Scale-up Activity in Ontario

Exploring the impact and growth of scale-ups in Ontario
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Scale-up Activity in Ontario

Illustration by: Karen Birkemoe

Annalise Huynh
Policy Analyst + Designer
Viet Vu
Economist

About this report

Ontario, and Canada more widely, are home to a vibrant entrepreneurial culture, yet many homegrown businesses face the challenge of becoming high-growth firms, or “scale-ups”.

This report maps and benchmarks scale-up activity in Ontario. Scale-ups are vital drivers of job creation and GDP growth in the province: revenue scale-ups generate $282 billion in business revenue and young employment scale-ups employ close to 10% of employees working for young companies. Using a new methodology, Scale-up Activity in Ontario helps policymakers and researchers understand where these scale-ups are, and their economic impact in Ontario.

Read this report to help you:
  • Identify, benchmark, and map Ontario’s scale-up activity.
  • Understand the industry characteristics of both employment- and revenue-based scale-up firms in Ontario.
  • Gain new insight into the size and impacts of scale-ups in Ontario.
  • Learn more about the differences in scale-up activity between Ontario’s census metropolitan areas (CMAs) and metropolitan areas in the US.

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Key findings from the report:

  • Between 2011 and 2015, Ontario gained 3,000 revenue-based scale-ups; an increase of over a third.
  • Together, Ontario’s revenue-based scale-ups generated revenue of $282 billion.
  • While scale-ups are concentrated in urban centres, they are driving growth in all corners of the province. London, Toronto, and Thunder Bay, for example, are producing scale-ups at levels proportional to their size.
  • Toronto stands out as a scale-up powerhouse. It has the highest number of revenue scale-ups per 10,000 residents (10,002), and scale-ups based in Toronto tend to employ more people and record higher revenue.
  • Some regions have experienced particularly strong growth (by rate of increase of revenue-based scale-ups): Muskoka-Kawarthas (59%), Kingston-Pembroke (54%), Windsor-Sarnia (48%), Kitchener-Waterloo-Barrie (43%), and the Hamilton-Niagara Peninsula (43%).
  • Scale-ups are expanding to encompass various industries across Ontario. Currently, 63% of revenue-based scale-ups span sectors such as: Finance, Insurance, and Real Estate, Construction, Wholesale Trade, and Professional, Scientific and Technical Services. 56% of employment-based scale-ups span across sectors such as Accommodation & Food Services, Retail Trade, Administrative Support, and Professional, Scientific, and Technical Services.

Methodology

This report drew on leading definitions of scale-ups, in particular those used in the Kauffman Foundation’s Index of Growth Entrepreneurship and by the Organization for Economic Cooperation and Development (OECD). Building from these sources, and drawing on available data, we developed a methodology that allowed us  to calculate metrics for Census Metropolitan Areas (CMAs) and economic regions (ERs) in Ontario, and produce a scale-up index at the ER level. To better understand scale-up characteristics, we also reported the industries with the highest number of scale-ups for each CMA and ER.

We worked with Statistics Canada’s Canadian Centre for Data Development and Economic Research (CDER) to obtain the data used in this report. This report relies on the National Accounts Longitudinal Microfiles (NALMF), which cover all registered Canadian businesses between 2003 and 2015.

Acknowledgements

This report was supported by the Government of Ontario.

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May 28, 2019

Taking a closer look at what scale ups are and why they matter to Ontario’s economy
Don’t Stop ‘Til You Scale Enough
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