Policy Consultation and Backgrounder: Strategic Incentives for Mobilizing Risk Capital in Canada
Updated May 14, 2025 v2 | National Angel Capital Organization
Executive Summary Canada’s long-term economic competitiveness hinges on the strength of its innovation economy—and that strength begins with early-stage capital. While Canada has made notable progress in scaling its venture capital sector through landmark public initiatives such as the Venture Capital Action Plan (VCAP) and the Venture Capital Catalyst Initiative (VCCI), the early-stage segment—particularly pre-seed and seed financing—remains underdeveloped and unevenly supported. This policy consultation explores targeted tax-based mechanisms to address these foundational gaps and strengthen the full innovation capital continuum. It focuses on three specific policy tools with the potential to increase private investment in early-stage ventures:
● A National Investment Tax Credit ● A Capital Gains Rollover Provision ● A Flowthrough Shares Adaptation for Startups
Stakeholder feedback will inform a white paper to guide federal policy recommendations, with the aim of enhancing Canada’s early-stage capital infrastructure, improving investor participation, and ensuring a robust pipeline of innovative companies poised for long-term growth. Version Notice: This document may be revised as new information becomes available. Please refer to the “Updated” date on the cover page or consult vision2040.ca for the most recent published version. Purpose of Consultation The National Angel Capital Organization (NACO) is seeking input from investors, entrepreneurs, policymakers, academics, and innovation ecosystem stakeholders on strategic policy mechanisms to increase the supply of early-stage capital in Canada.
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