Atlantic Canada’s Opportunity to Catalyze AI-Driven Enterprises
By Jeff Larsen, Assistant Vice-President, Innovation and Entrepreneurship, Dalhousie University and Paul Cheek, Senior Advisor, Entrepreneurship & AI, Martin Trust Center for MIT Entrepreneurship
Why it Matters
Creating the next wave of high growth startups
Traditionally, Innovation-Driven Enterprises (IDEs) have been the primary vehicles for scaling transformative technologies. These firms, like Shopify, require significant capital, long innovation cycles, and large teams to bring breakthrough products to global markets – but they have delivered outsized impact as far as jobs and economic impact. On the other hand, Small and Medium-sized Enterprises (SMEs)—local businesses like restaurants or small retailers—typically operate with modest resources and innovate incrementally. While IDEs aim for exponential growth, SMEs generally grow linearly. However, a new entrepreneurial model is emerging with AI at its core which can blend the innovation capacity of IDEs with the efficiency and agility of SMEs. In a recent article, MIT’s Paul Cheek has dubbed these ventures: AI-Driven Enterprises (AIDEs) explained that the emergence of rapidly scaling AIDEs – where a handful of people with AI can create enormous value quickly – is reshaping assumptions about what it takes to build a successful company. AIDEs leverage artificial intelligence at their core to drive all aspects of their businesses including market research, product development, go-to-market, administrative functions such as finance and HR, and overall operations. AIDEs combine the global ambition and innovative edge of IDEs with a lean operational footprint more akin to SMEs; reducing risk and increasing the likelihood of success along the way.
The AIDE Model
Cheek explains that AIDEs leverage artificial intelligence at the core of their operations—integrating AI into product development, market research, finance, HR, and other administrative tasks. This ssignificantly lowers innovation product development debt (IPDD)—the time and cost it takes to transform ideas into market-ready products. As a result, AIDEs can launch products more quickly, using fewer resources and smaller teams. For instance, while companies like LinkedIn and Shopify needed 600–900 employees to reach $100 million in annual recurring revenue (ARR), newer AIDEs such as Anysphere and ElevenLabs have hit the same milestone with under 50 employees. This shift has given rise to a new generation of startups generating substantial revenue with minimal staff. The traditional steep growth trajectory—demanding large upfront investments and sizable teams—has flattened; revenue arrives earlier and scales more rapidly, reducing the need for extensive funding or headcount in the early stages. Essentially, AIDEs blend the global scale and innovation of IDEs with the lean, agile structure typical of SMEs.
AIDEs: Accelerating Growth with Capital Efficiency
Faster Product Development
Use of AI coding assistants (e.g., GitHub Copilot, OpenAI Codex)
Smaller teams or solo founders can rapidly build MVPs
AI shortens the build–test–learn cycle for fast iteration
Automation of Operations
AI agents/chatbots handle routine tasks without extra headcount supporting functions including:
Data analysis & forecasting
Marketing optimization
Bookkeeping & document drafting
Enables data-driven decisions without full data teams
AI-Powered Go-to-Market Strategies
Automates lead gen, marketing, and sales support
Recommendation engines for retention and upselling
Multivariate testing and behavior pattern recognition
Scales growth without a large marketing department
“AI-driven” goes far beyond simply adding ChatGPT to a customer support desk. To qualify as a true AIDE, a company must integrate AI deeply across the entire business—from company formation and product development to go-to-market strategy and day-to-day operations. Being AI-driven means reimagining how decisions are made, how teams are organized, and what scaling looks like in a world where AI is foundational. AIDEs not only build AI-powered products and operate with AI-enhanced efficiency they adopt an ultra-lean approach where AI fundamentally shapes how they build, decide, and scale their ventures. In short, AIDEs are not just a middle ground between SMEs and IDEs—they represent a fundamentally new category of entrepreneurship. By compressing development timelines, minimizing capital needs, and increasing revenue per employee, AIDEs offer a more sustainable, scalable model for the future of business growth in an AI-powered economy.
