Growing up in New Brunswick, Kathryn Lockhart believed she had to leave the region to have a great career. She wants her children to grow up knowing that’s not the case, and her work supporting founders in Atlantic Canada provides several examples of how new companies can start, find funding, hire people and grow in the region.

“I like to say that we are in the business of raising baby unicorns,” said Lockhart, CEO of Propel ICT, a virtual accelerator based in and focused on Atlantic Canada. She believes Atlantic Canada has the capacity and potential to get 100 companies to that $50-100 million valuation level.

For any one company to reach that milestone requires a lot of support, connections, hard work—and funding. Right now, accessing that funding means balancing industry realities and global economic concerns with the growth and opportunities uniquely available in Atlantic Canada.

Economic worries and funding realities

So far, 2023 has been a tough year for entrepreneurs and high-growth sectors like tech and innovation. The fall of Silicon Valley Bank in March added a host of new struggles to the list for many startups, and layoffs across the innovation sector continued.

The current economic and funding situation makes rapid capital deployment more difficult, said Lockhart, who advises entrepreneurs to hustle and compete like they live in Silicon Valley. Using a global lens from the customer’s mindset, and a global perspective from the founder’s, is essential, she said.

“Resistance to change or just being comfortable is an enemy of the progress we need to see here,” Lockhart said.

At the same time, the region has had several good-news stories for founders and entrepreneurs this year. In February, three Atlantic Canadian healthcare startups—SiftMed, The Rounds, and NovaResp Technologies—announced six-figure funding. The federal government shared plans to invest in green tech in its March budget and in early April, Newfoundland and Labrador’s provincial government announced funding for ocean-tech companies. Thanks to dueling regional and national/global realities, the current ecosystem for Atlantic Canadian entrepreneurs is a mix of concern and optimism. And is shifting in significant ways.

The founder ecosystem is changing in the region, Lockhart said, with more second-time and mature founders. People who are new to Atlantic Canada, or Canada in general, are also making their mark. “We are seeing an increased level of new Canadians bringing their global experience to our region, bringing more investment opportunities,” Lockhart said.

 

Thanks to dueling regional and national/global realities, the current ecosystem for Atlantic Canadian entrepreneurs is a mix of concern and optimism. And is shifting in significant ways.

 

 

Finding the right funding

Even in a tough environment, company founders need to find funders to grow and scale their operations. That landscape has changed significantly in Atlantic Canada, and now contains a mix of government funding sources, venture and angel capitalists, and incubators and accelerators.

In tough times, and in booming sectors, competition for those funding sources is tight. But regardless of the challenges, the best capital for a startup is the kind that will move their company forward—not necessarily just the kind that is free or available, Lockhart said. “Founders need to understand where they are and what funding milestones are accessible at that given stage,” she said. “Investors are not looking for perfection, they are looking to understand how you think and how realistic you are about your assumptions.”

Also, there’s an increasing amount of capital coming into Atlantic Canada from outside the region, Lockhart said, with success stories like Verafin generating interest from venture capital firms outside the region. And at the angel level, opportunities for early-stage investment have improved in Atlantic Canada in recent years. But significant support based in the region is also available. Volta, Build Ventures, Tidal Venture Partners and Creative Destruction Lab are just a few of the many examples in the public and private sectors.

Propel supports more than 100 companies every year, helping founders develop the skills needed to grow and scale their business, Lockhart said. Part of that support includes capital, but there are also resources that help founders get to the point of needing capital: building relationships, becoming familiar with investment language, preparing a due-diligence folder, getting clear on your metrics.

“These are all common conversations founders have with their startup coaches at Propel, so it’s important that people know there is plenty of support in the region to help prepare you for fundraising,” Lockhart said.

It’s important for founders to leverage their networks to access funding – and joining an incubator or accelerator like Propel is a way to strengthen that network and focus on building connections. “Raising capital is hard, and the current volatile economy puts additional strain on the fundraising process. So show investors that you understand how your business model ticks,” Lockhart said.

Getting connected – and specific

Networking is an important part of not only understanding what funding is available, but also how it fits with a given business’s goals and needs. To start, long-established funding agencies like the Atlantic Canada Opportunities Agency (ACOA) and the National Research Council of Canada Industrial Research Assistance Program (IRAP) are still important sources of support. Lockhart advises founders to build relationships with these stakeholders early so they can quickly leverage non-dilutive support when revenue and/or investment comes in.

Broader networks bring together some of these resources and combine their skills and connections to support founders. Lockhart pointed to Startup Atlantic, a network of founder-centric organizations in Atlantic Canada focused on helping founders quickly. Founders should lean on these networks, and take advantage of the unique environment in the region to build relationships early, before capital is needed.

Government-led initiatives also play a significant role and involve stakeholders at several levels. “As a small region, it only makes sense for the provinces and feds to collaborate more to grow the regional economy,” Lockhart said. She pointed to the Atlantic Growth Strategy’s momentum as one positive, in particular through the Atlantic Immigration Program.

Beyond these broad-scope organizations, one of the benefits of gaining an understanding is that it can lead founders towards specialized funding sources. For example, Sandpiper Ventures focuses solely on women founders. Founded by Sarah Young, Rhiannon Davies and Cathy Bennett in 2020, the venture fund invests in female founders to increase diversity in investment and involve more women in the landscape.

Lockhart’s newest role is as a manager partner at WEL Atlantic, which supports women founders with angel investments. “We are trying to walk the talk ensuring women and women-identifying founders are well funded to grow their ventures here in the region,” she said.

Looking forward, Lockhart wants to see more regional wins for starting and growing new companies in the region. She gave the example of the Atlantic Investment Incentive Pilot, a pilot with strong startup-ecosystem support in the region. The initiative encourages the kind of regional investment that would result in more global companies headquartered in Atlantic Canada and tens of millions in private investment entering the ecosystem, she said.

“Our full potential will be realized when government policy enables and encourages investment, support, and ultimately growth across all four provinces,” Lockhart said. “Our future is Atlantic and the faster we remove the barriers to unlock that potential, the stronger our future will be.”

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