Enterprise adoption of artificial intelligence in Canada is still relatively low.Kiichiro Sato/Associated Press
Artificial intelligence is supposed to make everything easier, including starting a business. Chatbots can act as advisors and AI applications can speed up many core functions of a business. Technology startups can grow faster and with fewer employees and less capital than before.
So it’s no surprise that AI will enable more people to start businesses. Although not yet conclusive, there are early signs of this trend in the United States. But in Canada? There aren’t that many. This doesn’t bode well, especially for the country’s tech ecosystem, which is already struggling to retain founders and grow lasting businesses.
While some argue that AI is already driving the creation of more business, OpenAI CEO Sam Altman speculates that multibillion-dollar companies will be created and overseen by a single operator.
Torsten Slok, chief economist at Apollo Global Management, said earlier this year that there was an “explosion” in business formation in the United States, with the number of business applications on the rise. From November 2022, when ChatGPT was released, to April 2026, the number of monthly applications increased by 21%. “The surge in new business formation in the U.S. is being fueled by AI and large-scale language models that dramatically reduce the cost and complexity of starting a company,” Throck wrote.
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However, this number essentially tracks paperwork, and not all of these applications result in business functioning. The U.S. Bureau of Labor Statistics monitors births, or the number of companies that record an increase in employment for the first time in a given quarter. That number actually decreased by about 8 percent from 351,000 in the same period in 2022 to 323,000 in the third quarter of 2025. On the other hand, the quarterly birth rate essentially measures the proportion of new businesses to all establishments. The average since ChatGPT was released is around 3.5%, which is slightly higher than last year.
Of course, there is a time lag between applying for a business and hiring employees. Fortunately, the U.S. Census Bureau is trying to fill that gap by predicting the number of new businesses (defined as businesses with payroll tax debt) that will be formed within a year from any given month based on filing numbers. This number is certainly increasing, with an average increase of around 17% in the first four months of this year compared to the same period in 2022.
Still, this doesn’t tell us much about the role of AI. Reached via email for comment, Emin Dinlersoz, chief economist at the U.S. Census Bureau, declined to speculate on why business applications are on the rise.
There may be several factors. Some research suggests that expanding unemployment benefits in the U.S. during the pandemic has contributed to the surge in business start-ups, but the rise in remote work may also be playing a role.
Avi Goldfarb, a professor at the University of Toronto’s Rotman School of Management, said the AI explanation is plausible, but it’s too early to draw conclusions. “We won’t figure it out for a while,” he said, adding that it took about 10 years to figure out how the internet shaped the economy. (Maybe AI just makes filing easier, he suggested.)
While the idea that AI could lead to more business creation is true, there is a flip side, he continued. This technology could also help large, powerful companies become even bigger and more powerful. Stanford University economist Erik Brynjolfsson and Harvard University fellow Zoe Hitzig made that argument in a paper last year. “As AI capabilities advance, centralization is likely to increase,” they conclude.
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Here at Statistics Canada, we estimate the number of new entrants by reference to previously inactive businesses that had employment in the current month. This figure excludes seasonal reopenings and cases where large companies form new entities. Between 2015 and 2020, there was an average of approximately 15,687 participants per month in Canada. After ChatGPT, the average is not that high at 15,730. Barring pandemic-era disruptions, the pace has been fairly steady.
“You would expect to see new business formation already. It’s been three years and costs are coming down,” said Joel Britt, an associate professor of economics at the University of Waterloo. Corporate adoption of AI in Canada is still relatively low, which may be due to the country doing little to promote AI literacy.
“If you’re going to launch thousands of small startups, you need to make sure everyone understands the potential,” he says. It also requires an entrepreneurial spirit. People who have never thought about starting a business may be less likely to do so just because of ChatGPT.
Professor Britt knows first-hand how useful AI can be when running a business. He and his wife, family physician Lisa Friars Britt, run a skin cancer testing clinic and consider ChatGPT to be another co-founder. In preparation for my meeting with an actual attorney, I helped create a marketing plan, designed a logo, and provided legal advice regarding a medical office lease. “We saved money on legal fees, marketing and all kinds of expenses,” he said.
Of course, clinics existed before AI. The real promise of innovative technology is to create entirely new markets and create businesses that weren’t possible before. With AI from companies like Ada Support Inc., that’s becoming a reality. Some companies provide customer service chatbots to fanciful organizations like Cowboy Space Corporation, which aims to launch data centers into orbit.
The U.S. Census Bureau’s Dinrasosz didn’t want to speculate on the proliferation of business applications, but he pointed to his research showing that the number of new AI company applications started increasing around 2012 and then spiked in 2023, coinciding with the boom started by ChatGPT. He and his co-authors found that although these applications have a lower survival rate, they are more likely to transition into startups and achieve higher revenue and employment rates.
Conditions in Canada are not currently favorable for a sustainable AI startup boom. A study last year by investment firm Leaders Fund found that high-tech founders are leaving the country for the United States at a higher rate than in the past. San Francisco is an AI hub, with more capital and lower regulatory hurdles, founders say. red blood cells x, Canadian venture capital firms raised just over $2 billion last year, the worst figure since 2016, according to Royal Bank of Canada’s technology banking division. Toronto, Vancouver and Montreal have fallen in rankings of global tech ecosystems in recent years, according to data tracked by advisory firm Startup Genome.
one One company that embodies all of these AI startup trends is uRun. uRun couldn’t exist without technology. The company is known as an inference provider and has devised a faster way to generate AI videos to enable interactive editing. The company’s five employees are also heavy users of AI. “I don’t think it would be possible for a company of 50 people to build what we’ve built without modern AI tools,” said co-founder Keegan McCallum.
Finally, here is an example of the appeal of the United States. Mr McCallum is based in Victoria but plans to move to San Francisco. “The go-to-market and support part of the business probably needs to be there for the customer, because the customer is there,” he said.
Ultimately, though, one might hope that’s not where all AI-powered companies are born.
