costs, salaries and financial incen-tives. The cost-benefit ratio stands at 18% overall and at 24% each for LSHT (Life Sciences and Health Technolo-gies)and ICT (Information and Communications Technol-ogy).43 Greater Montreal also benefits from the industrial clusters spread throughout the city as well as support from government and municipal bodies.
Competitive operating costs
Montreal’s low operating costs make the city a prime strategic choice to start a business. Montreal actually ranks “first among major North American metropolitan areas in terms of operating costs [editor’s note : salaries, fringe benefits, rent, electricity and professional ser-vices] and of the tax burden of research and develop-ment firms.” The current corporate tax rate, one of the lowest on the continent, stands at 26.9%, not including tax credits.44
Competitive salaries
Montreal salaries remain generally competitive on the North American market. Taking the cost of living into account, Stack Overflow estimates that the salary por-tion that a developer with 5+ years of experience de-votes to rent in Montreal is 13%, placing the city at the top of that category.45 In addition to housing affordabil-ity, essential medical care is free for Canadian citizens and permanent residents, which frees a considerable portion of their revenues.
Industrial clusters
The importance of the Montreal industrial cluster net-work for startups specialized in related industries must also be stressed. As defined by Montreal Clusters, “Clusters are geographic concentrations of intercon-nected companies and institutions in a particular field. Clusters encompass an array of linked industries and other entities important to competition. [...] The com-petitiveness of metropolitan regions relies on the de-velopment of industrial clusters, or geographic con-centrations of businesses and institutions in related economic sectors. The physical proximity of the players encourages interaction and promotes the exchange of ideas and expertise.”46 According Montreal Internation-al, industrial clusters create a “strong concentration of world leaders, qualified workers and dedicated re-
36 Invest in Ontario
37 Montréal International, 2016.
Grand Montréal - grande réussite
38 See référence 2
39 See référence 2
40 Montréal International, 2016. Le Grand Montréal
- une métropole attractive sur la scène internationale ?
41 See référence 2
42 See référence 2
43 See référence 5
44 Montréal International, Technologies de
l’information et des communications
45 Stack Overflow
46 Grappes Montréal
background the economic and business environment
6 76 7
search centres” as well as “numerous foreign invest-ments and new business opportunities.”47
Government and municipal support
Thanks to Investissement Quebec and, more recent-ly, with the creation of Espace CDPQ by the Caisse de dépôt et placement du Quebec and the development of many organizations and Quebec government initiatives, many forms of assistance are in place to support the de-velopment of young businesses and stimulate entrepre-neurship. They include Montreal International, Innocité MTL, PME MTL, Quartier de l’Innovation and many more. Other examples include the Canada Media Fund, the Canada Accelerator and Incubator Program (CAIP) and Inno-centre. A significant number of actions have been taken in support of the business and entrepreneurship community.
FINANCIAL INCENTIVES
Besides providing support programs, the Quebec Gov-ernment fosters development and growth by offering tax credits to new companies. In addition to the standard refundable tax credits available to companies, specific tax credits are available to IT companies, including the refundable Tax Credit for Scientific Research and Ex-perimental Development (SR&ED), the Tax Credit for the Development of E-Business (CDAE), the Crédit d’impôt pour des titres multimédias, etc.48
DIGITAL STRATEGy PoLICy
On May 20, 2016, the Quebec government, through the Ministère de l’Économie, de la Science et de l’Innovation (MESI), unveiled a Digital Strategy Action Plan aiming at consolidating the presence of technologies within the province. The government plans to invest $200 million over a five-year period with an additional $100 million being earmarked for regional support. The ongoing public consultations on the Action plan will continue un-til the spring of 2017.
MoNTREAL SMART AND DIGITAL CITy 2015-2017 ACTIoN PLAN
In parallel with the provincial initiative, Montreal’s mu-nicipal administration has set up an action plan aiming at positioning Montreal as one of the world’s smartest cities. The action plan introduces 70 projects divid-ed into 6 programs – Public Wi-Fi, Ultra High-speed Network, Multiservice, Smart City Economic Segment, Smart Mobility, Participatory Democracy, and Digital Public Services.49 A Smart and Digital City Office was created and now has 10 employees.50 51
47 Montréal International, 7 grappes d’excellence
de réputation mondiale
48 See référence 2
49 BVIN
50 La Presse
51 Ville de Montréal
background the economic and business environment
6 86 8
As explained above, Canada, Quebec and the city of Montreal offer several economic and business bene-fits to companies and to the entrepreneurs who work in them. At a high level, many benefits such as tax credits, support services, etc., also apply to startups. Business environments nonetheless remain faced with their own issues. Sometimes, some of those is-sues may require sustained actions, for instance in the case of human resources.
These weaknesses affect startups as much as the bene-fits of the economic and business environment, the dif-ference being that the potential impacts are multiplied in the startup environment. By definition, these are nascent businesses that are often based on innovative models that, for the most part, are ahead of the market. Startups
take risks and often do so with limited resources, at least in the beginning. While large organizations often have more (financial, political, etc.) leeway to address the en-vironmental factors affecting them, startups, on the oth-er hand, are much more sensitive. The environment in which a startup operates often plays a significant part in its success or failure.
Over the past few years, the Montreal startup ecosystem has developed at a quick pace. Many indicators can at-test to it, such as Montreal’s presence in the ranking of the world’s 20 most dynamic startup ecosystems com-pleted by Startup Genome’s 2015 Global Startup Eco-system Ranking.52 The trend is also being confirmed by the increasing number of initiatives being undertaken in support of that ranking.
If the trend is to be maintained, startups must be able to draw on the strengths of the Greater Montreal eco-nomic and business environment, but efforts must also
be made to remedy our weaknesses in a way that can have a tangible and specific impact on the Montreal startup ecosystem.
Quebecor loans a private jet to Startupfest to bring
special Sil icon valley guests to the event
to provide one example among many others, the rapid growth of Startupfest in Montreal and elsewhere in canada attests to the buzz being created by startups.
52 Startup Genome
2 0 1 1 FIRST STARTuPFEST
2 0 1 6MoST RECENT STARTuPFEST
1 , 1 0 0 p a r t i c i p a n t s s t a r t u p s
s t a r t u p s ( 2 . 3 x )
p a r t i c i p a n t s ( 3 . 9 x )
3 0 0
4 , 3 0 0 7 0 0
background how do startups fit into this context?
6 96 9
ThE STARTuP ECoSySTEM CouLD BRIEFLy BE DESCRIBED AS A DyNAMIC, CoNSTANTLy EVoLV-
ING NETwoRK wITh ITS owN STRuCTuRAL FEATuRES AND oPERATING METhoD whERE KEy
PLAyERS ACCESS AND ExChANGE INFoRMATIoN AND woRK ToGEThER whILE PoSITIoNING
ThEMSELVES FoR SuCCESS oN ThE MoNTREAL AND EVEN INTERNATIoNAL ChESSBoARD. ThE
MoNTREAL STARTuP ECoSySTEM IS ChARACTERIzED By INNoVATIoN AND ThE ATTRACTIVE-
NESS oF CoMPLETED PRojECTS.
FoLLowING uP oN ThE ABoVE BACKGRouND, LET uS Now TuRN To ThE STATE oF PLAy AS
DESCRIBED By ThE KEy PLAyERS INTERVIEwED IN 2016 oN ThE ThREE KEy CoNDITIoNS ThEy
FELT wERE NECESSARy FoR ThE SuCCESS oF BoTh INDIVIDuAL STARTuPS AND ThE ECoSyS-
TEM AS A whoLE: TALENT, FINANCING, AND ThE ECoSySTEM.
Here, we will explore respondent perceptions of several talent matters such as the job market in the startup eco-system, the leveraging of the junior talent pool, the re-
cruitment and retention issues of senior talent, as well as the retention of company founders.
53 QS Best Student Cities 2016
54 Montréal International
55 Congrès Montreal
key findingS talent
junior talents
Montreal unquestionably supplies a large pool of young talent to businesses. Recognized as the best city for students in North America (and ranking 7th in the world) in 2016, Montreal was mentioned by 97% of all interviewees as pos-sessing a large pool of junior talent.53 Among other features, Montreal :
Includes 11 university institutions;
has approximately 190,000 students (2013);
Is the no. 1 metropolitan centre in the country in terms of the number of univer-sity degrees granted (undergraduate and post-graduate).54
The type of education provided fosters the development of technical and management skills that are attractive to entrepreneurs. High technology sectors, for example, account for nearly 15% of all university enrolment.55
ThE LEVERAGING oF juNIoR TALENT By STARTuPS
According to all categories of respondents, there is no shortage of junior talent in Montreal. However, that talent is not being leveraged by startups as much as it could.
