EXECUTIVE SUMMARY
Note: all figures in USD
Canada’s startup ecosystems are in strategic decline — and one of the root causes is clear: chronic underinvestment in seed-stage funding. Despite large public investments in Fund-of-Funds, capital has overwhelmingly flowed to later-stage ventures, leaving the seed pipeline under-funded. This report provides unequivocal evidence that this gap is real and widening with the advent of the AI era — and unless addressed with targeted interventions, it will continue to erode Canada's global economic competitiveness as we lose further grounds in the #1 engine of future-proof job creation and economic growth that startup ecosystems have become. Within the last 5 years, Canada’s top three ecosystems alone lost a combined 36% or $66B USD in startup Ecosystem Value (EV) and produced fewer exits worth at least $75B and translating into 133,000 fewer high-quality jobs and billions in exports and FDI.
The Diagnosis: A Structural Funding Deficit
● Across both Series A and Seed, the average Canadian startup (as well as the best ones) received smaller rounds – around 40% less at Seed and 25% less at Series A – than their U.S. peers, in the past two years. ● Canadian startups also take over 5 months longer to raise, on average, while the top of the seed funnel is 20% narrower ● Based on well established evidence, these gaps result in slower startup growth, fewer and smaller exits, holding back Canadian ecosystems across cycles of successful firms stimulating subsequent startups through resource recycling. ● We estimate the Series A gaps across Canadian ecosystems to be worth about $181 million USD per year and, in order to maintain the normal ratio of Seed:Series A funding observed across top North American startup ecosystems of 64%, of $116M USD per year at Seed, with a steeper Seed gap worth an additional $26M in Toronto-Waterloo. ● These funding gaps are most acute in Life Sciences and AI — the latter being the sector with the highest growth and global investment globally — where Canadian startups raise half as much at seed than U.S. peers and do so more slowly. Seed funding gaps cannot be patched by trying to catch up by investing more at Series A. The Seed funding gap opened in 2017 and widened then stayed about the
Startup Genome | San Francisco • Berlin • London • Delhi • Tokyo • Abu Dhabi • Bangalore • São Paulo
p. 3
Powered by FlippingBook