[Shared] Consultation Document and Backgrounder_ Strategic Incentives for Mobilizing Risk Capital in Canada-2.pdf | 2 |
Policy Consultation and Backgrounder: Strategic Incentives for Mobilizing Risk Capital in Canada | 2 |
Executive Summary | 2 |
Purpose of Consultation | 2 |
Context and Background: Strengthening Canada’s Full Innovation Capital Continuum | 3 |
Global Competition for Innovation Capital | 4 |
Lifecycle of Capital™ Framework | 5 |
Policy Mechanisms Under Consideration | 5 |
1. National Investment Tax Credit | 5 |
3. Flowthrough Shares Adaptation for Startups | 7 |
Strategic and Comparative Insights | 7 |
How To Respond | 8 |
Next Steps | 8 |
[Backgrounder on next page] | 8 |
Backgrounder: The Evolution of Venture Capital and Angel Investment in the U.S. and Canada | 9 |
Executive Summary | 9 |
1. Introduction | 10 |
2. Institutional vs. Pre-Institutional Vehicles: A Critical Distinction | 10 |
Institutional Capital Infrastructure | 10 |
Pre-Institutional Capital Dynamics | 10 |
Implications for Policy | 11 |
3. Venture Capital Development in the United States | 11 |
Foundations (1940s-1970s) | 11 |
Growth and Institutionalization (1970s-1990s) | 11 |
Maturation and Cycles (1990s-Present) | 11 |
4. Angel Investment in the United States | 12 |
Early Angel Investing (Pre-1990s) | 12 |
Professionalization and Organization (1990s-2010s) | 12 |
Democratization and Platform Models (2010s-Present) | 12 |
5. Venture Capital Development in Canada | 12 |
Early Attempts (1960s-1980s) | 12 |
Evolution and Reform (1990s-2010s) | 13 |
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Recent Developments (2010s-Present) | 13 |
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6. Angel Investment in Canada | 15 |
Early Development (Pre-2000s) | 15 |
Organization and Growth (2000s-2010s) | 15 |
Current Landscape (2010s-Present) | 15 |
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7. Comparative Analysis: Key Differences Between U.S. and Canadian Risk Capital Ecosystems | 16 |
Structural Differences in Venture Capital | 16 |
Contrasts in Angel Investing | 16 |
8. Core Challenges in Canada's Risk Capital Ecosystem | 17 |
1. Disproportionate Growth in Funding Continuum | 17 |
2. Limited Institutional Investor Support | 18 |
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3. Structural Weaknesses in Pre-Seed Ecosystem | 19 |
9. Policy Implications and Recommendations | 19 |
Ecosystem Approach | 19 |
Private Sector Alignment | 19 |
Tax-Based Incentives for Angel Investment | 19 |
Regional Balance | 19 |
Long-Term Policy Stability | 20 |
10. Case Study: How the UK’s SEIS and EIS Schemes Unlocked Billions in Early-Stage Capital | 20 |
Policy Design | 20 |
11. Conclusion | 21 |
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Appendix A: Summary Comparison of Proposed Early-Stage Investment Incentives | 23 |
Appendix B: Glossary of Terms | 24 |
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