Firstly, all categories of respondents wondered whether students had sufficient knowledge of the entrepreneurial environment, particularly with regard to technical programs such as en-gineering and information technology. Current training opportunities and ecosystem knowl-edge were questioned. Across the board, univer-sity education supporters agreed that universi-ties have an important role to play in continuing to link students with the entrepreneurial envi-ronment. When respondents (of all categories) without frequent interactions with university schools admit to realizing that they don’t have a very deep knowledge of what is being achieved there, one might surmise that this is possibly due to a lack of visibility of university actions in the entrepreneurial field. The role and actions of universities in the area of innovation, including training, will be further discussed below.
7 07 0
"how do we take talents l ike researchers and students and make them think with an entrepreneur’s mindset?"
"In universities, tech profiles are not getting enough classes and training on other necessary skills to build a business (communication, sales, etc.)"
key findingS talent
7 17 1
Secondly, students with a high potential for joining a start-up are also highly sought after by large businesses. While job postings mechanisms are limiting startup access to junior talents, the attractiveness of the startup model may be working in their favour. As they enjoy much greater vis-ibility in educational environments and in the media, large businesses generally attract more talent while offering at-tractive levels of remuneration. It is therefore difficult for startups to compete with them when career opportuni-ties are not advertised in a comparable manner. Students tend to attach greater importance to the meaning of their work, to flexibility, and to international access opportuni-ties as they look for employment – such conditions are frequently consistent with the reality of the startup model.
The myriad of student initiatives seen over the last few years seems to confirm such interest on their part. Exam-ples of such student-organized events coming to mind include Startup Weekend, the TEDx events on entrepre-neurship, the various student associations dedicated to entrepreneurship, etc.
For example, the setting up of the Front Row Ventures student initiative is described by cofounders Eleonore Jarry and Raphael Christian-Roy as follows :
“Front Row Ventures is a new student-run supra-campus initiative that supports daring and ambitious students who are creating technologies that will improve the way people live and work. our team is dedicated to acceler-ating the development of tech entrepreneurship on our university campuses. After all, Microsoft, Dell, Dropbox, Snapchat and, of course, Facebook were founded on university campuses.
with the highest proportion of post-secondary students, and some of the largest artificial intelligence research centers of all cities in North America, Montreal clearly has the talent. Still, only one of our six local universities ranked as America’s top 50 universities for producing VC-backed entrepreneurs last year. with the help of Montreal’s strong startup community, more entrepre-neurial success stories will/can/must rise from our campuses.
To fuel the creation of high-potential tech startups by students, we created Field Trip to 1) bring together stu-
dent founders from all campuses into one strong com-munity, 2) bridge the gap between universities and the industry, and 3) support talented students in launching their business with appropriate funding.
Field Trip, our 12-week tech entrepreneurship and ven-ture capital immersion program, welcomes a cohort of 15 to 20 of the most resolute, creative, and high-achiev-ing students in Montreal. we partner with seasoned en-trepreneurs, influencers, and investors to expose select-ed students to the reality of the startup world. Through workshops, founder talks and hands-on experiences, the participants learn about startups economics, ven-ture capital fundamentals, future technology trends, and much more.
Field Trip will produce cohorts of student founders ripe for early stage investment. As Front Row Ventures’ end-game is to operate quebec’s first student-led venture capital fund, this network of founders will be at the core of our investment model, gaining access to the resourc-es they need to take their startups to the next level. Al-ready too many students have abandoned their startup dreams to take full-time positions at established com-panies. Imagine: how many Montreal-based companies would we praise today, had our brightest students been provided with the right mindset and resources to dream bigger and take more risk?”
Thirdly, many students and other junior talent sources are joining Quebec companies, but it is believed that a signif-icant number are going abroad. Regulatory barriers are affecting the retention of junior talent. Although this prob-lem is not specific to startups, some concern has been expressed about the exodus of talent if the number of departing workers ended up exceeding the numbers ad-mitted into Quebec businesses. In 2013, foreign students made up 10.5% (20,000 out of 190,000) of Quebec univer-sity enrollment.56
"Montreal fails to retain foreign students,
and the talent is leaving. They lack the
legal incentive (e.g. visas) to launch their
own startups in Montreal."
56 See référence 18
key findingS talent
7 27 2
57 Montreal Internationall
Senior talent
Recruiting senior talent frequently becomes necessary when a startup must scale up. Those so-called “experienced” recruits may be spe-cialized Senior Vice Presidents (sales, market-ing, technology, etc.) or specialized employees with significant startup experience.
RECRuITING SENIoR TALENT IS DIFFICuLT
All (100%) of the startups surveyed who were undergoing a period of strong growth expressed difficulties in recruiting “experi-enced” candidates.
Many reasons were advanced not only by the entrepreneurs themselves, but also by sup-porters and investors, to explain why finding senior talent is so difficult.
Firstly, senior workers are in strong demand in any sector. Moreover, strong growth predic-tions by the year 2021 in the area of information technologies may call for increased require-ments of experienced workers throughout the Montreal economy.57
"Since there are more and more
big tech companies, senior talent
is more and more stretched."
Secondly, according to the startups surveyed, the most significant obstacles to the recruit-ment of senior talents are access to foreign talents and the provision of competitive remu-neration conditions.
Compensation conditions are seen as a prima-ry determinant in being able to provide a suffi-cient incentive to make a job offer an attractive alternative to those advertised by big compa-nies and other large startups. In spite of the fact that startups can leverage elements such as corporate culture and stock-based remu-neration in recruiting senior talent, the material compensation conditions remain paramount in many cases.
It is sometimes necessary to go abroad to find the specific desired profile. Canada is well perceived internationally, but access to senior talent is restricted by existing regula-tory barriers. For foreign talents, there is the additional issue of the immigration process, which is a burden for both the candidate and the startup. The recruitment of foreign talent is made less accessible by the administra-tion, charges and delays involved, all of which amounts to a liability in terms of the attrac-tiveness of Montreal startups.
"Work visa’s are still an issue due
to delay - [..] we have senior people
coming in on travel visas just to be
able to do the work..."
The current immigration process also makes it more difficult to reach experienced foreign en-trepreneurs willing to start a business in Mon-treal: the unavailability of the Start-up Visa in Quebec was specifically criticized.
Language issues were also frequently brought up in interviews because of the oper-ational constraints they place on startups, but also as a barrier to attracting foreign workers and their families.
Thirdly, local senior talent does not seem to view startup employment as a career opportu-nity given that they are often unaware of such a possibility. According to respondents, uniniti-ated potential candidates show a poor under-standing of the startup ecosystem. Additional efforts must therefore be made as part of the marketing and job posting operations to attract the right candidates for startup employment. The media are beginning to popularize the en-vironment, but much work remains to be done. In the meantime, entrepreneurs must make workers aware of the entrepreneurial environ-ment mainly through their personal network.
key findingS talent
7 37 3
TALENT MEANS EMPLoyEES, BuT ALSo CoMPANy FouNDERS
Founders are experienced entrepreneurs. Thanks to the potential transfer of their cumu-lative experience in company development (phase by phase, and particularly through the crucial growth phase), they can provide the right solutions to the problems being faced and act as catalyst and facilitators within the
ecosystem. However, it often happens that such talented people move on to start new companies someplace else, creating a debili-tating loss of expertise. Consequently, it is not only necessary to attract and retain the talent to be used in startups, but also to keep on board the people who have started, are start-ing, or are considering starting a new company.
In summary - Access to talent is a con-dition of success for startups and, con-sequently, for the ecosystem as a whole. According to the key players interviewed in the summer of 2016 :
The quality and availability of junior talent are ad-equate, but an improvement of their knowledge of the startup environment would be advisable. The startup sector has a strong attraction potential for young people.
Senior talent is hard to recruit. One must frequently go abroad to find candidates suitable for startup needs, and compensation conditions and immigration issues further complicate the process.
Communication of these opportunities are seen as means that are capable of foste-ring access to (junior and senior) talent. While not specific to startups, the issues of access to and retention of foreign (junior and senior) talents are partially linked to regulatory barriers.
