Ottawa pledges $1.75 bn to keep startups in Canada

Ottawa said in a government statement reported by the Financial Post on Oct. 22 that it would invest C$1.75 billion to support Canadian startups.

The commitment is about 2.6 times the C$675 million earmarked for later- and growth-stage companies, according to Atlas360 calculations, and targets a long-running concern that founders move south for capital.

The program, called Backing the Builders: Canada’s Early and Growth Stage Investment Strategy, allocates C$75 million to pre-seed and seed-stage companies, the earliest outside financing rounds for young firms. It focuses on research-heavy areas such as quantum technologies and advanced manufacturing.

Industry Minister Mélanie Joly said the plan is intended to attract private money into Canada’s venture-capital market. “Our government’s new venture-capital strategy will be bold, forward-looking and transformative for Canada’s venture-capital industry by unlocking more private capital to back Canadian entrepreneurs and innovators,” Joly said in the statement.

Ottawa also plans to provide C$1 billion starting in fiscal 2026 to 2027 to the Venture and Growth Capital Catalyst Initiative. That portion was announced in the last budget and is aimed at strengthening venture-capital funds that invest in Canadian companies, the Financial Post reported.

Domestic capital gap

The government said it will co-invest with the private sector and try to draw pension funds and other institutional investors into startup-focused funds. It also plans to support fund managers backing life-sciences companies and businesses in strategic sectors.

Canadian technology and business leaders have urged Ottawa to increase domestic financing options for founders. Their concern is that entrepreneurs often find deeper networks of investors and talent in the United States.

Build Canada, a tech advocacy group, said in a recent analysis that 517 U.S.-based technology firms with Canadian or Canadian-educated founders had raised more than US$400 billion. The government strategy is designed to counter that pattern by anchoring more early financing in Canada.

Claudio Rojas, chief executive of the National Angel Capital Organization, said early domestic investors can influence where a company builds operations. “It often decides where a company builds its future,” he said. “When their first investors are Canadian, their intellectual property and earliest decisions are anchored here.”

Benjamin Bergen, chief executive of the Canadian Venture Capital Association, said more Canadian capital at early and later stages would give founders more options as they grow. He also said Ottawa has not yet provided a timeline for when the new capital will reach fund managers.

“Fund managers raise on market schedules and limited partners make decisions on their own timelines. Federal commitments made while managers are raising can unlock additional private capital,” Bergen said. Limited partners are institutions or investors that commit money to venture funds.

Fiscal 2026 funding

The next dated element is the C$1 billion allocation to the Venture and Growth Capital Catalyst Initiative, which is scheduled to begin in fiscal 2026 to 2027. Investors and fund managers can track whether that money is committed while managers are raising private capital.

A second check is whether Ottawa provides a timetable for the C$75 million early-stage allocation and the C$675 million later- and growth-stage allocation. The source material did not give dates for when those funds will be available to managers or companies.