Artwork by Naomi Kim

Rural communities hold the unofficial title of being the backbone of the Canadian economy—boasting a superior per capita number of Small & Medium Enterprises (SMEs) compared to the national average. More surprisingly, Canada’s top entrepreneurial city is Whitehorse, Yukon, with a population of only 42,000. The unintuitive yet undeniable entrepreneurial success of rural regions is much more fitting of another name entirely: ‘alternative’ startup ecosystems. How is it possible that these alternative ecosystems can outperform sprawling urban cities—which generally provide greater access to capital, resources, and customers? 

When put in the context of an entrepreneur’s individual journey, this question is answered by the myriad and distinct ways alternative startup ecosystems appeal to aspiring entrepreneurs. There is something to be gained in examining Canada’s three most notable alternative regions—and perhaps these insights might reveal what entrepreneurs truly value most.

The Northwest: Promising Markets 

The territories offer a strong example of how important the right market is for the success of a start-up. To create a successful business, one needs the ingenuity to discover and hone in on their niche while understanding the surrounding environment and competition. Accomplishing this in a fast-paced densely populated city can be a difficult task. In rural regions such as Whitehorse, underserved markets coupled with an unsaturated business landscape make establishing a successful business far more accessible. The key is to identify what the community is missing and how one can fill the gap; rural communities often face similar conditions, creating cohesive community needs. One notable entrepreneur who has thrived in an alternative startup ecosystem is Raman Grewal, owner and operator of Whitehorse Subaru and Kia and Rent-A-Wreck. 

Upon moving to Yukon, Raman was determined to establish a stable venture that would provide for his family. After pinpointing which auto businesses were missing in Yukon, he settled on a Subaru car dealership. At the time, Subaru was the only company that offered smaller all-wheel drive vehicles. With the extreme winter weather conditions Yukon faces, access to reasonable all-wheel drive vehicles was a big selling point for those on a budget or with few cargo requirements. Raman was motivated to continually grow the business to avoid stagnation, so he researched other car brands that he could incorporate in his dealership to better serve the full range of his niche, namely very low-budget car-seekers. He settled on Kia after discovering how affordable the cars were. He recognized that while the target market of both car brands were similar, they would mutually add value through a line extension rather than cannibalizing car sales. Moreover, Raman offered car rental services for tourists, generating additional cash flows from used vehicles that would otherwise sit on the lot—settling on Rent-A-Wreck as his partner of choice. 

Raman’s achievements are a testament to the possibilities the promising markets of the Northwest region offer. Diligent and methodical analysis of the market allows the entrepreneur to offer community-focused products that overcome the gaps that perpetuate underserved industries. Raman’s approach also underlines the less-common entrepreneurial approach of starting small. Often, aspiring entrepreneurs utilize a large-to-small model, seeking to engage in massive markets with hefty competitors. Raman thrived in part by following the inverse path—he successfully asserted control over a specific category within the all-wheel drive vehicle industry, then moved to further perfect his catalogue upon initial concrete progress. Resourceful entrepreneurs with a passion for growing markets will very likely thrive in the promising markets of the Northwest region. 

Atlantic Canada: Broadening Talent Pools

While the Atlantic’s rural areas offer similar advantages in finding an ideal market, it also highlights an area where there is strong talent and population growth. This is attributable to a large university presence, favourable immigration policies, and growing job opportunities. Since 2011, the tech-driven region has garnered over $1 billion in investments with around 100 companies founded every year, creating more than 6000 direct jobs.  Additionally, there have been major tech acquisitions made by industry giants such as Salesforce, IBM, or Nasdaq—all of which have kept the headquarters of their newly acquired firms in Atlantic Canada, and helped to develop the ecosystem by means such as investing in local universities. For a tech-driven economy such as the Atlantic, Newfoundland provides an excellent local talent pool with the second-highest percentage in Canada of STEM graduates that are between 24 and 34 years of age. Nova Scotia also possesses the most graduates per capita in Canada from physical science, engineering, applied science, and mathematics. A major aspect of a new business is undoubtedly recruiting skilled and knowledgeable workers who will act as assets to the business. Located in Dartmouth, Nova Scotia, SimplyCast is an example of a company that has leveraged the human capital that the Atlantic has to offer to propel their business. 

SimplyCast is a marketing automation software that gathers customer data and enables businesses to deliver personally-targeted campaigns. When SimplyCast was first created, the founders were told that the talent and money needed to become successful were not found in Nova Scotia. However, SimplyCast was determined to work alongside neighboring universities to create scholarships and co-op opportunities. Recently, SimplyCast set a goal to hire up to 100 students to help them gain experience and receive mentorship. This was made possible by the credits offered by the Nova Scotia provincial government, resulting in one of the lowest operating expenses for digital services in North America. These credits include a digital media tax credit which comprises labour remuneration and marketing costs. Additionally, the rebate program allowed the company to have a payroll allowance lasting from 2010-2015, enabling them to save up to $1,008,000. SimplyCast was also able to acquire investors from family, friends, and individuals around Nova Scotia to grow the venture, later securing a global stance by gaining international resellers. This ongoing support from the community and the government created a welcoming and safe space for SimplyCast to grow and expand, now working with Dalhousie University, the Nova Scotia Department of Labour and Advanced Education, and the Information and Communication Technology Council.