1
2
key findingS talent
7 47 4
FoR 70% oF ThE STARTuPS SuRVEyED (SEE SECTIoN 1), FINANCING IS ThE MoST IMPoRTANT
CoNDITIoN FoR SuCCESS. IT wAS ALSo ThE ToPIC GENERATING ThE MoST DIVERGING VIEwS
AMoNG ThE PLAyERS BEING INTERVIEwED. IS ThERE ENouGh VENTuRE CAPITAL FoR START-
uPS IN MoNTREAL? ARE ThERE VARIATIoNS IN ThE AVAILABILITy oF FINANCING BASED oN
A STARTuPS’ STAGES oF DEVELoPMENT? whAT ABouT ACCESS To FINANCING AT AN EARLy
STAGE AND AT SuBSEquENT STAGES oF GRowTh? ThESE ELEMENTS AND MANy MoRE wERE
ADDRESSED By RESPoNDENTS IN INTERVIEwS.
This table summarizes respondent perceptions of the availability of venture capital to Montreal startups. Of special interest are the discrepancies between inves-tor and supporter perceptions (70% and 75% of whom believe that the available capital is sufficient) and start-
up perceptions (with a lower percentage of 40%). Even among startups, there seems to be a divergence of opin-ions (with 40% believing that the available capital is suffi-cient and 40% believing that it is not).
Investors
Supporters
Startups
Financing gaps between startup development stages
A financing gap is perceived when, on the one hand, the dedicated capital is insuf-ficient for a specific development phase (pre-seed, seed and post-seed capital, etc.) or when, on the other hand, a surplus is re-corded at another development stage.
Mixed opinions were however expressed on the specific phase at which the lack of ac-cess to financing was the most significant, possibly due to the fact that respondents used different experiences to anticipate a startup’s global needs per development stage. This being said, in the opinion of most respondents (in all categories), the growth phase is when the lack of financing seems to be most critical. Let us take a closer look.
perceived venture capital availability for Montreal StartupS
7 9 %
7 5 %
4 0 %
1 4 %
0 %
2 0 %
7 %
2 5 %
4 0 %
enough capital iS available
capital iS available, but leSS than in
other areaS
not enough capital iS available
65% 87%of the key players targeted (in all categories) addressed this issue.
perceived financing gaps patterned according to startup development stages.
key findingS Financing
7 57 5
Access to startup funding
Startups vs. venture capitalists (VC): divergent perspectives on funding in the initial stages
Startup in the pre-seed or seed stage can obtain funding in a few ways: grants, subsi-dies, “love money” from those who believe in the project or concept, etc. The main challenges for receiving any of these (as we
mentioned previously) are time, limiting se-lection criteria, the lack of information when researching, and misunderstanding of in-vestor expectations.
Many discrepancies in perceptions were recorded. On the one hand, we have one out of three entrepreneurs who feel as though VCs are too “overcautious” with the number of investments they make com-pared to foreign VCs. On the other hand, investors mentioned two main reasons to explain this discrepancy :
The number of VCs compared to the number of startups is lower than in
other ecosystems, therefore reducing competition between investors. Because of this, investors have more time to ana-lyze investment opportunities, contrary to their foreign counterparts, who are pushed to make quick investment deci-sions if they don’t want others to invest before they do.
Entrepreneurs who present their company for funding when they are
in the seed stage are often not prepared enough to meet investor expectations. There is a consensus that although prod-ucts presented often have great poten-tial, the marketing strategies are often underdeveloped. The main focus tends to be on the quality of the product rath-er than ensuring it will answer the needs of consumers and that the market is big enough for the product to gain reason-able traction.
Very few entrepreneurs take the time to analyze the market, and this results in a lot of “me too” projects that don’t really stand out from the competition. This per-
ception is shared by more than one third of investors. It is also shared among a few startups: 25% of them believe that funding would be available if the project was via-ble and well presented. It is important for entrepreneurs to not skip over any steps while they are hunting for capital. Inves-tors expect the product to have proven suitability for the market, through either sales or other means.
"we give our entrepreneurs with
big ideas the means to succeed.
we need to have two or three
very successful ventures to get
the momentum going. we must
find our champions and guide
them to success."
Comments were made about the fact that certain investors that support a startup in its early stages, such as angel investors, also tend to skip over important steps. It is essential to ensure that assessment crite-ria from financial groups do not incentivize them to push the startup to seek financing too quickly, when the startup might not be ready. The number of graduated startups and the minimum size of cohorts have been mentioned as assessment criteria that should be avoided.
1
2
key findingS Financing
7 6
4 MS : a fraMework for early-Stage StartupS*
7 6
ThE ‘’4MS’’ FRAMEwoRK (MARKET, MoDEL, MANAGEMENT AND MoMENTuM) GENERALLy hAS
CoNSENSuS SuPPoRT FRoM VCS, howEVER, IT SEEMS ThAT STARTuPS Do NoT uSE IT AS
oFTEN AS ThEy CouLD.58 ACCoRDING To INTERVIEwS wITh VCS, ThIS TooL oR oThERS LIKE
IT CAN SIGNIFICANTLy BENEFIT STARTuPS BECAuSE IT PuShES ThEM To ADDRESS MoST oF
ThE PoTENTIAL ISSuES AND ChALLENGES ThAT VCS wILL wANT To VERIFy BEFoRE ThEy
FEEL CoMFoRTABLE INVESTING. IT IS IMPoRTANT To NoTE ThAT IN SITuATIoNS whERE ThE
STARTuP IS quITE youNG, SoME oF ThESE CRITERIA MAy NoT APPLy (Ex: BEING ABLE To
DEMoNSTRATE ThE PRoDuCT’S TRACTIoN).
Market = big market opportunity
• Specific people with real needs
• Clear competitive positioning
• Large & attractive market
• Favorable trends & timing
*Source — B. Golden, Paratech Ventures
ManageMent = best team to execute
• Stellar startup team
• Unique insights & knowledge
• Grit, ambition & purpose
• Unfair team-project fit
Model = disruptive & virtuous model
• Valuable & Differentiated Product
• Efficient Go-to-Market
• Profitable Monetization
• Scalability/Defensibility
MoMentuM = ability to grow fast
• Cracked something/Traction
• Ambitious 18-month plan
• Capital-efficient growth model
• Credible strategy to grow & win
58 Boris Golden, Paratech Ventures
key findingS Financing
7 77 7
Summary - In short, financing is the most significant success factor (74%) for start-ups and for the entire ecosystem. Many points were addressed regarding financ-ing, and diverging opinions between key stakeholders interviewed in the summer of 2016 were noted.
Respondents had different views on the amount of venture capital available to Montreal startups (de-pending on what developmental stage is considered). Even startups had nuanced views on this topic.
Early stage financing seems fairly available, howev-er, VCs and startups had different opinions on certain points. According to VCs, startups should spend more time analyzing and planning their sales strategy and especially focus on the potential of the target market.
It is difficult to obtain financial support in periods of growth which often require extra capital. There is con-sensus among respondents that access to funding is limited due to a lack of capital dedicated to this spe-cific stage. VC funds should combine their efforts to be able to make connections with their Canadian and foreign counterparts.
Startups expressed the need for centralized informa-tion about the different alternatives to venture capital.
1
2
3
4
Access to funding during stages of growth
The general consensus is that access to financing is limited at the growth stage. According to our respondents (VCs and startups) this is simply due to a lack of capital devoted to this stage. Having less access to capital greatly affects a startup at the time when it needs it the most (the growth stage).
Venture capital funds must therefore work together so that larger amounts can be in-vested at a time. Otherwise, funds will not have enough capital to be invested inde-pendently. Investing such large amounts alone would mean using certain funds in their entirety, meaning their future would be too dependent on a single startup’s success. The risk then becomes too high in the event of failure. To access more capital, our res-pondents (startups and investors) stressed the importance of VC investments all over Canada and in other countries around the
world. This would help create relationships with other VCs who would then be incenti-vized to invest in Montreal startups.
