Canada’s innovation ecosystem has a scaling problem. It’s not a lack of ideas. It’s not a lack of funding. It’s a failure in product marketing.
That’s the view of Charles Plant, founder of the Narwhal Project and a long-time analyst of what it takes to build high-growth companies. Plant, who will headline the first day of ScaleUP Week 2025 on June 2 in Calgary with a keynote and panel discussion, has spent more than a decade studying why Canadian firms falter at the critical transition from startup to scaleup — and why few make it to the world stage.
“We don’t focus on, and are not strong in marketing and sales,” Plant says. While Canadian founders often focus heavily on product development, intellectual property, and R&D, he argues that too little attention is paid to what comes after the product exists.
“Every single company has a product,” he says. “All sorts of them have patents, but they’re all challenged at scaling.”
Scaling starts later than most people think
One of Plant’s core insights is that many companies attempt to scale too early. He draws a line between experimentation and execution. Most companies, he says, haven’t yet earned the right to scale when they think they have.
“When you’re about $50,000 [monthly recurring revenue], you’ve got an idea. You’ve proven you can get it to customers because there’s a basis of competition,” he explains. “From about $50,000 to $200,000, you’re figuring out if you have product market fit.”
True scaling, he says, doesn’t start until monthly revenue hits around $500,000 and the company has developed marketing efficiency, the ability to grow while earning a return for investors.
“Then you can raise a Series B round. Then you’re scaling,” he says.
“What I love is figuring out all those pieces of the formula: Do we have enough competitive differentiation? Can we achieve product-market fit? And can we get marketing efficiency? And then, boom.”
That formula, he says, is rarely followed in Canada.
A chronic underinvestment in marketing
Based on more than 40 research papers and the annual Narwhal List, which tracks the performance of Canadian scaleups, Plant has come to a stark conclusion: Canadian firms chronically underinvest in sales and marketing.
“They don’t hire the right people. They don’t spend enough money,” he says.
But the gap isn’t just in spending, it’s in capability. Specifically, Canada lacks strength in product marketing, the discipline focused on identifying the right market, positioning the product, and driving adoption. Without it, even strong technologies struggle to gain traction.
The data is consistent. Nine years ago, just over 200 companies in Canada had raised more than $10 million in capital — a proxy for scaleup potential. That number has grown to about 700 companies.
“We are doing better,” Plant says. “We aren’t doing nearly as well as we should.”
He points to StackAdapt as one of the rare exceptions. The company achieved massive growth with minimal outside capital. “They got to $300 million [revenue] on $4 million of [capital],” he says. “Just astounding success.”
Vertical markets limit potential
Another pattern he’s observed is that Canadian firms are often encouraged to go after vertical markets (highly specific industries) rather than broader, horizontal ones. The problem is that vertical markets often aren’t large enough to sustain long-term growth.
“The average horizontal market is seven times greater in size than the average vertical market,” Plant explains. “What happens is, eventually, your growth is going to stall in a market that’s too small.” He notes that Canadian investors frequently push founders in this direction, which can limit a company’s ability to eventually go public.
Plant believes market size — and the ability to capture even a small share of it — is central to success. “The average company only gets to 1% of its total addressable market by the time it goes public,” he says. “To create a public company, you need to be in a market that’s $20 billion a year. One per cent of that’s about $200 million. And that’ll make you go public.”
Founders need market insight, not just product
A further barrier comes from within founder teams themselves. Plant often sees companies started by people who lack domain experience in the industries they’re selling into.
“Some engineer is coming up with an idea for something, so they go out and do it, but they really don’t know why people buy what they buy in the industry they’re selling into,” he says.
Selling a new product, he argues, is fundamentally about changing customer behaviour — something that’s extremely difficult without a deep understanding of the market.
“You have to be an expert on the behaviour that you’re trying to change in order to be able to change it,” says Plant.
That’s behavioural economics, he adds. “It’s understanding the nature of that irrational behaviour that allows you to effect change in it.”
ScaleUP Week as a platform for data, not cheerleading
Plant’s keynote and panel at ScaleUP Week will offer more than frameworks. He plans to present new regional data on company performance, scaleup rates, and what distinguishes successful firms from the rest.
While the focus will be Western Canada, the implications are national.
“I’m using Western Canada as an example,” he says. “Here’s what I see that they could be doing more effectively.”
Edmonton, for instance, ranks first in Canada for two-year growth in scaleup employment — but near the bottom in average scaleup rank. “Their growth is great, but they’ve got some catching up to do.”
He’s also working on a new metric, which he plans to release in May, called scaleup efficiency. It blends growth and capital use into a single number he says is highly correlated with investor returns.
“Everybody has been focused for years on growth and lately they’ve been focused in on capital efficiency,” he says. “I’ve created a metric that combines those two that is highly correlated with investor success.”
For a country looking to create more globally competitive firms, Plant offers a blunt assessment and a clear call to action. “If we produced good companies, we’d have successes here,” he says. “Behind it all is the founders. The companies they create just are okay. They’re not great enough.”More information about ScaleUp Week 2025, including how to attend or participate, is available at scaleupweek.ca.
Digital Journal is the official media partner of ScaleUP Week 2025.
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