1. Introduction Canada’s competitiveness is being impacted by systemic fragmentation in how capital is supplied, deployed, and sustained. While the country has made significant strides in scaling venture capital—evidenced by record fund sizes and the rise of leading firms over the past decade—this success obscures deeper structural weaknesses in the country’s innovation finance architecture.
1.1 The Fragmentation Problem
Canada’s innovation funding landscape remains underdeveloped and underpowered to compete globally.
Currently, gaps in early-stage capital mean fewer high-potential companies are reaching the stage where venture investors are ready to back them. Despite renewed strength in angel investment—C$146.2 million deployed across 613 deals in 2024—Q1 2025 data show pre-seed and seed-stage funding at their lowest levels since the pandemic. Funding is fragmented across provinces and programs, which creates inefficiencies and leaves entrepreneurs, especially those outside major cities, without the resources they need in order to succeed. Provincial programs, while valuable, can unintentionally keep capital from flowing freely across the country. Institutional investors are still sitting on the sidelines, and core infrastructure like angel networks and emerging venture funds are stuck in short-term survival mode instead of planning for growth. This limits deal flow, erodes investor confidence, and disproportionately affects entrepreneurs outside major hubs. National coordination is essential to address these gaps. It strengthens economies of scope by leveraging shared platforms, relationships, and knowledge across multiple programs, and builds economies of scale , where larger collective reach reduces per-unit costs and increases efficiency. Stable, sustained funding is critical to advancing best practices, preserving institutional memory , and building capacity so early-stage investment networks can operate strategically rather than in short-term survival mode. National coordination also delivers economies of complementarity , where angel capital, venture capital, incubators, accelerators, and institutional partners work in concert to create a more robust and investable pipeline than any single actor could achieve alone. This integration enables the ecosystem to achieve critical mass and send a strong market signal —domestically and globally—that Canada’s innovation economy is coordinated, investable, and primed for scale.
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