Some of the startups we interviewed that did not have access to venture capital affir-med that a large number of startups are in the same situation. Only a few have access to this type of financing. They mentioned turning towards other funding options such as crowdfunding, government subsidies, grants, or profits made from sales. Fun-ding can be obtained through a variety of channels, but what is deeply lacking is the centralization of information to make these options more accessible and profitable for startups. Some startups seem to have mastered the art of obtaining funding while preserving their equity. This was the case with RateHub.ca, cited in the Globe and Mail article “How my company raised more than $1 million in government grants.”59
59 The Globe and Mail
key findingS Financing
7 87 8
wE PREVIouSLy NoTED ThAT SKILLED woRKERS AND FINANCING ARE DECISIVE FACToRS ThAT
CAN DETERMINE ThE SuCCESS oF A STARTuP AND CoNSEquENTLy, ThE ECoSySTEM. REMEM-
BER ThAT ThE STARTuP ECoSySTEM IS A RAPIDLy ChANGING, DyNAMIC NETwoRK IN whICh
CoLLABoRATIoN IS A MAjoR SuCCESS FACToR. IT IS ThEREFoRE NoRMAL ThAT AS ThE ECo-
SySTEM GRowS, IT GoES ThRouGh STANDARD STAGES ThAT CouLD EASILy BE CoMPARED To
ThE DEVELoPMENT STAGES oF A CoMMuNITy. ThIS INVoLVES A LoT oF CRITICAL ThINKING AND
REFLECTIoN wITh REGARD To STRuCTuRE AND METhoD oF oPERATIoN. ThIS TyPE oF FoRE-
ThouGhT CAN hELP STRENGThEN, IMPRoVE AND EVEN REDEFINE ThE ECoSySTEM.
uP uNTIL A FEw yEARS AGo, ThE ECoSySTEM IN MoNTREAL DID NoT ExIST AND ThERE wERE
VERy FEw PLAyERS. Now ThAT MoNTREAL hAS ITS owN ECoSySTEM AND MANy PLAyERS IN-
VoLVED, IT IS INTERESTING To ThINK ABouT how IT IS VIEwED FRoM ThE INSIDE. BELow ARE
SoME PERSPECTIVES oFFERED By KEy STAKEhoLDERS who TooK PART IN ouR SuMMER 2016
RouND oF INTERVIEwS.
Accelerated development of the Montreal startup ecosystem
It is difficult to find the right information, to differentiate “the good from the bad” and to learn how to access the right resources.
Montreal has served (and still serves) as a breeding ground for the development of the ecosystem and startups. Some of the many advantages mentioned in the inter-views were: Montreal’s geographical po-sition which facilitates US and European access, the low cost of living for entrepre-neurs (rent, salaries, etc.), government sup-port via subsidies and R&D credits, etc.
According to respondents (across all cat-egories), the ecosystem has been rapidly developing over the last five years. This is due to an increasing number of players, government and university involvement, new and diverse resources made available to the community, and the growing number of startups.
“Entrepreneurs have evolved
over the last 5 years. They know
their weaknesses; they are
asking themselves the right
questions.”
Today, we have an ecosystem with many players, all of which have mutually agreed on supporting the ecosystem together while also thriving individually. The key players interviewed believe that :
It is difficult to find the right informa-tion, to differentiate “the good from the bad” and to learn how to access the right resources;
There is a common desire for collab-oration, but little action has been taken in this regard;
Many crucial players are still not in-volved enough;
One respondent out of two (across all categories) believed that the ecosystem is just “too much”: too many initiatives, too segmented, too ambiguous. This is what makes it difficult to find the right information, to figure out what is worthwhile and what is not and access good resources.
key findingS the ecosystem
7 97 9
Good resources
With regard to startups, two types of resources were repeatedly mentioned by our respondents (across all categories): events and support programs.
EVENTS
Startups agree that events are key for networking and growing a company. A greater number of events could have a positive impact on the ecosystem.
However, according to entrepreneurs, it is increasingly difficult to quickly pinpoint the most relevant events be-cause there are so many to choose from. The need for centralized information and for more leadership in this regard was expressed during the interviews. Being bet-ter equipped and informed would result in having more specialized events to choose from, which would cater to more specific needs and attract the right resources and expertise.
SuPPoRT PRoGRAMS
One of the many benefits of working with business accelerators or incubators is that they help find one (or many) mentors - mentors that will answer with the needs of both the entrepreneur and the startup. These types of support play an important role in the ecosys-tem. They offer structure for startup’s development while also creating connections between players in the ecosystem such as investors or experts.
The response to these programs is overall positive, how-ever some believe that the number of incubators and accelerators is simply too high. The problem isn’t that the offer is greater than the demand, but rather that the quality of each program could be affected by the fact that many of these programs share common resources, such as funding from third parties (ex: governments).
Much like with events, clearer leadership and commu-nication between these programs is needed in order to form a solid base and consolidate efforts so as to create the most value possible for startups.
Satisfaction with mentoring
Overall, 84% of startups are “rather satisfied” or “very satisfied” with mentoring. Two types of mentoring were focused on during the interviews:
MENToRING By ENTREPRENEuRS wITh ExPERIENCE
The interviewed entrepreneurs affirmed that a wave of successful Montreal entrepreneurs is currently making its way back to help the new generation. Seeing as Mon-treal is a rather young ecosystem, the quality and the quantity of mentoring provided by entrepreneurs should keep increasing, in the medium and long term. Mentors will be able to share their experiences and in turn, enrich the startup community as a whole through a continuous learning cycle.
ExPERTISE BASED MENToRING
Specialized mentoring is generally viewed as positive. Organizations like PME MTL are considered to provide very good support with high-quality services. That being said, some of the respondents from the VC and startup groups believed that mentorship should be made more formal and structured, such as by having mentors go through training. Services currently offered are often temporary and entrepreneurs don’t usually stay connected to their mentors in the long term, even though that scenario would of course be ideal and the most rewarding.
“Currently, the entrepreneurs who have
succeeded in finding more permanent
support generally did so through their
personal contact networks.”
Many of the entrepreneurs in the interview recommend-ed this method for finding mentors. The need for a more structured process with long-term rapport (through specialized events for example) was expressed during the interviews.
key findingS the ecosystem
8 08 0
From a desire to collaborate to concrete actions
Number of accelerators involved
Montreal deMo day 2016
According to 80% of key players in the inter-view (across all categories), collaboration is one of the strong suits of Montreal’s star-tup ecosystem. The willingness of startups to help each other succeed, paired with the efforts made by supporters who give
their time and expertise to entrepreneurs, help enrich the ecosystem. The Demo Day concept is an example of de-compartmen-talizing the various activities of Montreal accelerators.
83921
51
Registered participants
Startups that presented during the event
Accelerators presented startups on stage (InnoCité MTL, Centech, Founder Institute, D3, Tandem Launch)
Accelerator (FounderFuel) provided coaching to presenters
It is clear that the key players interviewed are fully a part of the reality that the ecosystem faces. As the ecosys-tem evolves, it is natural for them to have questions and these were brought up in the interviews. Their questions stemmed from a desire to make the ecosystem con-tinue to grow. In their eyes, the issues highlighted can be seen as an opportunity to act collaboratively. Below are two areas that they believe could be improved and where the collaboration between players and consis-tency of actions come into play:
First, a certain number of events and organizations are seen as having been developed in silos, producing “the same thing” instead of working collaboratively.
“There are two ways to make the
ecosystem grow: create new players
or help existing players work together.”
Second, some of our respondents expressed apprehen-sion about the dilution of efforts between fast-growing numbers of projects.
“The ecosystem is buzzing with activity
but it is not being channelled.”
Third, some respondents expressed apprehension to-wards the outflow of talent. Although Montreal’s envi-ronment is considered ideal for supporting startups, some had questions about its capacity to support grow-ing startups. According to respondents, the ecosystem in Montreal is younger compared to ecosystems in New York and Boston, where many generations of entrepre-neurs have already succeeded one another. Montreal has only seen two generations of startup entrepreneurs. With the help of previous entrepreneurs returning as in-vestors or mentors, our neighbouring ecosystems were able to create more specialized structure to help start-ups. This has made their ecosystems more appealing to entrepreneurs, especially during growth stages.
The risk in all of this is that Montreal could become a “pit stop” where foreign investors come looking for the best projects during their growing stage and then convince them to leave Montreal. If this started to happen, the ecosystem would be weakened and lose a potentially successful startup that could have inspired, supported and motivated other entrepreneurs. Companies need talented individuals and financing. Entrepreneurs tend to find a way to position themselves so that they can ac-cess both of these.
key findingS the ecosystem
8 18 1
“Salaries in Montreal are too low, leading
founders to sell earlier to ensure they
get sufficient payout from their invest-
ment in building their startup. This is the
case even when accounting for lifestyle.”
These three findings support those stated previously in the ‘’Talent” and “Financing” chapters.
Fourth, our respondents expressed that the mindset of entrepreneurs is currently optimistic. There is a refresh-ing willingness to grow Montreal’s ecosystem into an entrepreneurial hub. However, some respondents were afraid that the small size of the ecosystem compared to larger hubs like Silicon Valley, New York, etc., would discourage entrepreneurs from aiming high in their own growth objectives. One respondent out of two agrees that the ecosystem needs companies called “anchors” during the interview, to help it develop and enhance the reputation of Montreal entrepreneurs, whether it be in-ternationally or within Montreal.
