Are young entrepreneurs giving up?

Canadian entrepreneurs are too cautious, says PwC, following the release of its annual Emerging Companies Survey.

That survey, which polled more than 100 startup CEOs, finds young business owners across the country are nervous about their growth prospects and about going public.

Over the last year, about a third have struggled to get funding (35%), while another 28% have found revenue generation challenging. As well, about 10% have had trouble attracting and retaining talent.

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As a result, many entrepreneurs may drop out of the Canadian market. The survey says nearly eight-in-ten young CEOs (78%) are looking at possible business exit strategies, with 63% of that total hoping their companies will be acquired.

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In fact, almost half of new owners say they’ll likely sell within the next few years. It will take a while for that to occur, notes the survey, since many haven’t prepared for company sales: they’ve updated their taxes and corporate documents, but less than a quarter (24%) have reviewed or audited their financial statements, and only 11% have completed a formal valuation.

Still, “Canadian [entrepreneurs] aren’t looking to build businesses over the long term,” says Eugene Bomba of PwC. “This impacts the made-in-Canada market, [especially if] large U.S. companies [are] looking to acquire Canadian businesses…for talent.”

Read: What’s the process of selling a business?

IPO fears

For business owners to go public in Canada, the IPO landscape needs to improve, says the survey.

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When asked what would make going public more attractive, 69% of those polled said they would be encouraged if they saw other prominent Canadian companies on the market.

One of the main problems is there’ve been some high-profile IPO flops over the past few years in North America. As a result, investors are putting pressure on new companies by demanding clear signs of traction, critical mass, growth potential and, most importantly, revenue generation.

What’s more, “the costs associated with going public are often too high for small businesses to assume,” says Bomba.

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