In contrast, Canada’s largest provincial angel tax credit program supported just $30–40 million in early-stage capital in 2022—representing less than 2% of the UK’s national EIS output. This disparity underscores the scale advantage of nationally consistent programs and the opportunity for Canada to unlock significantly more capital with federal coordination. Policy Lessons for Canada The UK experience illustrates the power of well-calibrated, nationally consistent, and investor-targeted tax policy in mobilizing risk capital at scale. It also underscores the importance of policy continuity—SEIS and EIS have remained largely stable for over a decade, providing predictability to investors. Canada’s current patchwork of provincial tax credits lacks this coherence, scale, and national alignment. A federal initiative modeled on SEIS/EIS could provide the missing link between government-led VC strategies and a robust, self-reinforcing angel capital foundation. In contrast to Canada’s existing fragmented provincial incentives, the UK’s nationally consistent SEIS and EIS policies have successfully provided investors with clear, predictable, and scalable frameworks. Implementing a similar national approach in Canada could streamline investor decisions, promote consistent market signals, and address regional disparities more effectively. 11. Conclusion Canada has made significant progress in strengthening its venture capital industry through targeted government initiatives. However, the disproportionate growth between venture capital and angel investment threatens the sustainability of the entire funding continuum. Addressing this imbalance requires policies specifically designed for the unique characteristics of pre-institutional capital, with particular attention to tax-based incentives that directly influence individual investor behavior. By taking a comprehensive approach that recognizes the distinct dynamics of institutional capital vehicles and pre-institutional capital, Canada can build a more balanced risk capital ecosystem capable of supporting innovative companies from inception through to scale and transformative impact on Canada’s economy. By strategically enhancing early-stage capital incentives, Canada can ensure sustained success and global leadership in innovation. Strengthening the entire capital continuum benefits venture capital funds, early-stage investors, and Canadian entrepreneurs alike.
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