“Canadian startups see expansion in
small increments (Montreal, quebec,
Canada, uSA, etc.). They ask too little.
They shouldn’t be asking for $1M, they
should be asking for $10M!”
The Montreal identity
In the same spirit of wanting to help Montreal evolve, it has been brought up that Montreal’s startup ecosystem should adopt a well-defined identity going forward. Also, to ensure that Montreal does not become a ‘pipeline’ for other ecosystems and to ensure that entrepreneurial ac-tivity does not decline, it is important to create a strong identity that will attract talent and foreign funding.
“The fact that some players leave is not
necessarily a bad thing. It would be in-
teresting to attract those who fit well in
Montreal and vice versa. we must create
an identity that will attract the right peo-
ple. When you join Montreal, you
are part of a solid ecosystem.”
“What’s cool in the startup ecosystem is
going fast. And yet it works better to take
our time to create a well-defined culture.”
One more thing that was mentioned in the interview was the importance of having a unique ecosystem that does not try to imitate the rest. This is essential in order to have a clear and strong position on the international stage. According to VCs and supporters, Montreal dif-ferentiates itself by its outstanding creativity and it can position itself well thanks to its expertise.
“Montreal must keep an open mind
and learn from the rest of the world.
It is important to gain inspiration from
great initiatives while successfully
keeping our identity.”
what about the involvement of large institutions and of quebec Inc.?
Within the dynamic environment of Montreal ecosys-tems, what do respondents think about certain import-ant players getting involved, such as institutions, univer-sities, and big companies?
INSTITuTIoNS
Respondents were mostly thankful for the efforts made by institutions to help the ecosystem. They considered their impact as positive, but also suggested that some adjustments could be made.
There is a feeling of disconnect between public pol-icies and startups which reduces the potential impact of actions taken. Among the examples stated, the long waiting time for receiving funds and the perception that the selection criteria for call for tenders or subsidies are too strict where mentioned. By limiting the involvement of startups in these processes, the city and the govern-ment are limiting themselves, as they could be an im-portant customer of young and innovative companies. They are also losing the opportunity to help startups access the market.
uNIVERSITIES
The crucial role that universities have in terms of inno-vation was brought up by some respondents during the interview (especially by VCs and supporters).
key findingS the ecosystem
8 28 2
The current structure does not optimally stimulate inno-vation, nor does it help it’s commercialization. Relating to this point, respondents named Boston and Water-loo as examples to follow for Montreal. In the first case, spaces have been created to bring together researchers and students, promoting the exchange of ideas while also offering a physical space where entrepreneurs and companies can meet to discuss their latest achieve-ments. In the case of Waterloo, researchers benefit from a flexible intellectual property policy that allows them to be the sole owners of their findings, thus making com-mercialization easier.
In addition to stimulating innovation, universities must be innovative themselves if they want to provide future entrepreneurs with the best tools possible. Different ini-tiatives were mentioned by respondents in the interview such as Concordia’s District 3, ÉTS’s Centech, and the BNC Entrepreneurship Institute accelerator programs at HEC and the Dobson Centre for Entrepreneurship at Mc-Gill (in order of importance). All of these initiatives were considered to be a positive response to providing stu-dents with useful tools.
Six respondents (across all categories) out of ten (63%) have mixed feelings about the quality of entrepreneur-ship programs offered by universities. According to them, entrepreneurship cannot be taught in a traditional way; universities must be innovative in their practices. First, traditional courses, even if specialized in entrepreneur-ship, can still be seen as too theoretical and too long to really portray the reality of entrepreneurship. Traditional teaching methods are not representative of a constantly evolving ecosystem. The challenge universities face is keeping up with current trends and being able to offer courses that correspond to market needs. Adapting to the startup environment would require schools to make significant changes. It was said these should be orches-trated by members of upper management so as to ac-celerate the process. Second, learning by experience should be prioritized. Internships or cohort programs appear to be catering to these market needs more suc-
cessfully, allowing students to start their own business-es during their studies or work for a startup. The main challenge is creating stronger connections between students and the startup world. Strengthening these connections is especially important for showing grad-uates that they can make a living working for a startup and for allowing pipelines to fill with young talent.
This reinforces the idea that widespread acceptance of the startup model and communication are two ways to increase access to talent (junior and senior) and improve training, as mentioned previously (see “Junior talent”). Emphasizing communication would create stronger synergy between actors involved and lead to better structure. Improving communication is crucial in making key players more involved, such as large corporations.
LARGE CoRPoRATIoNS
Among respondents (across all categories) that touched on this subject, all agreed that there should be more connections to large corporations. They be-lieve that serious efforts should be made in this regard. A large corporation can be a very valuable first client for startups; a relationship like this would help improve their product and increase market access.
“Large corporations often lack employ-
ees and procedures needed to partner
with startups.”
There are currently a few initiatives in place that aim to connect Quebec Inc. businesses to startups. For exam-ple, “mashups” organized five times a year by the Quart-ier de l’Innovation give certain startups the opportunity to present their product to big organizations that face specific challenges. These presentations are followed by a networking event.60 This concept is similar to the InnoBahn Ubisoft event organized by CCMM where big companies give selected startups challenges having to do with innovation. The startups are provided guidance throughout the process.61
60 Quartier de l’innovation
61 Montreal Metropolitan Chamber of Commerce
key findingS the ecosystem
8 38 3
Summary and Conclusion - The ecosys-tem and the support it offers are inherent requirements for the success of startups. According to key stakeholders interviewed in the sum-mer of 2016, Montreal’s startup ecosystem is young and has developed very rapidly. At this current stage of evo-lution, talent and financing are structural requirements crucial to startup success and for maintaining anchors (hugely successful startups). Montreal’s ecosystem is a dynamic and rapidly evolving network that is currently reflecting on its own structure and functioning so that it can continue to grow. It is sometimes difficult to find the right information and access the right resources (events, programs, mentors, etc.). The overall view is positive, but it seems as though Montreal needs help from its anchors, centralized information, better communication between players, and clearer leadership.
All respondents seem to have a willingness to collab-orate, but this willingness does not translate into con-crete actions as much as it should. The main elements that can be improved collaboratively are getting rid of silo mentalities and creating a well-defined identity go-ing forward.
The key players interviewed have been a part of the ac-celerated development (over the last 5-10 years) of the startup ecosystem in Montreal. Previous sections in this report highlight the efforts made in such a short period of time. During the interviews, there were a few times when respondents brought up issues that could be re-solved collaboratively, now and in the future. They want-ed to share their concerns and talk about opportunities to continue working alongside all stakeholders while contributing to the growth of Montreal’s ecosystem, which they are proud to be a part of. The idea is to make Montreal an entrepreneurial hub, and this requires vision and a long-term plan. As Brad Feld of Techstars said, “A startup community needs a 20-year time horizon.”62
62 Wharton School of the University of Pennsylvania
key findingS the ecosystem
8 4
4The aim in this section is to present potential solutions that could address the issues raised and take advantage of the strengths of the Montreal startup ecosystem, found throughout this report.
These recommendations are derived from consultations with partners and
collaborators of the study with regard to the content of the previous three
sections, and often stem from interviews with the key players (section 3).
recoMMendationS
8 58 5
talentS
Increasing the exposure of Montreal students to the world of startups
As noted in section 3 of the report, there is consensus as to the quality and abun-dance of junior talent in Montreal. How-ever, it would seem that this talent does not benefit startups as much as it might. The key stakeholders interviewed believe that students, especially those with tech-nical profiles such as engineers, are not exposed enough to startups during their academic career. The assumption is that many students could present great add-ed value in a startup environment, but they do not know enough about this ca-reer opportunity.
To address this, it might be desirable to see universities integrate mechanisms to
put their students in contact with the start-up environment. A university that demon-strates leadership and best practices in this regard is Montreal’s École de Tech-nologie Supérieure (ÉTS). The university had first experimented with an official en-trepreneurship program, but later revised its strategy after finding that this did little to encourage the creation of new start-ups. The School therefore changed its ap-proach to work on existing options, rather than creating new ones. Thus, for the past two years, the ÉTS has used a wide range of measures promoting contact with the entrepreneurial environment for its stu-dents. Here, as an example, is a non-ex-haustive list of these.
D u r i n g c o u r s e s a n d i n t e r n s h i p s C r e at i n g yo u r o w n s ta r t u p
When they arrive at the university, students are ex-plained what tools are offered by the ÉTS to support students wishing to start or join a startup
A course on job market preparation, as part of the curriculum, is offered before the three compulsory in-ternships. As part of this course, students take an exa-mination created by the BDC to assess their entrepre-neurial profile.