Cheek uses Lovable (lovable.dev), one of Europe’s fastest-growing AIDEs, as an illustrative example of how a lean team can use generative AI to create high-value products while maintaining strong unit economics Lovable uses AI to empower anyone to build full-stack software simply by describing what they want—streamlining the traditionally separate roles of front-end and back-end development, design, and product management into a single AI-powered platform. The company quickly scaled, achieved strong revenue, and maintained a lean team, showcasing the dramatic efficiency gains made possible through AI. Lovable’s success also illustrates how AIDEs can flourish in regions with limited access to venture capital, as long as there’s a foundation of talent and entrepreneurial support. This shift in business models is reshaping the economics of startups. Leading AIDEs today can generate up to $5 million in ARR per employee—an order-of-magnitude leap beyond traditional IDEs. As a result, startups can become profitable sooner, reduce their reliance on outside funding, and stay more agile in how they grow. AI also minimizes the need for large sales or support teams by automating routine functions, freeing founders to focus on innovation and achieving product-market fit.
Paul Cheek and Jeff Larsen have written about how SME exporters, a distinct subset of SMEs specifically engaged in selling products and services internationally, possess untapped potential to use AI to shift their growth trajectories from linear to exponential and achieve a level of growth that was previously not practical. Cheek and Larsen have also written about how the application of AI within deep tech, medtech, and pharma startups has the potential to drive a dramatic shift in societal progress by shortening timelines, reducing IPDD and resource needs, accelerating R&D and product development cycles, and augmenting the customer value with AI-powered product features. But the unique opportunity of AIDEs creates a compelling case for investment in education and training to drive economic development.
Call to Action: The AIDE Opportunity for Regional Economic Development
Cheek explains the exciting potential for regional economic development policymakers and entrepreneurship educators to fully embrace the unique potential of AIDEs to drive economic growth and prosperity in ways previously not possible:
“The emergence of AIDEs lowers certain barriers to entry but raises the bar in other ways. On one hand, it’s never been easier to translate an idea into a product – thanks to accessible AI APIs and tools, a single skilled founder can prototype a complex service without needing a full team from the start. This means entrepreneurs who lack connections to big investors or those outside major tech hubs can still realistically build a product that gains traction, as long as they leverage the plethora of AI resources available (many of which are open-source or low-cost). It democratizes innovation to a degree: cloud infrastructure and AI APIs are accessible globally, so a founder in a region with little venture capital can use them to create a world-class product. However, this also means the entrepreneur’s skill set needs to adapt.
If a small team with laptops and cloud credits can create a globally competitive service, then theoretically any region with educated entrepreneurs and internet access can spawn high-impact startups. The limiting factor becomes knowledge and skills rather than money. This is where strong entrepreneurship education and support is crucial. Regions that invest in training founders – teaching not just business basics but also modern skills like AI utilization, agile development, and global market strategy – can empower local talent to build AIDEs that compete on the world stage. In a way, AI is a great equalizer: it reduces the advantage of having a large staff or large budget, things that traditionally favored companies in wealthy, venture-rich locales. We see this with Lovable – coming out of Sweden with a modest pre-seed round, it could still outpace many Silicon Valley rivals by smartly leveraging AI and open-source. Policymakers should note that access to risk capital, while still helpful, is no longer the sole determinant of startup success. Thus, policies might shift to focus more on providing cloud computing resources, AI research support, or training programs rather than just financial subsidies. One concrete step could be establishing innovation hubs or incubators centered on AI-driven entrepreneurship. These could provide young companies with credits for AI platforms, mentorship on integrating AI, and connections to global markets. Education systems can also incorporate more interdisciplinary training – blending software engineering with AI ethics, data science with entrepreneurship – to produce the kind of founders and early employees who thrive in an AIDE. For example, universities could run accelerator programs where student teams must prototype a venture using generative AI tools, thereby normalizing the approach of building with AI from the ground up. Regions that do this can cultivate a reputation for lean, AI-savvy startups.”
