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Startups, here’s how you can prepare to combat an economic downturn

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Startups, here’s how you can prepare to combat an economic downturn

A blueprint to super-proof your startup and protect against economic instability.

With record-high inflation, wars overseas and rising interest rates, experts are telling Canadians to brace for an economic downturn and warning signs are starting to trickle to the startup and innovation economy, which can affect in a multitude of ways.

Over the last year, Canada’s tech ecosystem showed explosive growth – in fact – a recent BDC VC report showed that Canada had a record year for venture capital, breaking records by almost every metric.

While some in the startup ecosystem are sounding their warning bells, like Silicon Valley-based Y-Combinator, the industry is still positioned to continue its growth. Is it always going to be clear sailing? No. But what we’re seeing is not a halt to our momentum but rather a course correction.

It’s second nature for startups to pivot and change their mindsets to focus on the opportunities at hand. Just look at Uber, Pinterest and Whatsapp, all household names that came out of the 2008-2009 recession!

We’re here to make sure that founders stay resilient, agile and are prepared to bear the punches that may come their way.

iPad screen with stock market metrics - Economic downturn blog

So what can you do to start planning ahead and super-proof your business? We’re glad you asked.

1. Leverage liquidity.

Finding the right liquidity balance for your business can not only help you gain insight into if you have enough cash to pay off your short-term liabilities. but also allows you to set yourself up for strategic growth. Having enough cash on hand is important to meet financial obligations, but holding onto too much cash might leave important investment and growth opportunities on the table. Finding the right balance will ensure long-term stability and provides a good first impression when looking to secure a loan or other funding.

2. Budgeting, budgeting, budgeting.

This goes without saying, but take a moment to sit down and understand exactly where your money is going and where your main sources of revenue are coming from. Getting a thorough understanding of finances will help make tough decisions – if need be – quickly and effectively.

3. Lock in longer commitments.

Focusing on closing longer commitments such as subscriptions or multi-year agreements with customer, partnerships and client can ensure financial security in uncertain circumstances. Recession or not, this is a great tip for any startup that is looking to extend its runway and demonstrate loyalty to customers and partners.

4. Cut costs.

It’s only natural to turn to cost-cutting measures but it’s important to remember one thing – cutting costs does not mean you need to let go of talent. Cutting costs means reevaluating your spending to axe unnecessary costs. Create plans for different levels of financial scarcity to work for different scenarios the ecosystem throws at you.

5. Back-up business plans are your best bet.

This is similar to the last point, but apply it to your entire business plan. Your best bet in preparing for the unknown is to create multiple overarching plans that fit a range of realistic possibilities. These plans should include securing funding as planned, securing a smaller amount and not being able to secure funding at all. Look at other forms of funding as alternatives, whether it be grants, crowdfunding, bank loans or support from family and friends.

Workers having a meeting - Economic downturn blog

Want to learn more about how you can solidify your contingency plans? Apply to a DMZ program here.

Breaking $1 billion in funding: DMZ startups reach a major milestone

DMZ’s startups and alumni have raised over $1 billion CAD in funding


Note: All figures are reported in Canadian dollars.


DMZ companies have officially surpassed $1 billion in total funding raised. While the DMZ has been supporting startups for the last 11 years, the majority of this funding has been raised by startups in the last five years (over $940 million since 2016).

This milestone is a victory for the entire Canadian startup ecosystem. It’s a testament to the level of confidence that government, investors, and startup support organizations have in Canadian tech founders to lead world-class businesses. It’s true that startups who have proven market traction, strong competitive advantages and IP protection will attract investors. But oftentimes, qualitative traits that a startup has may be even more valuable in the eyes of an investor – like having a solid diverse management team that fosters great company culture or a founder that has tremendous passion and drive to make a difference.

Let’s dive into the numbers to explore tech investment trends over the last decade, from the largest funding rounds to the industries receiving the most investment dollars. 
This major milestone has been achieved through 194 DMZ-supported startups that have received a total of 424 investments from 2011 to 2021. 

The raise that pushed the DMZ to break past the $1 billion mark was Toronto-based Snapcommerce’s recent $107 million raise. Snapcommerce was incubated at the DMZ in 2016. This announcement also marked the largest single funding round on record for DMZ alumni! 

After a year like 2020, with so much uncertainty to navigate, DMZ startups preserved and were able to continue to secure funding. Over $185 million was raised in 2020 alone.


Top 10 startups and top 10 funding rounds

The top ten startups that have received the most investment dollars have collectively raised over $700 million. The top five – Borrowell, Snapcommerce, Sensibill, Ada Support and Flybits – accounting for an impressive $560 million of that. That’s over 50% of the total funding raised by all DMZ startups.


Funding breakdown by stage

These investments come from a variety of funding sources, including equity crowdfunding, government grants, pitch competition awards, and angel and venture capital investments from the pre-seed stage to Series C and beyond.

The sheer number of stakeholders that have played a role in reaching this $1 billion achievement illustrates the importance of industry-wide collaboration and cooperation. 

The way in which this ecosystem plays as a whole determines its success.


Funding breakdown by industry

When breaking down the industries of startups that raised the most money, startups in Financial Tech take the lead. A total of 11 startups representing this industry raised a combined $273 million – that’s over a quarter of the total funding raised by DMZ companies across all industries. The industries that followed were Retail Tech ($213M), Enterprise Tech ($131M), Health Tech ($100M),  Arts & Entertainment ($59M), Marketing ($27M), Education Tech ($32M), Communications ($29M), Consumer Tech ($26M)and Insurance Tech ($25M).


Huge gaps in funding support still exist

The Canadian tech ecosystem has become increasingly competitive – this milestone speaks to the growth and potential of our startups. Yet, startup founders still say that accessing capital is their biggest challenge and roadblock to success.

Seed deals have slowed down significantly in recent years and early-stage financing has become progressively more difficult to secure.

That’s why the DMZ is doubling down on its efforts to help startups in the early stages receive more investment strategy support, access to investors and dedicated fundraising workshops, and mentorship from professionals who specialize in fundraising – especially through our Black Innovation and Women Founders streams to support women-owned and Black-owned startups that have historically been underfunded.

Want to be a part of the next billion? Email us at dmz@ryerson.ca. Learn more about the DMZ’s programming here.