To encourage internships in startups, the ÉTS offers scholarships to students to cover their wages when the startup is not able to do so.
Students can carry out a special project course, earning them three credits, by working in a startup.
Students can carry out their third compulsory internship in their own company.
The ÉTS is home to the Centre d'en-trepreneurship technologique (Cen-tech): an incubator and accelerator for startups created at the university, but also for others from outside the establishment.
In the majority of cases, the facilities of the ÉTS and Centech are available free of charge to students for them to prototype and develop the products of their respective startups.
Intellectual property relating to pro-ducts developed by startups remains the property of the startups, and not the university. This is the case even after the use of ÉTS facilities in the product development process.
8 68 6
talentS
Richard Chénier, Director of Technology, Entrepreneur-ship and Innovation at the ÉTS, draws a parallel between the approach of the ÉTS towards entrepreneurship and sports-study programs. These programs target students “who have athletic talent that is recognized by a federation and who are aiming at excellence in sport performance,” but the programs do this with flexibility, and only target students who have an interest in doing this.63 Why not do the same for startups and entrepreneurship?
It is also important to highlight the work of certain organi-zations, independent of universities, that bridge the gap
between students and startups. For example, Venture for Canada's mission is “to recruit, train and support top recent graduates to work at Canadian startups in need of talent, with the mission of fostering entrepreneurship.”64 As it is not already established in Montreal, we can imagine that the arrival of this organization might have an com-plementary impact to the measures taken in universities. Our recommendation is not to specifically support the development of Venture for Canada in Montreal, but to focus on support for organizations with similar missions that demonstrate the ability to deliver results.
Facilitating the attraction, integration and retention of international talent in Montreal startups
juNIoR TALENT ALREADy IN MoNTREAL
Foreign students enrolled in university pro-grams in Quebec are naturally a source of talent that it would be nice to see developed in Montreal. During interviews conducted in Summer 2016, the comment was often made that it was difficult for foreign students to stay in Montreal for work because of ad-ministrative constraints. However, there has been a recent major policy change on this subject : international students who com-plete a university study program are eligi-ble for a post-graduation work permit.65 The latter is normally valid for a period equiva-lent to the whole study program. Normal-ly, although exceptions may exist, “staying to work” in Montreal after completing their studies should be relatively simple from an administrative point of view.
However, it may be interesting to explore strategies for communicating this informa-tion put forward by the government, espe-cially the process to follow to remain within the time limit required by such an applica-tion, so as to work to correct the perception of administrative complexity. Note also that since 2010, the Ministry of Immigration, Di-versity and Inclusion (MIDI) has introduced a quick route for international students to gain permanent residency through the Quebec Experience Program.66
STARTuP FouNDERS
Another important category of foreign talent that it would be desirable to attract and re-tain in Montreal is the founders of startup companies. Indeed, given that Montreal of-fers favourable conditions at several levels for the creation of startups, we can imagine that a number of founders would want to start their company(ies) here. In the rest of Canada, the Start-Up Visa Program created in 2013 exists and allows founders “to im-migrate to Canada as permanent residents without conditions linked to the success of their business”.67 Several conditions are re-quired to obtain this visa, such “as obtain-ing the commitment of a group of business angel investors or a designated Canadian venture capital fund, ready to invest in [the] business concept”.68 The Quebec govern-ment has developed a similar program, but it has not yet been implemented. Thus, we think it is desirable that the Government of Quebec continue its efforts in this regard and implement the program it has devel-oped so that Montreal can host high poten-tial international founders.
63 Quebec Ministry of Education
64 Venture for Canada
65 Government of Canada
66 Montreal International
67 Government of Canada
68 See référence 5
8 78 7
talentS
SENIoR TALENT
Senior talent is in high demand in Montreal, in large companies, and now also in start-ups. Remember, we refer here to profiles such as specialized senior VPs (sales, mar-keting, technology, etc.). This talent is not only sought after by other technology com-panies, but also by other sectors. The de-mand for senior talent in Montreal is there-fore high, to the point where it is sometimes necessary to look internationally to find the ideal candidate. Here, startups say they face a number of barriers, including the immigration process through which foreign senior talent must pass.
First, the waiting time to obtain a work permit has been repeatedly cited as a limiting factor. To accelerate the process, we could think, for example, of exploring avenues to develop a rapid and simplified access route for appli-cants who meet specific criteria qualifying them as high potential for startups.
Secondly, it has been noted that in several cases, the pay structures offered in Montre-al are sometimes more modest than those that can be found in environments such as Silicon Valley. This obviously plays a role in the decision process of senior talent. This however applies to a larger context than startups. Quebec has one of the heaviest fiscal burdens in North America. In order to attract talent, workers must be able to keep a greater part of the value their work gen-erates. It is important to consider bringing down taxes on salaries, as well as personal revenue taxes in order to attract and retain top talent.
Thirdly, international senior talent often comes from environments where there is limited knowledge of the French lan-guage. Their command of this language is therefore also limited. The fact that knowl-edge of French is a criterion in the perma-nent residency application process could
then reduce the attractiveness of settling in Montreal. It may therefore be advis-able to consider a different approach that would both attract senior talent and pro-mote the French language. In a brief filed in August 2016, the Chamber of Commerce of Metropolitan Montreal used the follow-ing wording :
"It is more appropriate to target
immigrants with knowledge and
skills that are consistent with
our labour market and to extend
the offering of French classes to
immigrants once they arrive in
Quebec, than to set at the selec-
tion stage a minimum propor-
tion of immigrants in the skilled
workers category who declare
knowledge of French at the time
of their admission."69
Fourthly, it might be interesting for startups to try to gain maximum benefit from the links which Quebec (and therefore Montreal) al-ready has with other Francophone countries. For example, Startupfest, the Table d’action en Entrepreneuriat de Montréal (TAEM) and Paris&Co created the Startup Exchange program between Montreal and Paris.70 Par-ticipation in such programs or in targeted commercial missions could help Montreal startups to recruit talent from abroad.
69 Recommendations of the Chamber of Commerce of Metropolitan Montreal within the framework of consultations
on immigration planning for the period 2017-2019.
70 Startupfest
8 88 8
talentS
Focus on creation of university entrepreneurship centres
Emphasize the importance of women in startups
There was unanimous agreement about the central role of universities in the de-velopment of startups among interviewed key players. It is also clear, according to them, that an institution the size of a uni-versity cannot be as agile and quick to
change as the startup world requires. We must therefore find a way to accommo-date these two situations. The majority of Montreal's universities have responded to this problem by creating entrepreneurship hubs in different formats.
As we have seen in this report, women represent ≈ 22% of employees and ≈ 19% of startup founders in Montreal. In over 95% of cases, women are in the minority in start-ups. We believe there is still much room for improvement and that women can and should have a greater role in startups.
Already in 2012, Forbes published an ar-ticle entitled “Why Do We Need More Women In Technology?”.72 We invite you to consult the following articles, by key play-ers of the industry, on the importance of women in tech : Women in tech: What’s
the real problem? (TechCrunch), Why We Need Women in Tech (Popular Mechanics), Wanted: More women in technology (McK-insey), etc.73 The objective of our study was not to dive deep into the subject female of underrepresentation in startups. This subject is indeed complex enough that it could warrant a stand alone study. Many recommendations have already been for-mulated by other actors, as shown in the above articles. We believe this is a key is-sue that should be studied in depth in a future study.
We believe that this decentralized approach is condu-cive to supporting startups insofar as these entities (uni-versity entrepreneurship centres) can adapt more quick-ly to the changing situation of Montreal startups.
It is also important to mention that as part of its Entre-preneurship Strategy, the Government of Quebec has
launched a funding program for incubators and business accelerators in academia, which is currently in effect. A call for projects is launched once a year and aims to en-able universities to rely on this financial tool to imple-ment their aid strategies for startups. We believe that this is beneficial and helps to maximize the support that universities can offer startups.
