3.3 Sustainability of Capital: Follow the Investors
The Sustainability of Capital Framework addresses the long-term conditions required to maintain and grow a resilient investment ecosystem. By focusing on the locality, sophistication, and connectivity of capital, this framework clarifies how well-supported investors—particularly those with training, networks, and aligned incentives—can recycle their capital and expertise into the next generation of Canadian companies. Strategic tools like the proposed Strategic Capital Gains Deferral (SCGD) strengthen these foundations by encouraging reinvestment, deepening local investor ecosystems, and anchoring high-growth companies in communities across the country. Locality of Capital: When early-stage investment is local, companies are more likely to stay, grow, and reinvest within the Canadian economy, functioning as anchors for ecosystem development. Sophistication of Capital: Investors with strong training, experience, and incentives make better deals, reduce founder burden, and accelerate success. Educational opportunities increase investor sophistication, ensuring sustainable capital deployment. Connectivity of Capital: Syndication networks and cross-regional partnerships are underdeveloped. National-scale coordination is needed to ensure risk-sharing and efficient deal flow coverage, enhancing private capital market efficiency. Figure 6: Sustainability of Capital Framework. This diagram illustrates the interplay between locality, sophistication and connectivity of capital – with higher probabilities of success resulting in greater sustainability of capital flows.
Locality
Connectivity
Sophistication
22
Powered by FlippingBook