International Trade Committee on Nov. 20th, 2024

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you, Madam Chair, and to the witnesses for being here.

I'll start my questions with Startup Canada. Thank you for being here.

One thing you mentioned in your opening address was that capital and access to capital are among the biggest challenges for women entrepreneurs, including start-ups.

The Canadian Venture Capital and Private Equity Association co-signed a letter with the Canadian Chamber of Commerce to the finance minister saying that the Liberals' proposed capital gains tax increase “sows division at a time when we need a Team Canada approach to economic growth.”

My question is, will the capital gains tax hike impact the start-ups you work with and their ability to access capital in order to grow and potentially export?

[Kayla Isabelle]

Absolutely. Thank you for that question.

I cannot say that I've heard from a single founder how the capital gains tax is going to benefit them. I think that's probably my answer.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Wow.

Do you have any sense as to a dollar figure for the lost opportunities that might result?

[Kayla Isabelle]

No. I think there's an overall fear. I think that, potentially, might be clouding what will become the actual net of it.

I don't think there was a concrete understanding as to why it was put into place and what benefit it was intending to serve. I can say unequivocally that all of the feedback we've received through our advocacy and programming has been concern about the capital gains tax.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

That's very impactful because you are definitely working with a lot of women entrepreneurs, are you not?

Recent calculations by renowned economist Jack Mintz show that the capital gains tax hike across all sectors will reduce Canada's GDP by $90 billion, real per capita GDP by three per cent, the capital stock by $127 billion and employment by 404,000.

Based on what you know, the work that you do and the women entrepreneurs whom you work with, will Canada be less competitive for talent, investment or capital in the global market because of the Liberal capital gains tax hike?

[Kayla Isabelle]

I think this sentiment around competitiveness and ensuring that we are not only maintaining Canadian companies, but also maintaining Canadian talent to feed into those incredible companies has been a topic of conversation for quite some time, before my time at Startup Canada. I think we are constantly losing incredible founders because of the environment and the perception of comfort with risk in Canada and the supports that I think a lot of founders perceive that we may not have.

To my point earlier, I think that access to capital is actually the challenge. It's not that there isn't money to access or support. To ensure that we have incredible businesses that are staying in Canada and growing and that we have more exits stay in Canada.... I'm sure that the capital gains tax will impact that, especially when we see our southern neighbour's very—I don't want to use the word "positive"—appealing tax environments.

I do think it's an important variable, but we need to be very serious if we want to be competitive and really wave our Canadian flag proudly internationally. We need to be looking at why so many Canadian companies are going to the U.S. and shifting from Waterloo to Silicon Valley and beyond.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

We are seeing a lot of businesses and entrepreneurs moving to the U.S. Are you hearing that as well?

[Kayla Isabelle]

I think that's been the case for quite a while; I don't think that's new. I think there's an appetite for risk in the U.S. that is higher. I think people think they can get bigger cheques in the U.S., that they can also stand on a larger podium.

When I do my international work across the EU, I don't think any of them could mention a Canadian founder if you asked them to name somebody successful. They would be able to provide an inventory of American entrepreneurs, but also may have thought that a Canadian founder was American, so we really need to do a job as a collective, the entire ecosystem, to proudly showcase Canadian innovation globally.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Based on your experience and the entrepreneur you work with, over the last nine years, has Canada become a more challenging country for entrepreneurs to access venture capital and private equity? Has the capital pool shrunk or grown?

As part of that as well—because we're almost out of time here—how much do you think cutting taxes as well as red tape and bureaucracy in the tax system would improve our economic growth?

[Kayla Isabelle]

I think red tape reduction needs to be a number one priority. We consistently hear that and have for years. When we talk about the overall capital pool, it's been very encouraging to see more women-led VCs enter the space. I can think of a handful. I know my colleague Sonya Shorey mentioned a number who partner with folks like SheBoot. That is an important part of the equation, women writing cheques to women-led ventures. We also need to see more male-led VCs writing larger cheques to Canadian women, being that champion and that ally with their purse strings and not just saying that they support women and have one on their leadership team.

[The Chair, Liberal, Judy Sgro]

I'm sorry. That's such valuable information, but I have to cut you off.

Terry, go ahead for five minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much to both presenters.

My first question is for Startup, Kayla.

We have a mutual friend, I believe, Nevin Buconjic from Sault Ste. Marie. He founded StartUP Sault Ste. Marie in 2012. He used to work for me at a small business enterprise and entrepreneurship centre that I ran. He has started a multitude of businesses and written a bunch of books. Right now he is working with his daughter, Hannah, and they wrote a book together. She's in elementary school. He and I have had opportunities to speak, and he really wants to push entrepreneurship for young people, in particular women, like his daughter.