Name UniversityYear of creation
District 3 (D3)
Accelerator of the Institute for
Entrepreneurship, National Bank
| hEC MontréalAccélérateur Max
Max Tech Accelerator
x-1 Accelerator
Centech (Technology
Entrepreneurship Centre)
accelerator
2 0 1 3
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6 7 1
Concordia
Montreal Campus (HEC Montréal, Montreal Polytechnic, University of Montreal)
Université du Québecà Montréal
McGill
École de technologiesupérieure (ÉTS)
71 Note that Centech has existed since 1996
72 Forbes
73 TechCrunch, Popular Mechanics, McKinsey
8 98 9
financing
Clarifying the sources and nature of the capital available for startups in Montreal
Venture capital is certainly a preferred source of cap-ital for startups. However, by definition, the majority of startups will not have access to this. Montreal also has several other alternative capital providers which start-ups can access. The challenge is that this information is fragmented for the moment and even difficult to access sometimes. We therefore believe in the importance of centralizing information on available sources of capital so that it is available in a transparent manner. In Toron-to, the online platform Startup HERE Toronto centralizes several useful sources of information for startups such as major events, coworking spaces, capital providers (VC and others), incubators and accelerators, service pro-viders, etc.74 Info Entrepreneur is currently an excellent source of information pour financing programs at the federal, provincial, municipal and private levels. A de-tailed census of actors of different categories already exists, including over 120 investment funds, 10 financial institutions, 60 accelerators and incubators. In order for startups to better leverage this resource, we believe that a better promotion and simplification of the user experi-ence of the Info Entrepreneur platform could be of value.
Still with the aim of providing easier access to the many resources offered by Montreal, it should be noted that the key actors interviewed in Summer 2016 repeatedly expressed the idea that a recurrent and updated se-ries of activities would be an avenue worth exploring to facilitate the processing of the information sought in terms of funding. Some good initiatives have emerged in this regard. One example is the Info entrepreneurs open house days during the BDC Week of the SME, when we are invited to discover over 700 support or-ganizations, the services offered by advisors in govern-ment services and programs, experts in business infor-mation, and the services of guest advisors.75 We can see the excitement around and benefits of such a program elsewhere in Canada, as in the case of the Techtober-fest organized by Communitech.
" "You won’t find any other tech event
quite like this on the planet, said Madusha
Cooray, the investor relations and startup
services group manager at Communitech."
Last year resulted in 160 one-on-one meet-
ings with startups and investors in only
four hours. This is investing on steroids!"76
The guiding principle of these examples is the col-laboration between the key players in the ecosystem to facilitate access to information and capital (venture and other) for startups. Instead of producing several small events, a big event is organized combining many re-sources, accessible to everyone.
Finally, the criteria for access to capital (venture and other) were mentioned by the majority of startups in-terviewed as a major source of frustration. The same applies for capital providers who are disappointed with the presentations of high-quality startups, but which do not fit with their selection models. Creating a summa-ry guide to capital providers’ assessment criteria could therefore help align the rhetoric of startups with those assessing them. In the spirit of the 4M model presented in this report, we could devise a reference tool resulting from a collaboration between different capital providers. Although each type of provider may have their own crite-ria (VCs and foundations are not always concerned with the same aspects of a startup), our hypothesis is that a significant portion of the criteria could be communicated in a standardized way.
74 Startup HERE Toronto
75 Chamber of Commerce of Metropolitan Montreal
76 BetaKit
9 09 0
Stepping up collaboration between the VCs and other capital providers
In the specific case of access to information, we posed the hypothesis of greater added value stemming from collaboration between capital providers in Montreal. We believe that this value goes beyond access to informa-tion. An example that illustrates the benefits of close col-laboration between capital providers is the creation of the British platform F6S. Now, an international platform, F6S enables startup founders to apply to different sourc-es of capital, incubation and acceleration programs and more via a single portal. The success of this tool is based fundamentally on the willingness of different actors to collaborate for the benefit of startups
"F6S is home to 1.5 million profiles, 600k
startups and more than 12,000 startup
programs globally. F6S delivers to found-
ers more than $1 billion per year in funding,
grants and services. F6S founders apply to
accelerators, pitch investment funds, post
or apply for jobs, get free founder benefits
and grow on F6S every day."77
We are already seeing the emergence of this trend in Montreal. The creation of Espace CDPQ and the estab-lishment of Capital Intelligent MTL are leading exam-ples. We believe that it is important to invest in such initiatives. The idea is to create mechanisms linking financial players on an ongoing basis, to increase col-laboration between them and thus the strength of the investment network in Montreal.
Affirming the place of quebec Inc. businesses on the Montreal startup scene
Large companies have a key role to play in startup ecosystems in a comprehensive way. Québec Inc. companies represent ideal potential clients for Mon-treal startups. Large companies often have needs that can fit with the offerings of startups. Moreover, these companies have the financial assets and market expe-rience necessary to help startups further improve their products. We often refer to this context as being the “first client opportunity.” Having a client as important
as a member of Québec Inc. brings great credibility to a startup when it deals with future clients. High-qual-ity relationships with startups are also profitable for large companies. We only need to think of companies that look to purchase startups to complement their current business model. As service providers, startups may also offer pioneering products with high added value for large companies.
Some companies have already made this observa-tion and are actively working to carve out a prominent place in the startup ecosystem. Take for example the Bank of Montreal (BMO), which, together with the DMZ of Ryerson University, launched the program “The Next Big Idea in Fintech” in April 2016.
"The program [...] will provide up to six
selected startups with :
• A four-month placement at the DMZ,
the leading university-based incubator
in North America;
• An exclusive opportunity to pilot their
technology with BMO; and
• Introductions to venture capital groups
that may be willing to take the startup to
the next level."
" " The evolving needs of customers are
driving a push for innovation and an ac-
celeration of the development of new
technologies," said Cameron Fowler, Group
Head, Canadian Personal and Commercial
Banking, BMO Financial Group. "Talented
entrepreneurs need opportunities, re-
sources and the right environment for their
ideas to succeed. We look forward to colla-
borating with DMZ and these new leaders
of Canada’s innovation industry." "78
77 F6S
78 BMO
financing
9 19 1
The link between the needs of the banking sector and the offering of FinTech startups is obvious, but several other similar examples exist where startups have the chance to create high value for companies in a given industry. In some sectors such as technology, media and telecommunications, some companies have even established corporate venture capital groups in their own right (Google Ventures, Intel Capital, Salesforce Ventures, Qualcomm Ventures, Comcast Ventures, etc.).79 We believe that other Québec Inc. businesses should follow in the footsteps of players such as BMO and assert their role in the Montreal startup ecosys-tem. We could also think of government support in
this context. For example, we could create special tax credits for expenses incurred with startup providers.
The key is to increase interaction between large com-panies and startups, concretely and constructively. Companies are not required to entertain investment presentations or service proposals. They can start the relationship on a concept validation basis (giving advice to the startup so as to improve its product). This pro-vides a first exposure for startups and concretely helps the startup to create a network and validate its product. The CCMM’s InnoBahn Ubisoft is a successful example of this.
79 CB Insights
financing
9 29 2
the ecoSySteM
Strengthen the existing support infrastructure rather than increasing the number of initiatives
A unanimous sentiment was expressed among key play-ers interviewed: that new initiatives to support the start-up ecosystem seem to be launched every day, despite the fact that many are very similar to existing approach-es. This is due in part to a lack of centralized information. In the context where the various resources available to the startup ecosystem are not known or consulted by all parties, it may be that a project is started with goals overlapping several existing projects without this being known beforehand.
The Quebec government is actively trying to solve a sim-ilar problem with SMEs via the Entreprise Québec plat-form.80 Indeed, the latter is meant to be a centralization of all government resources that may be required by businesses in Quebec. The information is presented in an intuitive way, according to the different phases of a company (Start, Manage, Transform, Close).81 Depending on requirements, you will be directed towards specific Revenu Québec articles for questions about provincial taxes, or to the Canadian Intellectual Property Office for questions about patents. Entreprise Québec also col-laborates with Info Entrepreneur regarding all program and services offered by private or governmental sourc-es. Since such platforms reflect a need to centralize information about resources for SMEs, it is likely that a similar tool would be relevant for startups. Indeed, we believe it would be desirable that the expertise devel-oped during the creation of Entreprises Québec and Info Entrepreneurs be exploited in the context of startups. A first step could be to identify the resources already list-ed by these two platforms, by that are specifically tai-lored technology startups. A search filter could then help startups to target specific resources. We could also con-sider a mechanism that allows actors that offer services to startups (non-profits, accelerators, VC funds, etc.) to easily create and maintain their online profiles. As a whole, the resources already in place would have much to gain by being better known by their target market : entrepreneurs and startups.
