It is perplexing to see the contrariety between the performance of knowledge-based small enterprises in Canada and similar ventures in the US despite the two counties having so much in common. Canada’s potential to create disruptive innovation is demonstrated by individual success stories that are few and far between. However, there is apparently no dearth of talent and entrepreneurial risk taking when it comes to tech startups or innovative social enterprises. What lacks in almost all cases is the ability of the businesses to organically grow by leveraging a partnership-based innovation ecosystem. The reason is simple; one doesn’t exist.
The gaps in the venture financing systems warrant creating a collaborative ecosystem for innovation that would build on the existing strengths by augmenting partnerships between private, public and non-profit sectors nationally, while on the other hand enhancing global knowledge-sharing. Canada already enjoys an advantageous position in terms of its immigration policies, a quality higher education system and extensive research and development spending. The key is to come up with a strategy to build an inclusive cluster for innovation while leveraging these advantages. Due to the massive untapped potential of immigrant entrepreneurs in Canada, this promising segment is where the right mix of investments and policies can add immense value.
The success of immigrant integration is generally measured by the number of immigrants who are able to settle down in employment and become tax payers. This limits the stake of immigrants in the larger economic growth of Canada, and as a result, while immigrants are more likely to start small businesses than to look for employment, their business ventures are rife with challenges due to lack of capital, know-how and collaboration.
In Toronto, where the immigrant-owned share in SME sector is the highest, 40% of small business owners were born abroad. Statistics Canada defines a high-growth firm as one which sees grows in terms of turnover or revenues by more than 20% annually for at least 3 years. When we look at the small business landscape from this lens, a disproportionately small number of immigrant-owned businesses qualify as high-growth.
The key is to understand the unique situation and needs of immigrant business owners, especially at the startup stage. While immigrants generally have a more entrepreneurial mindset compared to their Canadian-born counterparts, they lack the knowledge and vital skills needed to start and grow businesses in the North American context. To further compound the challenge, they do not have the right social and business contacts to help them grow their businesses at a rapid pace.
The trade and finance hubs of Canada such as Vancouver and Toronto that also have large population of immigrants are most likely to appear on the global innovation map if provided the right support in terms of cross-sector collaboration, mentoring, access to capital and knowledge-sharing.
Specifically, there is a need to:
- Support innovative social enterprises run by immigrant entrepreneurs that develop solutions for most pressing socioeconomic problems faced by Canada
- Invest in firms that can scale up by creating collaborative relationships with experts and mentors and thereby leverage a public-private model for raising capital
- Focus on areas that have the best potential to create employment for Canadians by matching the available skill base with new business ideas
- Promote an entrepreneurial culture among immigrant communities by creating awareness of the upside of risk-taking
The time is ripe to bring Canada on the world stage of innovation by creating a robust and sustainable ecosystem that values unconventional ideas for collaboration and value creation. All segments of the economy — private, government and non-profit — need to play their part in easing the pressures of unemployment by converting immigrant job seekers into employers. By making immigrants an equity partner in the economy, Canada will not only enhance economic productivity in terms of domestic output, but also be able to attract global investments in innovative new solutions.
Photo credit: Premier ministre du Canada
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