The problem is that both Seed and Series A funding need to be increased. Provided the Series A funding gap is estimated to be $181M per year and is proposed to be addressed through VICCI 3, then 64% of that amount should be invested in Seed funding, or $116M per year . A more practical way to approach these gaps is that for any investment of $1 in Series A funding through VICCI 3, $0.64 shall be invested in Seed funding to maintain a healthy Seed:Series A ratio of 64%. The above assumes Canadian startup ecosystems already have a healthy Seed:Series A ratio of 64 percent, but from Figure 7 above we know this is not true. Toronto-Waterloo actually has a much lower ratio, with a gap worth $26M per year. Therefore, the next allocation of capital (VICCI 3) shall invest 64% of any capital invested in any province or startup ecosystem at Series A into seed funding for that province or city, plus $26M per year specifically to close the deeper Seed gap for Toronto . Considering the gap in the size and number of seed and pre-seed rounds (seed table below), the gap of $141M per year (116M + 26M) is definitely required to close Canadian seed funding gaps. In fact, if we applied a similar logic to estimating the Series A gap to Seed, the gap is much larger, at $265M USD per year.
Est. number of Tier 2 startups
Seed Gap cf US per Tier 1 startup
Est. number of Tier 1 startups
Seed Gap cf US per Tier 2 startup
Category
Total seed gap
Top 10%
$2,559,183
21
$4,151,403
4
$70,613,823
Next 15%
$2,107,648
31
$1,372,361
6
$74,441,267
Bottom 75%
$660,255
156
$299,172
31
$112,513,937
Too few rounds
21% fewer than U.S. 21%/79% X 208 = 55
$150,000
55
$8,250,00
Total
---
208
---
42
$265,819,027
Startup Genome | San Francisco • Berlin • London • Delhi • Tokyo • Abu Dhabi • Bangalore • São Paulo
p. 39
Powered by FlippingBook