THE SCALE-UP GAP: A BLUEPRINT FOR ICT FIRM GROWTH Final Report Sarah 16170 Ravine Way, Ot Phone: (63) 851-7901 {malt dale@snowicous con March 31,2016Table of Contents Execute Summary ie ee ier d Le ItOduton sn vnvonnennnnnnnrnn vn s 12 objective : ee 6 412 Methodology sssnsovvnvsnvnennnncnne IIIs 2 KeyFindngs- CT Fem Opportunities and Chalengesin Sel nnn 2. Financing : = : sve 2.1.1 Startup Stage through Sed Fnac eA 2.1.2 Growth tage through Venture Capital Financing nsssnsvnnsnnnnnsvnnsnnnnee 3 2.13 Expansion tage through Debt and Public Markets. a3 22.6rowing Revenues sennnnnnd 2BTReM onnnnnmnnonnnvnnnnnn von 23:1 ~ ss so 23.2 immigration — cn? 2.4 Mentorship ani Leadership wn sn 25 Government Programs Leveraged to Support GOW nnn vd 3. A BIutpin forIT Fim Growth nnn snd 1. Canads's Top 48 Technology Companies A Nationa cle Up Program swsunsnnnnnnnnedT 2. Create a Notionol CT Business Leodershp Count ann 28 3. ncrease Access to Sle Immigrant Talent. —) 4 Support the Development of Business Sls (Le marketing and Sle) nn 23 5. Focus investment 10 Support Growth nnn vo 30 5.1 Seed investment -A Nationa Angel TX Ce re 3D 5.2 Venture Captal-ACanada/US VC NetWoth nnn 3 15.3 Cedi Facies increasing Risk Tolerance and Encouraging Competition 31 5:4 Pub Markets Implement 3 rational secures regulator and evaluate erowalunding model {or equity investing oe 32 6 Developing an innvaton/industil strategy. 7 33 6: Peer Review Reseach Aligning Publi an Private SectoFnvesment in MnOvaiON. in 38 1:2 Colaboratve Research -Trptng Technology based Colaberative Research. rs 6.3 Industri Research: Rethinking SRBED rane 34 8 Coelho nnn : 26 ‘anes A-Intenew Questions vn vn 38 ‘Annex Biography, : ae 1iPaeeExecutive Summary Canada has one ofthe Organization for Economic Cooperation and Development's (OECD) highest rates of new busines entry and produces a greater proportion of young five years or less) high growth fms. ‘sa country, Canada has developed an excellent ecosystem to suppor the cretion oftartups, tates lke Startup Canada and the groath of cubator and accelerators have allonrbuted toa trong tty cature. However, 35 Canada's high growth firms age, their performance slows and they fl to thrive ‘Aecording to OECD rankings, Canada i near the bottom forthe number of high growth fms over years of ge. The challange I that startups are not scaling and becoming strong sustainable midsized compari. Further to this, 22013 Business Development Sank of Canad (80) stud dented that Canadian mi sited fms ate esappearig, From 2006 to 2010, the number of Canadian mid-sied fms decreased by 17% (fom 9,370 to 7814) In ation, midsized companies are having challenges growing into large ‘ums due to ere competion, avalibilty of francing and challenges attracting and retaining alent. ‘This challenge isnot unique to Canad Europe, Japan and the US ae al focused onthe challenges of scaling. up thet startups to sustainable midsted companies. Supporting startups Ie relatively straightforward and can largely be done through mentorship and classroom syle traning for common ‘startup challenges. Supporting 2 company to scale up however is very ferent and presets 2 challenge 2s each fms uigueinits business propstion stat of matty and objectives for growth, Any solution for scaling up a frm needs tobe highly customized and mentorsip/coaching requires "justin time” approach. In shot, sale up inatives are far more resource intensive than startup iniates, Innovation Science and Economie Development Department (SED) retained Snowy Cloud nc. to develop 2 blueprint for scaling ICT frm growth Ths research study combines Interviews of leaders from technology associations, accelerator programs and business, with pevous studs that Srowy Cloud has conducted on high growth fms, interoationalzation, suit talent, and mapping the stages offer rom, Participants were asked to dently and discuss the assets and bares that support andor hinder the scaling p of afm. 's important to ote that fm growth isnot neat nor uniform. Mos ofthe inervewees ae proving scaling Support services to rms pos-artup and at inflection pont. These inflection points are defined as significant transition period In business growth and are expressed in ~ terms ofboth revenue and employee headcount (ee Figur 2), 21Paee