segment reinforces the other. This interdependence will be explored more fully in a forthcoming companion consultation as part of NACO’s broader policy development process. Canada’s impressive venture capital growth is a major achievement essential to our economic competitiveness. Enhancing support for early-stage capital supply will ensure that Canada’s world-class venture funds continue to thrive with a strong and sustainable pipeline of high-quality ventures. Global Competition for Innovation Capital Building on this progress, it is critical to ensure a strong, sustainable early-stage pipeline that feeds and fuels continued venture success. The health of the entire innovation funding continuum depends on a strong start: without a vibrant early-stage ecosystem, even the best-capitalized venture funds face weaker deal flow, constrained investment opportunities, and diminished long-term returns. At the same time, Canada is competing within an increasingly aggressive global environment for investment capital. Strategic incentives like the U.S. Qualified Small Business Stock (QSBS) exemption have strengthened America’s early-stage funding environment, attracting risk capital and reinforcing their innovation leadership. Without comparable incentives, Canada risks losing talent, investment, and global competitiveness at the earliest stages. It should also be recognized that many of Canada’s angel investors and family offices are active Limited Partners (LPs) in Canadian venture capital funds. Their participation reflects the integrated nature of Canada’s innovation capital continuum—where a vibrant early-stage ecosystem and a globally competitive venture capital sector are mutually reinforcing drivers of long-term economic growth. It is crucial to emphasize that enhancing early-stage capital mechanisms will complement—not compete with—the institutional venture capital sector. Strengthening pre-institutional capital supply creates a stronger and more diverse investment pipeline, directly benefiting institutional investors through improved deal flow and risk-adjusted returns. Our shared opportunity is to build a unified, globally competitive capital continuum that positions Canadian entrepreneurs for success at every stage of growth. Against this backdrop, our consultation focuses specifically on the earliest stage of capital formation: the Supply of Capital. This consultation directly aligns with the Lifecycle of Capital™ framework—specifically focusing on the first phase: Supply of Capital . Ensuring robust early-stage investment incentives strengthens the foundational stage of the innovation pipeline, ultimately enhancing outcomes for subsequent phases of deployment and momentum.
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