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After building and selling companies for over $1 billion, Michael Hyatt is short-term anxious but long-term positive on Canada’s entrepreneurial future as he builds his next venture, data security platform DataStealh. Speaking with TechExit.io, Michael shared the three policy changes he thinks will drive more prosperity and entrepreneurial spirit in our great nation.
Key takeaways:
- Canada needs to shed its economic protectionism and provide a path for foreign-educated immigrants to quickly gain permits to work in relevant fields.
- Tax policy should entice investment in Canadian companies with a capital gains deferral program if you reinvest proceeds rather than cash out.
- Government spending and policy should focus on building infrastructure, not picking winners and losers with taxpayer dollars.
Michael Hyatt has built and sold two companies for a combined total of over $1 billion in Toronto. Now, he’s a bit worried about Canada.
Specifically, he’s worried the next generation of entrepreneurs looking to build will have an unnecessarily harder time than he did. The reason? Varying government policies implemented over the past two decades.
Speaking with TechExit.io, Michael shared what he thinks is necessary to kickstart not just productivity, but prosperity.
“Early” exits and the audacity of some people
When Michael and his brother sold a majority stake in their company BlueCat Networks for $400 million—and then sold the remaining minority stake a few years later in a sale valued at over $700 million—more than a few people suggested they sold too early.
The company had so much potential, or so the saying goes, but the brothers opted to sell out rather than keep going.
Michael has spoken out about this in the past, but he was particularly pointed when speaking with TechExit: where do these people get the audacity?
To start, the data does not bear out the claim that Canadians sell too early.
One 2023 study out of Europe, for example, found that the typical startup globally takes about 11 years to be sold. If VC financed, it sells for around 38 million euros (~$55 million CAD). If bootstrapped, it goes for closer to 22 million euros (~$32 million CAD).
A now-dated but oft-cited 2013 Crunchbase study found that the typical US startup raises $41 million and exits at $242 million.
For reference, BlueCat raised around $27 million and exited far higher.
And this is just one story—there are multiple instances of 9-figure Canadian exits such as Rockwell Automation and Safe Software.
But beyond the financial data is a very personal decision.
“It’s very easy to say that we always go for bronze,” Michael said. “But the truth is, building any company, no matter if it’s in America or Canada, is extraordinarily difficult.”
“We never talk about how tired you get as a founder,” Michael continued. “Between years seven and ten, you’re just tired. Then you have an exit, you do incredibly well, and you make intergenerational money, and then someone has the audacity to tell you, ‘Oh, you could have stuck around for longer.’”
3 policy changes for Canadian prosperity
Michael said entrepreneurs receive another slap in the face: government policies, implemented by successive governments over the past 20 years, that disempower entrepreneurship and hamstring investment.
Rather than point fingers, Michael shared three changes he believes will foster more entrepreneurship and prosperity in Canada.
1. Immigration
Discourse on immigration in Canada is often that we let the “wrong people” in. Michael, an immigrant himself, challenged this, saying we are letting highly skilled, highly motivated immigrants into the country… but giving them no path forward.
“Our economy is too protectionist… our immigration policy doesn’t take into account that when they get here, there’s no possible path to getting a home or living well,” said Michael.
What Michael wants to see is clear paths for foreign-educated professionals—medical professionals, engineers, teachers, etc.—to meet Canadian standards quickly and get working in field-relevant professions.
2. Taxes
Michael is vocally against the 2024 federal government change to capital gains inclusion rates, saying it needs to be competitive with other developed countries.
But more so, he’s worried about encouraging investment in Canadian companies.
One way he advocates for this is through a deferral system: only pay tax if you cash out. If you take gains from one investment and put them directly into another Canadian business or VC fund investing in Canadian companies, you can defer tax owing.
“I’m asking the government to get me to put my money back into the market,” said Michael. “What they’re telling me right now is just pay the tax, put the money into the S&P 500, and don’t invest in Canadians.”
3. Dealmaking
In April 2024, both Doug Ford and Justin Trudeau committed taxpayer dollars—$5 billion in total—to fund a Honda EV plant in Ontario.
The reward for those funds? An estimated 1,000 jobs.
“That is $5 million a job,” said Michael. “…If I go to any startup and say, ‘I’m going to give you $5 million, can you hire one person?’ … Come on. Who are you kidding here?”
Michael doesn’t want to see governments in the business of picking winners and losers by spending tax dollars. Instead, he believes the government’s job is to build the best infrastructure possible—policy and otherwise—that allows business to flourish. Then he wants them to get out of the way.
Act Canadian, think American
Michael’s ultimate prescription isn’t really about policy, but about mindset. And to get there, he’s looking south… but not to move.
Michael wants founders to stay in Canada—and keep Canadian values of wanting opportunity, education, and social mobility.
However, he wants all Canadians to adopt an American “ethos of risk taking” when it comes to trying new things, working with innovators, and spending (or investing) money quickly on new technologies to eke out competitive advantage.
That’s the shift he believes will drive a lot more prosperity for Canada.
“It’s not about me or all the people at TechExit who have made money,” said Michael. “It’s about the next entrepreneurs that need money to build a great company and to hire people.”