Clarify and review the structure of mentoring and coaching
Coaching and mentoring are two complementary sub-jects often mentioned by startups in this study. Coach-ing and mentoring differ significantly, however. Accord-ing to the Fondation de l’entrepreneurship, the role of a coach is more focused on expertise (skills) while the role of the mentor is to provide advice on soft skills (hu-man relations, high-level objectives, etc.).82 The general comment from startups was that mentoring is relatively well organized and available. The Réseau M is one ex-ample, with more than 3,500 entrepreneurs benefitting from the service in 2015.83
However, startups have expressed the need to be bet-ter supported with respect to coaching. It seems, when it comes to coaching, there are less formal, organized structures such as with mentoring. This lack is even more significant, according to startups, because the value of coaching increases significantly when it is car-ried out on a recurring and sustainable basis. At pres-ent, the majority of startups that receive advice from a coach may have used their personal network to initiate the relationship. It would therefore be beneficial if for-mal and long-term mechanisms were put in place to facilitate coaching in startups. Note that this could be a great opportunity for Québec Inc. businesses.
Designate entities responsible for gouver-nement-startup relations, on both sides
During our research, we found a large number of initia-tives undertaken by the government, sometimes to sup-port entrepreneurship, sometimes startups, sometimes both. Our discussions at this level resulted in an import-ant observation: startups did not know about several government programs and initiatives designed to help them. This therefore underlines an issue that has more to do with communication than lack of resources or will. On the contrary, there are many examples demonstrat-ing that the startup ecosystem is important to the gov-ernment, as much at the municipal as at the provincial and federal levels. To name just one, the Canada Accel-erators and Incubators Program (CAIP) demonstrates the willingness of the state to be involved in the risk that is usual at the outset for startups.84 Despite all this good will, we find that there does not seem to be a clearly
80 Finances Québec
81 Entreprises Québec
82 Fondation de l’entrepreneurship
83 Fondation de l’entrepreneurship
84 Government of Canada
9 39 3
85 PME MTL
86 Code for America
87 Washington Post
identified group within the government for managing the relationship with startups. We note also the absence of a formal representation group from the Montreal startup community. Defining these two points of refer-ence seems necessary to us to encourage communica-tion as well as to ensure that the needs of startups are known to the government and that policy progress is continually updated. On the government side, we could, for example, think of PME Montreal, whose mission (“[to provide] support, training and funding to entrepreneurs and business leaders”) would seem to position the orga-nization favourably with startups.85
An inspiring example from the point of view of the col-laboration between a large number of players in the technology sector and the government is the Code for America movement.86 Created in 2009, the inde-pendent organization's mission is to oversee skilled workers in the technology industry who wish to work to optimize government services using technology. Al-though a large number of private and public players are involved in the process, the people responsible are always known to all sides.
"Code for America is the technology
world’s equivalent of the Peace Corps or
Teach for America. [...] This is a win-win for
cities that need help and for technologists
that want to give back and contribute to
lower government costs and the delivery
of improved government service."87
It is also important to differentiate entrepreneurship in general from the situation of startups. Although a start-up is necessarily entrepreneurial in nature, any young, newly started company is not necessarily a startup. This is an important distinction to make on many levels. For example, in the case of the above representation groups, we must be careful not to group startups with entrepreneurship by default. The situation and needs of startups are often different.
the ecoSySteM
9 49 4
This report portrays a startup ecosystem that is still young, with several opportuni-ties to seize, and enormous potential. It provides a quantitative overview of the eco-system including a profile of its significant human capital, an estimate of the economic impact, and the views of more than 50 key players. We believe we were able to estab-lish a representative picture of the Montreal startup ecosystem in the summer of 2016. Moreover, we believe that this portrait il-lustrates the significant dynamic impact of the startup ecosystem on Montreal (1800 to 2600 startups, approximately 8000 em-ployees, over $700M in direct and indirect production).
The startup world is constantly changing, however, and we must be alert to update the reality of the situation and be able to provide an up-to-date reading of it over time. The recommendations outlined above and sum-marized below were formulated to help the different actors organize work within the eco-system. The recommendations draw strength from the fact that they originate from opin-ions and visions for improvement made by the sector itself. In this sense, the implemen-tation of the proposed measures would have more chance of success since the desire to act would come from organic sources. Thus, this report is made available free of charge to the whole community.
As a conclusion to the Montreal Startup Ecosystem Report
We also believe in the value of this approach over time. To stay abreast of changes and emerging trends, it may be appropriate to regularly update key indicators with regard to the state of the Montreal startup environ-ment. Being comparable to the best in the
world also has great value in the identifica-tion of our respective strengths and weak-nesses. To do this, we believe that measures such as those taken by Startup Genome would be likely to continue to help the eco-system grow.
Increase the exposure of Montreal students to the world of startups.
Facilitate the attraction, integration and retention of international
talent within startups in Montreal.
Focus on creating and empowering university entrepreneurship centres.
Emphasize the importance of women in startups.
Clarify the sources and nature of available capital for startups in Montreal.
Strengthen collaboration between VCs and other capital providers.
Consolidate the place of québec Inc. companies on the Montreal
startup scene.
Strengthen the existing support infrastructure rather than increasing the
number of initiatives.
Clarify and review the mentoring and coaching structure.
Designate entities responsible for gouvernement-startup relations, on both sides.
9 5
acknowledgeMentS
9 5
the founding partners
As said at the beginning of this report, the concept and objectives of this report were determined jointly with Credo, the OSMO Foundation, and Startupfest. The end result of this work is largely due to their vi-sion and their interest in seeing the Montreal ecosys-tem grow.
• credo
christian bélair, President and Co-FounderJean-françois charette, Lead Analyst and Project Manager
• oSMo foundation
Sylvain carle, Associate (Real Ventures) and General Manager (FounderFuel)
• StartupfeSt
phil ippe telio, Founder
the financial partners
It goes without saying that without the contribu-tion of financial partners, this report would not have moved beyond the idea stage. It is because of the value they place on the ecosystem that this report has been produced. These partners are, in the order of the size of their financial contributions::
• ville de Montréal,
• Ministère de l’Économie, de la Science et de l’ innovation du Québec,
• chamber of commerce of Metropolitan Montreal.
the advisory committee
From the beginning of the process, certain key play-ers were called upon to act as advisors for clarifica-tion and support. They contributed as much to the content as to the format and the formulation of rec-ommendations. The contribution of their respective expertise is a key success factor in the completion of the report. Members of the advisory committee, pre-sented in alphabetical order, are :
• chaMber of coMMerce of
Metropolitan Montreal
alain boudreault, Vice President, Programming and Innovationceline huot, Vice President Strategy and Public AffairsMichelle vaillancourt, Analyst , International Business
• fondation MontrÉal inc.
liette lamonde, General Managernicolas Morand, Company f inancing
• Ministère de l’ÉconoMie, de la science
et de l’innovation du QuÉbec
Josée-anne richard, Executive AssistantMourtala Salha, Economic Advisor
• MontrÉal international
alpha daye diallo, Analystchristian bernard, Vice President, Strategy and Communications
• notMan House
emma will iams, Director
• PMe MontrÉal
christian perron, General Manager
• Quartier de l'innovation
antoine leduc, Communications Managerchristine desmarais, Project Managergabrielle langlois, Operations Manager
• ville de MontrÉal
alain houde, Manager, Investment and Strategic Developmentalexandre dion, Commissioner of Economic Developmentfrance Jobin, Team Leader, Business Development
9 69 6
Startups that shared their data
In order to respect confidentiality, the identity of start-ups that responded to our survey, as well as those that shared other data, remains and will remain strict-ly confidential. The contribution of these startups was key to the completion of this report - without it, this report would not have been possible. We were im-pressed by the desire to give back to the community, as well as the sense of belonging of these startups to the Montreal ecosystem.
key stakeholers interviewed
More than fifty interviews were conducted with key players in the ecosystem for this report. These players include VCs, investors, foundations, government and para-governmental agencies, NPOs, interest groups, startups, accelerators, incubators, co-working spaces and several others. Again, in the interests of respect for confidentiality, the identity of the individuals and organizations interviewed will remain confidential. However, we would stress their essential contribution to the process, similar to the contribution mentioned above for startups.
Special mention of other people and organizations who contributed to the success of the report
In addition to those mentioned above, other individuals and organizations also had a significant impact on the design of this report. In alphabetical order by name :
caroline pelletier (vp dossier Selection and
vp investment Support, anges Québec),
corélia kostovic, craig asano (executive di-
rector, national crowdfunding association of
canada), david nault (vice president invest-
ments, inovia capital) , françois gilbert (pres-
ident and general Manager, anges Québec),
Jean-françois gauthier (president, Start-
up genome), Montreal new tech (the whole
team), nancy rosenfeld (president, claudine
and Stephen bronfman family foundation),
tilman wiewinner (global relationship Man-
ager, Startup genome), raff paquin (alveo.io,
associate and co-founder) .
acknowledgeMentS
9 79 7
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