The Atlantic provides a blueprint of success for other rural areas as a highly collaborative ecosystem between companies, universities, government, and investors. The stakeholders work to ensure the human capital, social and financial resources are available to propel new companies forward. With workers seeking lower cost of living and higher quality of life in coastal towns, the talent pool in particular has only increased in this region. For startups looking to set roots in a resource-rich ecosystem with fewer competitors to rival than in urban areas, Atlantic Canada is an excellent choice. 

The Prairies: Fueling Innovation

The Prairie provinces of Alberta, Manitoba, and Saskatchewan have long been the frontier of Canadian entrepreneurship and socio-political movements. Through necessity, generations of Prairie entrepreneurs have developed a forward-thinking culture. Given the need for economic diversification in the region, various government initiatives working with nonprofits have created numerous programs offering funding and mentorship. Saskatchewan-based nonprofit has incubated over 122 tech startups, creating over 300 jobs, and their Co.Lead program offers new founders seminars, office hours, and coworking opportunities with experienced local founders. Likewise,  has supported investments totaling $280 million, creating 3000+ new jobs, while also connecting new founders with their networks of experienced local C-suite executives and industry experts. In the Prairies’ economic centre of Alberta, female entrepreneurs thrive, with notable Calgary natives Arlene Dickinson and Manjit Minhas taking their business success to the show Dragon’s Den. The province leads in the percentage of female tech startup founders nationwide, with 30% of the province’s tech startups founded or co-founded by women. Referencing the female 51% of Canada’s population, The 51, a national investment platform to encourage women to find access to capital, was founded in Calgary. With recent initiatives such as an additional $3.18 million in top-up funding for Women Entrepreneurship Strategy Ecosystem Fund recipients in the Prairies, the area provides both the funding and mentorship needed for success. 

Similarly, Accelerate Fundis an organization that provides an alternative financing source to start-ups all across Alberta by using capital from the Alberta Enterprise Corporation, working alongside the Alberta Government. By focusing on funding early-stage technology companies that have not yet reached the venture capital funding stage, the fund incentives innovation and diversification. Capitalizing on the local tech entrepreneur community, the fund also offers support from A100, a nonprofit organization supporting a wide range of Alberta accelerators and organizations with mentorship and personal support. One business in particular that has benefited from this program is mcThings, located in the small town of Cochrane. mcThings is a tech company that provides businesses with access to products that solve problems in an easily manageable, affordable, and scalable way. This includes multi-sensor devices and switches, sensor upgrades, and long range network devices. mcThings was given Accelerate Fund II which is an “early stage co-investment fund”. This means that Accelerate Fund co-invests alongside angel investors during financing rounds – typically investing about half a million dollars. The angel investors range from angel groups, super-angels, and individual angel investors to family funds. With the support from Accelerate Fund, companies like mcThings have gone on to grow, now in the later stages of venture capital funding. For prospective entrepreneurs seeking support, the opportunities in the Prairies will enable them to gain momentum in their journey.

The Challenge

Entrepreneurial success is granted to those who demonstrate tenacity and resourcefulness. Make no mistake—despite the crucial advantages these ‘alternative’ startup ecosystems offer, they are far from a free ride. The onus remains on the entrepreneur: those that seize their destinies and overcome any barriers in their way. That is why their stories are celebrated.

The unique regional downsides to rural locations are numerous. In the Northwest, supply chains are lengthy, expensive, and complex, making thoughtful inventory management paramount. With respect to the auto industry in particular, dealerships located in urban cities collaborate with each other to fulfill specific customer demands in what is known as a ‘dealer trade’—in B.C., a Surrey Subaru might trade cars with a Richmond Subaru to satisfy a customer inquiry for a specific make or model. This is not an option for Whitehorse Subaru and Kia. In Atlantic Canada, the demographic makeup is rapidly aging, with escalating healthcare demands and a decreasing tax base creating financial strain for working age-groups. It is currently unclear if this effect will outweigh the strong talent pipeline and immigration policies the Maritimes offer. And in the Prairies, the oil crash that left Alberta’s economy 8.3% smaller in 2020 has had resounding effects on businesses, big and small. The Prairies’ uneven demographic and economic transition also leaves the future uncertain for start-up owners: for instance, Manitoba’s southwest rural communities are both aging and declining in population. The implications of demography—coupled with an accelerating shift from agriculture to wholesale, retail, and manufacturing—carry huge weight for those entrepreneurs that must navigate such murky waters. 

The challenges have been loosely defined. How can we manage inventory to maximize value to our customers and avoid passing on freight fees? How can we leverage a strong talent pool to attract (and bring home) the best human capital? And how can we lead the Prairies out of such uncertain times with brilliant, innovative, and competitive offerings? These questions are not unanswerable; indeed, it is in the entrepreneur’s job description to overcome them. Not only that, but they have done it before—with the numerous unexpected challenges of COVID-19, entrepreneurs are more prepared than ever to conquer a post-pandemic digital world.

Conclusion

The ‘alternative’ startup ecosystems discussed earlier do not only represent what rural Canada offers to the commercial world. They each illuminate crucial entrepreneurial catalysts and geo-specific attributes which unlock huge startup potential: from ideal competitive landscapes and strong local talent pipelines, to supportive and accessible startup finance. These alternative regions challenge the traditional association between mega-cities and entrepreneurial dominance—evidently, success stories from rural Canada demonstrate the more-than-competitive status of these regions. With careful stewardship and savvy management, aspiring entrepreneurs can look to alternative ecosystems as an ideal location to set their roots, provide for their communities, and shape the future.