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Fewer Canadian tech startups selling out?

Jennifer Kwan
Fin - Dashboard - CA

Fewer Canadian technology startup companies are looking for buyers in order to exit the market, choosing instead to find ways to reach their next growth stage and generate revenue domestically.

Some 44 per cent of startups polled are looking for a merger or acquisition to exit the market, a steep drop from 76 per cent in the prior year, according to a PwC report released this week titled Emerging Canadian Technology Companies: A CEO Perspective. The survey polled 200 chief executives in February and April, and those findings reflect their strategies for 2012 and 2011, respectively.

The survey shows 21 per cent of respondents anticipate a partial sale of the company, while 30 per cent have no plans to exit at all.

As well, CEOs say they are staying put because more than one-third reported their companies had reached profitability, while another 28 per cent expect to do so within one year. Some 26 per cent expect to do so within two years, the report shows.

Eugene Bomba, national emerging company services leader at PwC, said the findings point to a friendly climate that will help companies grow their revenue in Canada where prospects for profits are high.

The report shows that seven in 10 respondents generate most of their revenue in Canada, but also suggests uncertainty remains. Startup leaders noted revenue generation, 41 per cent, and funding, 19 per cent, as the biggest concerns over the next 12 months. That's ahead of attracting and retaining talent at 11 per cent.

“The outlook is positive for Canadian startups, but it is crucial that CEOs not rest on their laurels,” says Chris Dulny, PwC’s national technology sector leader.

The survey also found that nearly two-thirds of respondents rely mostly on private funding from family and friends. Government funding also plays a key role, with 50 per cent tapping at least one government source. The survey also highlighted women make up 27 per cent of the startup workforce and 24 per cent of management teams.