Kick-start: How to ignite entrepreneurship among young Canadians
The RBC report on youth entrepreneurship highlights a troubling decline in businesses that hire among young Canadians, a phenomenon that could have significant implications for the economy going forward. Per the full note from RBC, while Canada ranks 4th among OECD countries in early-stage entrepreneurial activity, it drops to 11th for established business ownership, indicating a significant gap in sustainable business growth. The analysis reveals that 80% of young entrepreneurs operate solo, raising concerns about their long-term viability and the lack of hiring potential. The desk's thesis is that without targeted support for these young businesses to make their first hires and grow beyond early-stage operations, we could see stagnation in job creation and economic dynamism in Canada. As firms navigate this landscape, the imperative is clear: bolstering growth supports is essential to transition these entrepreneurs from solo operations to sustainable business models.
What the desk is arguing
The RBC report indicates that the trend of increased youth entrepreneurship does not equate to a rise in employment-generating companies. When examining the data, it is alarming to note that the builder archetype of incorporated businesses with employees has decreased by 40% over the past 20 years. This underlines a structural challenge within the Canadian entrepreneurial ecosystem, especially given that 90% of businesses that hire do so within their first five years, suggesting that there’s a critical need for increased support during these formative years.
RBC's findings resonate with broader economic indicators reflecting a hesitancy among young entrepreneurs to scale their ventures beyond sole proprietorships. This inconsistency raises questions about whether current support frameworks are adequate, especially when juxtaposed with Canada’s high early-stage entrepreneurial activity ranking but lackluster performance in maintaining established businesses.
Where it sits in our coverage
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How other firms see it
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Key takeaways
- 0180% of young Canadian entrepreneurs operate without employees.
- 02The builder archetype of businesses with employees has declined by 40% in two decades.
- 03Canada ranks 4th in early-stage entrepreneurial activity but 11th for established business ownership.
- 04Support for young firms is crucial in the initial stages to drive employment and growth.
Market implications
Watch for shifts in policy announcements targeting young entrepreneurs, as these could signal a pivot in support measures that might impact employment rates in the medium term. The evolving landscape may also influence investor sentiment as firms assess the viability of engaging with young enterprises.
Risks to this view
The call is contingent upon the support measures implemented by governments and financial institutions. A lack of proactive investment into scaling-up resources or an unforeseen economic downturn could severely hinder the potential for young companies to begin hiring.
RBC Royal Bank View Online Dear Brian While headlines celebrate a renaissance in youth entrepreneurship, our deep-dive analysis in our latest report, Kick-start, reveals that fewer young Canadians are building companies that hire. We mined more than a billion cells of StatsCan microdata to unearth a new picture of youth entrepreneurship in Canada. Here’s what we found: - 80% of young Canadian entrepreneurs operate solo, without employees - The ‘builder’ archetype, which we defined as incorporated businesses with employees, have declined by 40% over the past two decades on a relative basis - 90% of businesses that hire do so within the first five years—but support ecosystems dry up at scale-up.
Canada ranks 4th among OECD countries for early-stage entrepreneurial activity but 11th for established business ownership, which captures that gap. We spoke with a dozen young founders across industries—biotech, AI, consumer goods, cleantech—and heard consistent challenges: difficulty accessing scale-up capital, lack of operator-led mentorship, and skills gaps in hiring. How to respond?
Focus support where it matters most: helping businesses make their first hire, survive three years, and grow. That means anchor customers from larger firms, simplified government programs, and pathways that connect young talent with young companies. Read the report We encourage you to share this message with your network and ask them to join our mailing list to get in-depth research on the big ideas that can drive Canada’s economic prosperity. - Please do not respond to this email as this inbox is not monitored.
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