Canada's unicorn problem: New study explores why our best startups fail to take flight

Calgary Herald

12-05-2025

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Canadian startups can address these challenges through investing more in marketing in sales, Plant argued.
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'It's an enormously complex problem to solve … to be able to sell in a new market with a new product to new customers. These companies have senior people in engineering and finance, yet marketing and sales seem to be a subsidiary function to them,' he said.
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Canada has seen improvement in terms of sheer numbers: in 2024, the number of Canadian unicorns jumped to 27 from 23 the year prior, with the country's unicorn count increasing every year since 2020.
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At the same time, Canadian unicorns' competitiveness has declined. On average, these companies are slipping in terms of their 'scaleup rank' — a metric devised by Plant that measures the performance of a company in scaling up through tallying its funding amount, headcount numbers and employee growth rates and benchmarking the score against its North American peers.
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Last year, the average Canadian unicorn recorded a scaleup rank of 74 per cent but that gauge has fallen to 70 per cent in 2025. The two-year compound annual employee growth rate has also plunged to seven per cent in 2025, versus 23 per cent in 2024 and 53 per cent in 2023, according to Plant's calculations. These startups 'have the capital, but their growth rates are lower than they should be,' he said.
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Only nine out of Canada's 27 unicorns scored above 90 per cent — the threshold that should, in theory, see the startups continue to raise major funds and allow them to get to an IPO, Plant said. These high-performing unicorns include the likes of AI enterprise platform Cohere Inc., AI hardware company TensTorrent (Canadian-founded but now U.S.-domiciled), quantum computing firm Xanadu Quantum Technologies, investment platform Wealthsimple Inc., and password manager 1Password.
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Canada is positioned second-last globally in terms of millions of dollars of funding per unicorn. The reason, Plant noted, is that 'there are too few high potential companies being produced in Canada.' While the lack of domestic funding has been a long-standing gripe of the tech sector, local capital is less relevant in late-stage unicorn funding because the amounts necessary aren't locally available: 'Unicorn funding is an international phenomenon, with the money going to the best companies no matter where they are,' Plant said.
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One bright spot is the competitiveness of Canada's scaleups. 'As a whole, and not including unicorns, (Canada's) health and clean-tech sectors are competitive with the U.S.,' Plant wrote.
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Canadian scaleups in these sectors have improved their scaleup rankings against American ones, outperforming their U.S. counterparts with two-year compound average growth rates in employment 'well in excess of U.S. results,' Plant found.
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Canada's computer tech scaleups fared slightly worse, with the sector's scaleup rank falling to 44.7 per cent from 48.8 per cent a year ago and recording lower growth relative to U.S. firms. Still, Canadian computer tech startups raised much more on average compared to other sectors, with its average raise more than doubling from the year prior to US$59.4 million.
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When it comes to taking out patents, Canadian scaleups far outrank American firms in every sector, yet Canada still lags the U.S. in scaling startups. Plant's conclusion? 'Taking out patents isn't the way to create a more competitive technology sector in Canada … despite the Canadian government's fixation on patents.'
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