The founders of the newly established Innovation Economy Council (IEC) — MaRSOCECommunitechDMZInvest Ottawa and CCRM — have published the group’s first white paper: The post-viral pivot: How Canada’s tech startups can drive the recovery from COVID-19

The IEC was formed as an informal coalition of industry leaders advocating on behalf of startup ventures at the beginning of the COVID-19 crisis, and is looking at how Canada’s established companies should work with innovators to navigate a post-COVID-19 world. Going forward, the new council will produce white papers and host events to help shape a new industrial innovation policy for the country.

The IEC’s inaugural report was authored by Barrie McKenna, former Globe and Mail columnist, with data and analytics by Nigel Biggar. It examines how Canada’s startups are best positioned to lead Canada’s post-COVID-19 recovery, well beyond the bounds of the startup ecosystem itself — and the consequences if they aren’t adequately supported. The report findings show that all sectors of the Canadian economy depend on a vast supply chain of technology companies to meet needs in such areas as cybersecurity, artificial intelligence, data privacy, e-commerce, clean technology and advanced manufacturing. These companies also have some of the highest rates of productivity and generate more economic output for every hour worked. A disproportionate share of job losses in these advanced industries would damage productivity nationwide.

The white paper also highlights essential startups that have shifted gears during the pandemic to meet new demands and opportunities. Companies that pivot with their clients are best positioned to help the Canadian economy bounce back. The IEC recommends that governments work together to design a new industrial innovation policy that supports the leading startups and industries that can help fuel the economic recovery post-pandemic. 

Key findings include:

Tech startups already drive employment and growth 

  • A 25-percent drop in employment in the technology startup sector would wipe out 274,000 jobs across the country — nearly 130,000 in Ontario alone. But it’s not just the job loss that matters. Through case studies of promising startup companies, the report demonstrates how Canada’s technology ecosystem is providing jobs and growth today, as well as new ideas that will power the economy for years to come.
  • The vast majority of hub clients operate in a clutch of advanced industry groupings that account for nearly 12 percent of Canada’s GDP and nearly two million jobs.
  • Companies involved in computer systems design have added nearly 90,000 jobs since 2009 — more than three times as many as the entire vehicle-manufacturing and auto-parts industry. Many of these startups also support established companies, providing innovative back-end data solutions. 

Startups help advanced industries punch above their weight

  • Advanced industries are creating jobs and are growing at a much faster rate than the overall economy. Employment in software publishing, for example, has grown nearly six times faster in Ontario since the 2008-2009 recession than overall private-sector job creation and four times the pace Canada-wide. 
  • GDP in the software industry has expanded at six times the pace of the overall economy in Ontario.

After COVID-19, startups will help established corporations pivot

  • Startups and tech companies can pivot quickly to support their clients and help the economy become more resilient, which is critical as global supply chains cope with massive disruption. This is apparent with the number of startups that have partnered with established firms to create products that are working to contain the virus and support the community. 

The IEC recommends the federal and provincial governments collaborate to implement stimulus measures that will build the physical and digital infrastructure that serve as the foundation for Canada’s economy over the coming decades and incentivize technology adoption. In addition to ensuring that Canada has the necessary channels to get products to market, Canadian companies must be leaders in the global digital marketplace. Policies should also focus on enhancing the resilience of domestic supply chains and promote collaboration between Canadian firms. 

The DMZ is a leading business incubator for tech startups in Canada. They help startups build great businesses by connecting them with customers, capital, experts and a community of entrepreneurs and influencers.

The DMZ is a partner in StartUp Here Toronto.