This consultation is focused on the earliest stage of the capital lifecycle—where startups first raise external funding and where risk-adjusted capital is often hardest to access. Addressing these early bottlenecks is essential to ensuring a healthy, investable pipeline for later-stage venture capital and institutional capital. We are specifically requesting feedback on three tax-based proposals designed to catalyze early-stage investment, and we welcome insights on their design, implementation, and alignment with existing federal and provincial programs. The perspectives gathered will directly inform a white paper and formal policy recommendations to government. By engaging the broader ecosystem in this process, NACO aims to advance nationally coordinated strategies that position Canada as a global leader in early-stage innovation-driven economic growth. Context and Background: Strengthening Canada’s Full Innovation Capital Continuum Canada’s venture capital sector is a remarkable success story, providing vital momentum to our innovation-driven economy. Enhancing complementary early-stage mechanisms will further cement this success. Canada has made significant strides in growing a vibrant venture capital sector, supported by landmark initiatives like the Venture Capital Action Plan (VCAP) and the Venture Capital Catalyst Initiative (VCCI). Venture funds play an essential role in scaling high-growth companies, driving economic opportunity, and positioning Canada on the global innovation stage. Canada’s venture capital funds are world-class, led by highly capable general partners with deep domain expertise and proven track records, offering access to globally promising sectors. However, Canadian pension funds, given their large-scale capital pools and approach to fiduciary responsibilities, have historically prioritized established asset classes with predictable returns. Strategic policy incentives tailored specifically for early-stage and venture capital could align better with institutional investment criteria, encouraging increased participation from these significant capital sources. This presents a strategic challenge that straddles both the supply and deployment phases of capital: it underscores the importance of developing policy mechanisms that not only incentivize initial investment into early-stage ventures but also encourage greater participation by Canada’s Maple 8 pension funds and other major institutional investors in domestic venture capital funds. While this consultation focuses on pre-institutional capital—investment vehicles that typically fall below the threshold required to attract large-scale institutional capital—we recognize that early-stage and institutional capital formation are deeply interconnected. Strengthening one
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