Appendix A: (Continued) The current Canadian innovation ecosystem is equipped with the deployment infrastructure, sectoral focus, and professional expertise that were absent in earlier eras. This maturity directly addresses the risk of unsophisticated retail investors and capital misallocation, providing a robust foundation for scaling BC’s empirical results nationally. b) Policy Coordination and National Integration Addressing Fragmentation: Hellmann and Schure (2010) identified provincial silos as a key barrier. OECD (2023) advocates harmonization. International Validation: UK and Israeli models show national tax incentives can mobilize private capital at scale. c) Conservative Extrapolation The BC program generated C$1.98 in provincial taxes and C$2.92 in combined federal/provincial taxes per C$1 of tax credits. This provides a robust empirical foundation for national extrapolation, where the total fiscal return approaches a 3:1 ratio at the national level—reflecting BC’s observed outcomes and excluding any additional gains from enhanced policy coordination or sectoral targeting.
5. Conservative Assumptions in Projections
Risk Buffers: 15% lower job creation rates than BC baseline. Geographic Scaling: 30% discount applied to urban-centric outcomes to reflect rural integration. Sectoral Variance: Excludes non-strategic sectors (22% of BC’s portfolio, <5% returns).
6. Lessons from the Labour Sponsored Investment Funds (LSIF) Era
Canada’s experience with Labour-Sponsored Investment Funds (LSIFs) in the 1990s and early 2000s offers important lessons for future innovation capital policy design. LSIFs successfully mobilized more than C$10 billion in retail capital, but the broader ecosystem lacked the structural features needed to deploy that capital effectively. At the time, Canada had very few professional venture capital funds, limited domain expertise among fund managers, and no nationally coordinated framework for staged or sector-aligned investment. As a result, LSIF investments were often scattered across low-growth sectors, suffered from weak due diligence, and delivered below-market returns. Studies such as Cumming & MacIntosh (2007) attributed much of this underperformance to an oversupply of tax-incentivized capital chasing too few high- quality investment opportunities.
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