For all the hype around startups, Canada is still stuck at the kiddie table.
We cheer for funding rounds and celebrate incubators. But when it comes to building global-scale businesses, the kind that drive productivity, exports, and serious economic impact, we’re falling behind.
That’s the uncomfortable truth that opened ScaleUp Week 2025.
Ross Prusakowski, deputy chief economist at Export Development Canada, didn’t mince words when he said the country is likely in a recession, crushed by interest rate sensitivity, sluggish productivity, and the chaos of global trade.
And Charles Plant, founder of The Narwhal Project, took aim at the scale-up system itself, calling out Canada’s tendency to build small, aim local, and delay the kind of aggressive growth that turns good companies into great ones.
Their messages converged on one theme: Canada’s problem is more about mindset than it is capital.
And unless that changes, we’ll keep producing promising startups… and watching them stall before they ever reach scale.
That urgency is amplified by the unstable global environment. As Prusakowski noted, the volatility in U.S. trade policy, especially under the current Trump administration, makes long-term planning nearly impossible for Canadian exporters.
“There’s a term now being used by the Financial Times,” he said. “TACO. Trump Always Chickens Out.”
The acronym may be tongue-in-cheek, but the implications are not.
As Prusakowski explained, tariffs and trade restrictions have shifted week to week, and Canadian companies are left to adapt.
“What we’ve seen since then is… more continued uncertainty around President Trump’s actions,” he said. “What happens in the world, and in particular south of the border… really does impact us in a pretty big way.”
A fragile foundation
With the Bank of Canada aggressively cutting rates while the U.S. holds firm, the policy gap is the widest it’s been since the late 1990s.
“Canadians are much more sensitive to interest rate movements,” said Prusakowski. “Our economy cannot handle high interest rates.”
Add to that a rising wave of tariffs, tightening export rules, a consumer sector already cautious from pandemic savings and debt rollover, and the near-term outlook dims further.
“There’s a lot I’ve talked about in terms of the challenges,” Prusakowski noted. “But we are likely, as I said, in a recession currently.”
He pointed to a long-standing drag on national productivity: underinvestment in machinery, equipment, and technology.
For 25 years, Canadian businesses have overwhelmingly chosen to hire more people rather than improve their capital stock. The result is flat productivity and a workforce stretched thin.
To illustrate Canada’s productivity challenge, Prusakowski used an analogy.
Rather than investing in better tools, like a snow blower or a truck, Canadian businesses too often opt to hire more people and hand them snow shovels. This leaves us with a workforce doing more with less while productivity lags behind international peers.
We build small
If Prusakowski’s keynote set the economic context, Charles Plant’s talk took aim at the cultural and structural barriers preventing Canadian firms from scaling.
“Canada does not grow large firms. We are a country of mid-sized companies,” Plant told the audience. “Large companies are, by nature, more productive. They have higher revenue per hour worked than small companies, and the more big companies you have, the more productive you are.”
Plant’s research, through years of company data and The Narwhal List — which ranks Canadian tech companies raising over $10 million based on capital, team growth, and scale — points to a recurring pattern of too many Canadian startups aiming too small. They enter niche, vertical B2B markets, focus heavily on R&D, and are encouraged to grow slowly and locally.
That’s the wrong playbook, Plant argues.
“If you’ve got a small market, you’ve got a generation to get to the market. You’ve got a large market, the same thing,” he said. “Where is your growth going to be? It’s where the curve ticks up in the larger markets.”
And yet, only 30% of scale-ups in Western Canada serve horizontal markets, those with broader applicability and more room to grow. Worse, only 6% serve consumer markets, despite these being five to seven times larger than their B2B counterparts.
Then there’s the issue of where founders choose to sell.
“Canada is 2% of the world’s market. Who cares if you have 50% of 2%? Nobody cares,” Plant said, adding that starting with Canadian customers limits both pace and potential.
It’s not the money, it’s the mindset
Founders often blame capital gaps for stalled growth, but Plant pushed back.
“If we create better companies, the capital will follow,” he said. “It’s the company that comes first, not the capital.”
The companies that do break through — those who raise early, go global, and prioritize sales and marketing — are exceptions that prove the rule. But the broader system still rewards incremental progress, not ambition.
He pulled no punches when reflecting on the support ecosystem around Canadian startups.
“We are amateurs,” said Plant. “We aren’t professionals. We’re treating this like amateurs. We’re not playing Moneyball.”
In a previous interview with Digital Journal, Plant made the same point.
“Our support infrastructure — whether it’s accelerators, incubators, or investors — isn’t aligned around building large companies,” he said. “Everyone is well-meaning, but we lack shared metrics, a common playbook, and long-term thinking.”
Read more: Why Canada struggles to scale and what Charles Plant wants founders to know
A new scale-up strategy
So what needs to change?
Both speakers had ideas. For Prusakowski, boosting productivity means addressing capital investment gaps and regulatory burdens. For Plant, the fix starts even earlier, with how we define ambition and success in Canada.
“We need to start companies globally, not locally,” said Plant. “Startups need to go after bigger markets. Both startups and scaleups must spend more on marketing and sales.”
And just as importantly, founders need the right team around them. His research found that 38% of Western Canadian scaleups had no senior sales or marketing leader. The impact was stark. Those with such leaders grew 229% faster.
At a moment when Canada’s economic outlook is in question and its innovation investments are under scrutiny, the message from day one of ScaleUp Week was to stop building for survival and start building for scale.
“If you’re willing to innovate and invest, there could be some short-term challenges,” Prusakowski said. “But we can put ourselves in a much better place going forward.”
Digital Journal is the official media partner of ScaleUP Week 2025.
This coverage is supported by the Calgary Innovation Coalition (CIC), a network of 95+ organizations working to accelerate innovation and entrepreneurship across the Calgary region.
This article was created with the assistance of AI. Learn more about our AI ethics policy here.