Nova Scotia, a province on Canada’s east coast in the Atlantic region, is stepping up to meet the moment. Though relatively small—home to just over one million people and about a two-hour flight from Boston or Toronto—Nova Scotia, like much of Canada, has historically lagged behind the U.S. and other OECD countries in productivity and innovation. Within Canada, Atlantic provinces have tended to trail further, with a more rural population and an economy less concentrated in innovation-driven enterprises or large corporations. However, Halifax, Nova Scotia’s capital, is emerging as a bright spot. The city has seen strong economic and population growth, surpassing 500,000 residents after gaining nearly 25,000 new people in 2023–24. Its median age has dropped to around 39, thanks to an influx of young professionals and international talent. Halifax’s GDP grew by a notable 2.6% in 2024, making it one of the fastest-growing urban economies in Canada, with continued expansion projected beyond 2025. Employment and labour force participation are also on the rise. The city is also a hub for higher education, home to six universities and a community college, including Dalhousie University—a leading Canadian research institution with around 20,000 students.
Volta – which is a startup hub based in Halifax - has pivoted to focus exclusively on AIDEs (it also has developed a new SME AI Productivity Lab). It provides a hands-on support program for AI-first software startups in Atlantic Canada, focused on accelerating market validation, traction, and early growth. The program is structured around two main stages:
Zero 2 X: Helps startups validate their market and reach approximately $5K in ARR.
10X: Supports scaling efforts to grow ARR to around $50K in six months, with the long-term goal of hitting $1M ARR within 12–18 months.
Clear milestones guide startups from early validation to sustainable growth. From January to October 2025, about 15% of applicants were accepted, with 61% reaching the value baseline in 10 weeks and 32% securing a first paying customer in 13 weeks—figures that increase significantly for teams active over six months. While 33% of teams exit early, many successfully pivot, with some re-entering with new ventures. Notably, 5 teams are already on track to reach or have achieved $1M ARR within the program’s first year.
In addition, Dalhousie is launching a new AI2Market program focused on training more students in AI and entrepreneurship, while creating more and better scalable AIDEs. AI2Market will provide interdisciplinary training – blending software engineering with AI ethics, data science and entrepreneurship – to produce the kind of founders and early employees who thrive in AIDEs. The AI2Market program will integrate AI guides as tutors for the entrepreneurship learning process.
AI2Market is based on the Lab2Market which was co-founded by Larsen at Dalhousie. Lab2Market is Canada’s innovation, commercialization and entrepreneurship training platform for graduate students, postdoctoral researchers and faculty researchers. The Lab2Market programs, which are based on the U.S. National Science Foundation’s I-Corp program and MIT’s delta v accelerator for venture creation, provide innovation and entrepreneurship training for graduate students and postdocs who are working with professors on commercialization of science, engineering, medical and other research. Over the four-year pilot of Lab2Market, there were over 1000 participants and 132 new startups which are raising millions in funding and employing skilled “highly qualified persons” in high growth industries. Dalhousie and its partners were recently awarded $32 million from the National Sciences and Engineering Research Council over the next five-years to scale the Lab2Market network nationally, and it now Lab2Market has six regional hubs, and a national health hub running programs, and the network includes a core of more than 50 universities generating almost $7.8 billion in research funding income in 2022-23. AI2Market leverages the Lab2Market programming but it focuses on the application of AI to develop new startups whereas Lab2Market focuses on commercialization of science, deep tech and biomedical research through startups. There is potential and ambition to leverage the Lab2Market network to scale AI2Market nationally across Canada.
Volta’s AI focused programming and AI2Market will provide useful experiments in Atlantic Canada to test Cheek’s call to action for policy-makers and educators in smaller regions to empower local talent to build AIDEs that compete on the world stage.
Key Takeaways
AIDEs—where small teams harness AI to rapidly create significant value—are redefining what it takes to build a successful company by embedding AI across all functions, from market research and product development to operations and administration, combining the global ambition of IDEs with the lean efficiency of SMEs to lower risk and boost success.
The emergence of AIDEs shifts the focus of regional economic development from attracting venture capital to investing in talent, AI education, and infrastructure—enabling even resource-limited regions to build globally competitive startups through smart use of accessible AI tools.
Volta’s AI program and the AI2Market program led by Dalhousie provide an opportunity to pilot whether a small region with little venture capital can embrace AIDEs to drive innovation and productivity.