6,  March 2024

Entrepreneurship is strong in Canada.

The latest report on entrepreneurship is just out and Canada looks very good. The report, by the Global Entrepreneurship Monitor (GEM) (Ref 1), is the largest study of entrepreneurship in the world and measures entrepreneurship in forty-six countries.

What does the population think about entrepreneurs?

Canadians have a positive attitude towards entrepreneurs. 52% know someone who has started a new business in the last two years, 63% see good opportunities to start a business where they live, and 57% believe they have the skills and experience needed to start a business. 14% say they plan to start a business in the next three years. 64% say it is easy to start a business in Canada.

It is interesting to compare some of these numbers with the US. For instance, in the US only 54% see good opportunities to start a business (compared with 63% in Canada) and 56% say it is easy to start a business *(compared with 64% in Canada).

However, 55% of those who see an opportunity to start a business would not do so because of a fear of failure. In the US only 45%. Canadians fear of failure is among the highest in the rich countries.

What motivates entrepreneurs to start a business?

As you might expect, people have many reasons for starting a business. 62% of entrepreneurs say they started their business to make a difference in the world, 69% said it was to build great wealth or a very high income, 42% said it was to continue a family tradition, and 67% to earn a living because jobs were scarce.

These numbers are quite similar to the US numbers. Slightly fewer entrepreneurs in the US start a business to continue a family tradition, and fewer start business because jobs were scarce.

What about the level of entrepreneurship?

GEM measures the level of entrepreneurship by combining those who are actively planning to start a business, together with those running a business less than three years old. This is called the Total early-stage entrepreneurship rate. (TEA). Canada’s TEA rate is very high, at 20% of the adult population. That is much higher than the US TEA rate that is 15%. Over the last decade the US and Canada have flipped TEA rates several times – sometimes the US is ahead, sometimes Canada.

Canada’s TEA rate has steadily increased over the last decade, as shown in the figure below. The reason for the increase is not well understood.

GEM also measures the level of Established Businesses, those more than three and a half years old. This is measured as the percentage of the adult population who are currently owner-managers of an Established Business. The level of Established Businesses in Canada is 8%, slightly higher than the US with 7%. The level of Established businesses in Canada has declined in the last decade. See the figure below.

This is a puzzling result, as you might expect that the number of Established Businesses would increase as the level of TEA increased (as happens in the US). The explanation lies in the difficulty that Canadian entrepreneurs have in growing their businesses to a viable size, likely the well-known scale up problem in Canada.

Different definitions of entrepreneurship.

The two images above illustrate two different definitions of entrepreneurship. GEM defines entrepreneurship as being related to startups. The Business Development Bank of Canada defines entrepreneurship as being related to the number of existing businesses, similar to GEM’s Established Businesses (Ref 2.). So, according to the GEM definition, entrepreneurship has increased in the last decade, while according to the BDC definition entrepreneurship has decreased. Neither is right or wrong, but it reveals the complexity of the entrepreneurship process and the importance of clarifying the definition you are using.

What kinds of business do entrepreneurs start?

GEM classifies business in four categories – business-oriented services, consumer-oriented services, extractive sector (mining, oil and gas & agriculture) and transformative (manufacturing.) In most countries consumer-oriented services represent a majority of all new businesses. Canada is no exception, as 53% of new businesses fall into this category. Business-oriented services represent 30% of new businesses. These are often higher value services, requiring specialized skills and knowledge. Manufacturing represents 16% of startups, and extractive industries only 2%.


The Canadian population is supportive of entrepreneurship. Startups are doing well in Canada but struggle to convert themselves into Established businesses. The rate of startups has increased in the last decade while Established Businesses have declined. The reasons for these trends are not well understood. Most new businesses are for consumer-oriented services and business-oriented services.

This report highlights the need to pay more attention to helping startups scale up.

Peter Josty


Ref 1. GEM Global Report www.gemconsortium.org

Ref 2. Entrepreneurship in Motion: Skills to Succeed in a Changing World, Business Development Bank, October 2023. https://www.bdc.ca/en/about/analysis-research/entrepreneurship-skills