Debunking the myth that Canadians don’t take risks

Simon Leith had a pretty good thing going on Bay Street when he made the jump.

In 2019, after more than a decade deep inside Canada’s economic epicentre, first as an accountant at PwC, then practising corporate law at Osler, he tossed it all aside – the salary, the clout, the security – to buy Homepro Pest Control, ​a modest service business headquartered in Toronto.

“A lot of people asked me, ‘You quit your job to do what?’” he recalled. “It’s about as unsexy as it gets. But I was able to see opportunity.”

Leith had been drawn toward entrepreneurship for a long time. His years witnessing the brass-tacks realities experienced by companies of all types gave him a unique appreciation for the sorts of ventures that tend to stick around. The critter-conquering business seemed a smart bet. 

“It wasn’t a long shot that might become the next Shopify but also might amount to nothing,” he reasoned. “There was a real business there that generated cash, that would allow me to pay myself a salary.”

Even with a law degree and a CPA designation to fall back on, Leith’s acquisition of Homepro was anything but a safe play. At the time, he and his wife had a mortgage, a young child at home and a second on the way. And after the deal closed, he wasted no time aggressively expanding the business: thanks to a mix of acquisitions and organic growth, the company today has seven times as many employees, nearly tenfold the revenue and a much healthier bottom line than it did when he bought it ​​in 2019.

“And we’re still just getting started,” he said. “There’s so much more we want to do.”

Leith’s risks in scaling a business were – and remain – calculated and unglamorous, but they were risks all the same. So, spare him – and the thousands of other Canadian entrepreneurs with similar stories – the bromide that Canadians are overly cautious or, worse, that they lack ambition.

For years, many economists, pundits, investors and business leaders beat a steady drum: “Canadians need to take more risks.” “Our entrepreneurial class is too cautious.” “We need more companies charging after moonshots.” “We don’t start enough new companies to begin with, and when we do manage to get things off the ground, we’re lousy at scaling them to billion-dollar valuations.”

There’s truth in each of these arguments. But taken together, they feed a false narrative: that Canadian entrepreneurs are a bunch of overly prudent ditherers. That common line of thinking fundamentally misreads the drive and ambition inherent in most Canadian founders, experts say.

“The more I wrap my head around the data from very different vantage points, I’m not convinced Canada has a risk-appetite problem,” said Marwa Abdou, senior ​research director at the Business Data Lab, Canadian Chamber of Commerce. “The question, to me, is whether entrepreneurs have the financing, the market opportunities, the institutional environment and the personal buffers that allow them to actually take productive risks.”

Indeed, there is little concrete proof that Canadian entrepreneurs are innately or unusually uncomfortable with risk. ​​According to the most recent Global Entrepreneurship Monitor, some 21 per cent of Canadian adults, defined as 18 to 64 in the study, not currently engaged in entrepreneurial activity plan to start a business in the next three years, a proportion well above the North American average.

​​​Younger Canadians in particular – nearly 70 per cent of gen-Zers, by some counts – are overwhelmingly drawn to the idea of starting a business. Be Giant’s own Upstart Index – which polled more than 3,000 aspiring and early-stage entrepreneurs across the country – revealed both ambition and momentum in spades, with two-thirds of respondents saying they’d moved their business forward in recent months and nearly 80 per cent saying they’d continue growing their business even if they had access to a steady job. 

​​​You hear all the time that Canadian founders are not risk-takers and that nobody wants to go into entrepreneurship here, said​​ Fenton Jagdeo, Jr., a Toronto-based serial entrepreneur, innovation expert and investor. “That’s just not true. Canadians are taking risks. We’re just less performative about it.”

Consider the entrepreneurial phenomenon taking hold in garages, factories and hair salons from coast to coast. As a wave of baby boomer business owners hit retirement age, a flood of established and, often, profitable companies is changing hands. This transition – dubbed the “succession tsunami” by the Canadian Federation of Independent Business ​​– is set to transfer $2 trillion in business value in the next decade or so. It translates to $300 billion of revenue to be preserved and, ideally, grown by new owners in the next five years, according to the Business Development Bank of Canada.

