Dear BTF Community,
Three key points from a recent interview with Ari Pandes, Associate Professor of Finance and Associate Dean of Professional Graduate Programs at the Haskayne School of Business, University of Calgary:
- Canada is great at starting businesses but weak at scaling: promising firms often get acquired by larger international players instead of growing into global leaders here at home.
- IPOs are a powerful tool to keep companies Canadian: going public enables growth, creates opportunities for retail investors, and builds stronger knowledge-based industries.
- Structural barriers are holding us back: concentrated banking, fewer underwriters, and heavy regulatory burdens discourage founders from pursuing IPOs, fueling talent loss and slowing innovation.
Enjoy,
Mark
Ari Pandes, Associate Professor of Finance and Associate Dean of Professional Graduate Programs at the Haskayne School of Business, University of Calgary, is sounding the alarm on a troubling trend in Canada’s economy: the steady decline of operating companies listed on public markets, and the broader failure to scale up domestic businesses.
“A lot of what I do focuses on the public markets,” said Pandes. “I pay particular attention to the decline in public markets. A couple of key points I’ve documented – and written some op-eds in The Globe on – are: If you look at the TSX (Toronto Stock Exchange), the number of operating companies listed is down by about half from its peak in 2008.”
While the TSX’s total listings have gone up, Pandes emphasized that “those are driven by financial products like ETFs and closed-end funds. The number of actual operating companies – companies that invest, hire, and innovate – has been in drastic decline. This isn’t unique to Canada; it’s a global issue.”
Another worrying trend, he noted, is the dramatic fall in IPO activity. “From 1986 to 2000, about 35 operating companies went public annually on the TSX. Since 2000, that number is down to 13. Over the last three years, we’ve had only a single operating company IPO each year.”
That drop, Pandes said, connects directly to Canada’s scale-up problem. “Canada is great at entrepreneurship – we have an educated workforce and we’re good at starting companies – but we struggle to grow them into global businesses.”
What happens instead?
“Often, Canadian companies get financing from friends and family, then angels, VCs, late-stage private equity… but they get picked off – usually in trade sales – by larger, often foreign, players. Most of the time, those are American buyers.”
While this might be good for the founders, “Canada loses out on developing large-scale companies in tech, innovation, and knowledge-based industries,” said Pandes. “One way to prevent that is through IPOs, which keep the companies here and help them grow.”
IPOs, he explained, allow companies to scale while maintaining domestic leadership and economic presence. “IPOs allow founders to stay involved and let the company scale domestically. That supports a nice cycle, where big companies can invest in or acquire smaller Canadian companies.”
In today’s tense Canada–U.S. trade environment, keeping companies Canadian is more important than ever. “Public markets also open access to retail investors – not just institutional ones – making investing more inclusive. When companies stay private, only wealthy investors benefit. So the public market is a democratizing force.”
Beyond inclusivity, scaling businesses is key to diversifying Canada’s economic base. “Our market is lacking in industries of the future, knowledge-based industries. We do well in resources and banking, but those are concentrated sectors,” Pandes said.
“In banking, for example, we see oligopolies and limited competition. I wrote a piece with a senator recently in The Globe on how this affects the IPO space.”
He pointed out how the financial sector itself has become more concentrated, with fewer players able to support IPOs. “Banks dominate underwriting now. We used to have great regional players – even here in Alberta, like FirstEnergy – and other specialized underwriters. That lack of diversity in the financial sector affects the ability for companies to go public.”
The impact, he said, is both structural and generational. “Scaling knowledge-based companies helps retain talent and boosts productivity. Otherwise, we get brain drain – our top talent heads to the U.S., where those industries are more developed.”
Yet despite the clear benefits of IPOs, many Canadian founders shy away from going public. “Part of it is we’ve made it hard for them,” said Pandes. “There’s more scrutiny, more bureaucracy, more regulatory burden in the public markets. Founders often say, ‘Why go public when I can stay private and avoid the grief?’ So that’s another barrier. It dissuades people from choosing the public route.”
The takeaway? Canada has the talent, the education, and the entrepreneurial drive – but without intentional support for scaling companies and easing the IPO process, the country will continue to see its most promising firms snapped up by foreign interests.
“It’s not just about investment,” said Pandes. “It’s about long-term economic health, innovation, and keeping talent here.”
Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 and 2024 a Top Ten Business Journalist in the world and only Canadian. He also made the RETHINK’s global list as a Top Retail Expert 2024 and 2025.