Canada is seeing a wave of new businesses take flight as entrepreneurs look past the pandemic or take advantage of new consumer trends, a sign that confidence is returning to an economy that was badly damaged over the past year.

Entrepreneurship is picking up for several reasons. The pandemic has upended some business models, creating new opportunities. Laid-off workers are striking out on their own. Commercial rents have become much cheaper in many places. And some new companies are fully remote, allowing for big savings on office space.

The shift was apparent in Statistics Canada figures published on Monday. Nearly 17,000 new businesses opened in December that had at least one employee, the agency estimated. For a third consecutive month, that was stronger than precrisis norms: Between 2015 and 2019, a monthly average of 15,725 new businesses were created.

New-business openings tumbled last year as the pandemic hit, reaching a low point in May. Since then, the numbers have improved greatly, marked by strength in a broad range of industries. Statscan noted that new entrants were particularly strong in wholesale trade, transportation and warehousing, and technology.

Entrepreneurs will play a crucial role in the recovery. Small companies (with fewer than 100 employees) were more likely to shut down in the pandemic, and accounted for a disproportionate share of job losses last spring. That underlines the importance of business creation – and a bigger appetite for risk-taking – in getting the Canadian economy back on its feet.

Brianna Blaney of the Vancouver area was forced to adapt. When the pandemic hit, she was leading a startup that specialized in predictive hiring and retention software for restaurants and retailers – two of the industries most affected by COVID-19. Some clients wound up filing for bankruptcy.

“It was the final writing on the wall,” said Ms. Blaney, who stopped developing the software in September. “Cool idea, absolute wrong timing.”

Soon after, she co-founded Pocketed, a platform that helps entrepreneurs access grant funding. Within months, a small team hustled together a new product that a handful of young companies are now using. A beta version launches this week, with a broader Canadian rollout planned for later this year.

“It’s been a sprint, but it’s been a very rewarding sprint,” Ms. Blaney said.

The technology sector has been a standout over the past year. Statscan noted on Monday that business creation in professional, scientific and technical services held its own last spring, while much of the economy was in a tailspin. Today, employment in technology is stronger than when the health crisis started.

For tech-industry veterans Candice Faktor and Chris Sukornyk, the process of starting a business was remarkably different in a pandemic.

Normally, they would have flown around the continent to pitch investors over several months, with maybe two or three meetings in a day. This time, the process took less than four weeks, with as many as eight pitches a day on Zoom. “It was so efficient and effective, for both the investors and for us,” Ms. Faktor said.

The result is Disco Inc., a live course-teaching platform they recently launched with US$4.75-million in early-stage venture financing. Furthermore, they pulled it off with Ms. Faktor in Toronto and Mr. Sukornyk in Costa Rica, where he moved five years ago. The plan is to build their company with a remote work force.

“We just did our funding announcement and I have all sorts of real estate people reaching out to me, asking if I’m interested in downtown real estate,” Mr. Sukornyk said. “And the answer is no.”

The commercial real estate industry has undoubtedly struggled in the pandemic. Vacancy rates have increased in major centres as retailers closed for good, while some companies have looked to downsize their office space permanently.

“The good news is that [commercial] space is still leasing, but it’s not at the same pace” as before the pandemic, said Ray Wong, vice-president of data operations at Altus Group.

Still, some companies need space, and they’re finding more options, along with potential deals. That includes restaurants, despite an exceptionally tough year. Around 750 new hospitality businesses were created in December, about even with February, 2020, Statscan said. More than 1,000 were opened in October.

After getting laid off, Myles Harrison and Joachim Hayward opened Crosley’s in Toronto in January. The restaurant is still unable to serve in-seat diners owing to health restrictions, but to get established, they’re selling four-course takeout meals, along with wine and provisions.

As the pandemic wanes, Crosley’s will need to ramp up hiring – by a lot. At the moment, three people keep it running. Once it’s fully operational, Mr. Harrison could see that number hitting 30. “My personal life is non-existent right now,” he said, with 14-hour work days being typical.

Situations like that bode well for the recovery. Job losses are highly concentrated in industries that, like restaurants, are closely tied to public-health measures.

Still, the labour recovery also hinges on the health of older businesses. Despite all the newcomers, the number of active businesses was still 3.6 per cent lower in December than in February, 2020. The hospitality and tourism industries are grappling with the largest drops, Statscan data show.

MATT LUNDY
ECONOMICS REPORTER
The Globe and Mail, March 29, 2021