Canada's Innovation Investment Gap
Despite world-class talent and research capabilities, Canada invests considerably less in innovation than its global peers. Achieving venture capital (VC) intensity on par with Estonia or Israel within five years will radically transform the structure of Canada’s economy, amplifying productivity and fueling broad-based prosperity. Closing this VC gap is essential to advancing Canada’s economic autonomy and long-term prosperity (see Appendix C).
2.0%
3.0
2.5
1.5%
2.0
1.0%
1.5
1.0
0.5%
0.5
0.0%
0.0
Canada USA UK Estonia Israel
Canada USA UK Estonia Israel
Figure 1: International Venture Capital Intensity (VC Deals per GDP and VC Investment as % of GDP, 2024). This dual-chart visualization reveals the relative scale and activity of venture capital ecosystems across different national economies through two complementary intensity measures. The left chart shows VC deal intensity in 2024, calculated as total number of deals divided by each country's gross domestic product (GDP) for the same year, expressed as deals per billion US dollars of GDP. The right chart shows VC investment intensity calculated as total annual VC investment divided by each country's GDP in US dollars for the same year, expressed as a percentage. GDP and VC investment figures were converted to US dollars for comparability. These measures allow for direct comparison of how significant VC intensity is within each national economy. Note: While this chart provides a snapshot of 2024 VC intensity, it’s important to note that U.S. venture capital activity was significantly depressed that year. Averaging VC investment over the past five years would show a much wider gap—and underscore how far Canada still lags behind top- tier innovation economies. Immediate Action Required: The global competition for innovation capital intensifies each year. To capture the full value of Canada’s innovation investments and secure long-term economic resilience, we urgently need a more sophisticated understanding of how capital operates across the full innovation funding continuum.
To guide this analysis, the report introduces three interlinked analytical frameworks that clarify how capital flows through the innovation economy:
1. Access to Capital – analyzing the availability, timing, and pathways to investment. 2. Lifecycle of Capital – tracing capital flow from initial supply through deployment to reinvestment. 3. Sustainability of Capital – evaluating how locality, connectivity, and sophistication of investor networks support ecosystem retention and recycling.
Together, these frameworks inform a unified strategy to unlock private capital at scale.
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