As a result, a growing cadre of would-be magnates are choosing to acquire their way to an entrepreneurial empire. Many, like Leith, are shaking up the status quo in these so-called “boring” businesses – dry cleaners and laundromats, car washes, plumbing companies and self-storage among them – with ambitious growth plans, technological overhauls and process improvements.

Such situations are hardly playing it safe: ​​buying and growing a small business is just as risky as launching a startup, raising money and chasing a moonshot, said Jagdeo, who has done both and currently runs Boring Ventures, which acquires established businesses with growth potential.

The risks simply present differently, he explains: in introducing new technology to a team used to doing things a certain way; in ensuring key customers don’t bolt when the owner they’ve been dealing with for decades is out of the picture; in incentivizing valuable employees – especially those who sit on all the institutional knowledge – to stick around.

“We’ve somehow convinced ourselves that starting something from zero is more enticing, creative or courageous than buying an existing company,” he said. “I think that is total ​​​​​​​​bullshit.”

Broadening the conventional understanding of entrepreneurial risk to include different forms of business venturing – including acquisition, bootstrapping, even side hustles – isn’t simply a matter of semantics. There’s greater economic benefit in supporting a more varied understanding of what people put on the line when they’re growing a company.

Sometime over the past two decades – possibly when Mark Zuckerberg started talking about moving fast and breaking things or when “10x” became a verb – entrepreneurial impact became synonymous with exponentialism. And while there’s no denying that hypergrowth scale-ups can generate extraordinary returns and enormous economic spillovers, experts say their high-risk, high-reward trajectories shouldn’t be venerated as the entrepreneurial norm.

“Economies absolutely need firms that are willing to push technological frontiers, that are able to commercialize intellectual property, that are able to develop new products and that even create new markets,” Abdou said. “But an economy composed entirely of those moonshots would be a terrible economy.”

In her view, improving overall economic productivity in Canada will depend just as much on entrepreneurs taking on the risks of innovating and growing stalwart ventures as those betting big on buzzy scale-ups.

It will also take an ecosystem that incentivizes and supports a range of risks.

“Before we prescribe more courage, I would question whether we’re adequately rewarding the behaviour we’re asking entrepreneurs to undertake,” noted Abdou. “How do we build an economy in which more people have the capacity to take productive risks? Where successful experimentation is rewarded? Where we recognize that entrepreneurship can mean scaling and transforming businesses just as much as creating new ones?”

Here, experts contend there is room for improvement. While venture capital ​​​​spend is starting to rebound from a five-year slump, with a few small blips along the way, securing financing for chancy ventures of all stripes remains tricky for many Canadian entrepreneurs. The bureaucratic burden associated with taking risks – such as securing regulatory approval for a new product or applying for an innovation grant or even selling into new provinces – can be prohibitive and disproportionately affect smaller outfits.

The country’s tax policies rarely reward derring-do. And while policy-makers and power-wielders are working hard to create a more venture-friendly business climate, change is slower than many would like.

​​​We need a policy environment that really encourages experimentation, risk-taking and second chances, said Laure-Anna Bomal, senior economist at the Canadian Federation of Independent Business. “We have to keep in mind that if we’re not competitive enough, Canadian entrepreneurs willing to take risks will go somewhere else.”

None of this is to suggest Canada couldn’t use a few more Shopifys or Wealthsimples or Coheres. Nor that every up-and-comer with a brilliant idea should ditch it to buy a plumbing company. Rather, it is to underline that all kinds of Canadian entrepreneurs have far more experience with, and appetite for, risk than they’re given credit for – and more than the system they operate within is designed to accommodate.

This is the real problem, in Jagdeo’s view: “Not a deficit of ambition.”