What advice do you have for this committee for how the federal government could help get to young people? I know that education is a provincial matter, but perhaps there are things like start-ups that your business is doing.

[Kayla Isabelle]

Thank you so much for that question.

I'm a huge fan of Nevin. For anybody who's looking for a holiday stocking stuffer, his book that he developed with his daughter, Hannah, has a lot of different start-up ideas that any young person can create. That's definitely a great shout-out to their work.

When it comes to activating and inspiring young potential entrepreneurs, this has ebbed and flowed. I've been with Startup Canada for just over five years. When I started, entrepreneurship was what everybody wanted. You would see all of “overnight successes” pop up, and everybody wanted to be a founder, disrupting some type of space. Now, after going through the pandemic, after seeing how uncertain that type of lifestyle is and how much risk you're taking on, and after throwing in interest rates, economic uncertainty, global conflict and Canada Post strikes that impact thousands of small businesses right before Black Friday, many young potential aspiring entrepreneurs are seeing a lot of this noise and a realistic perspective on what it is to be a founder. You're shifting from nine-to-five work to 24-7 work, as they say.

We need to look at that risk appetite and ensure that folks can build businesses that are going to radically transform the future of Canada and the world. We need to bring in those perspectives and those ideas. We do need to be hopeful, but there is a pretty intense and difficult climate that they're navigating into. We also need them to understand that full risk before going all in, especially when it comes to women founders.

To Mr. Desjarlais' point of leveraging their own capital, women entrepreneurs are way less likely to take on debt, and they're more likely to use their own funding—their own chequing accounts and banking accounts. That comes with tremendous risk as well.

We need a full understanding of what entrepreneurship entails. We need a hopeful message. I'm a very glass-half-full person. There's so much potential in bringing these incredible ideas that come from academic institutions, from all across the country. The youth have the ideas that are going to change the future and the world that we live in, so we need to make sure that they're helping to build it.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Nevin also mentioned that, in his mind, because the unemployment rate is so low, people have jobs. When the unemployment rate is high, people make their own jobs. He was talking about the curriculum and some of the stuff that he's interested in.

We would also be interested in learning about networking and what kind of start-up networking you do that is helpful to women entrepreneurs, and about mentorship—women mentoring women in business. I know a lot about Futurpreneur, the federal program for 18- to 39-year-olds. It has helped over 18,000 entrepreneurs with over 14,000 business start-ups, and 44% of them are women entrepreneurs, which is a better number than it was years before. What can we do to get that number up higher, as well, if you don't mind?

[Kayla Isabelle]

I love that question.

As it pertains to networking, that is really our bread and butter at Startup Canada. It's providing access for these early-stage founders to the network of support that exists.

I think of programming that we do like our Startup Canada tour. We travel to a number of different destinations all across the country, from Whitehorse to Halifax, from Calgary to Brampton and to all of these different spaces. We create a physical environment where the support ecosystem partners and the private sector come to engage, as do early-stage founders and the governments. We engage all of the stakeholders involved in entrepreneurship.

If I have an emerging business and a great idea, then I can enter into this space and can find an incubation program. I can potentially find an angel investor if that's the right path for me. I can find the right government partner, once I'm ready for procurement.

We are trying to decrease the tension points in that access, because if you're a small business Googling “how to start my company”, you're going to get a whole bunch of different resources. Our tour is a way of really bringing that to life.

On the mentorship piece in particular, five years ago when I began at Startup Canada, there were a tremendous number of mentorship programs. That was where a tremendous amount of funding was going toward building more and more mentorship.

How do we actually focus on the mentorship programs that most meaningfully support women founders? I think of The Forum. It received WES funding, and it has an excellent mentorship program. Now, instead of building our own, we point to that and ask that it leverages this fantastic session and initiative for them, and then it gets better stats.

[The Chair, Liberal, Judy Sgro]

Thank you, very much.

I apologize for cutting you off.

[Kayla Isabelle]

I'm sorry, but I could talk about this all day.

[The Chair, Liberal, Judy Sgro]

You need to come back. You have a huge amount of information to share with us.

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Judy Sgro]

We'll go to Monsieur Savard-Tremblay for two and a half minutes, please.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Mrs. Isabelle, I'd like to ask you a quick question before moving on.

Are you also active in Quebec?

[Kayla Isabelle]

Yes, we are. In partnership, we've held our Startup Canada tour and some export programming specifically in Montreal.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Chair, there is no interpretation.

[Kayla Isabelle]

Yes, a little bit in Montreal—

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

You can start over in English. I want to make sure it works.