Financing Canadian Startups

Filed in archive Startup on July 28, 2006

Solo-entrepreneurs often get started with $5,000 of self-funding and never employ anyone other than themselves. Whereas, many of the startups I see typically use an average of $50,000-$250,000 to start their business. The majority self fund from savings, corporate assets, or self-directed RRSP's and the remaining will use Banks and other financial institutions.

For example, research shows that 49% of the small- and medium-sized businesses in Canada rely on banks and other financial institutions to provide them with business debt financing (whether for start-up, expansion or ongoing funding). Other sources of financing include:

• retained earnings (31%)


• supplier credit (39%)


• personal savings (35%)


• personal lines of credit (37%)


• personal credit cards (33%)


• leasing (16%)


• personal loans (14%)


• business credit cards (26%)


• government lending agencies/grants (7%)


• loans from employees, friends and relatives (10%)


• non-related private loans (5%)


• public equity (2%)


• venture capital (2%)*


• * Angel Investment = 4% according to Statistics Canada Survey 2000. Venture Capital = 1% according to Statistics Canada, Survey of Suppliers of business financing, 2002.

Source: Statistics Canada, Survey of Financing of Small- and Medium-Sized Businesses, 2002.