same across VICCI and VICCI 2. Without targeted interventions at Seed, these gaps will continue to directly result in a lower economic impact.
The Risk: Allocation of the $1B in New Public Capital
The proposed capital injection into Canadian Fund-of-Funds risks repeating past mistakes if no structural shift occurs. If the great majority is allocated to Series A and later rounds instead of capitalizing Angels and Seed VCs, it will not close and rather widen the existing seed gaps. This will cause Series A capital to chase too few seed-stage winners, leading to inefficiency and wasted public dollars – in addition to the continued direct and indirect negative impact on Canada’s startup ecosystems.
The Solution: Firm Capital Allocation to Seed and Pre-Seed
Startup Genome recommends that for each $1 in new Fund of Funds capital allocated to Series A, $0.64 (or ~40% of the total capital allocation to early-stage funding) be allocated to seed-stage instruments – plus additional injections for any region with deeper seed gaps. The objective is to broaden the top of the funnel while increasing startup success rates by combining mentorship with faster and larger size deals – especially for AI-Native startups. Specifically we suggest: ● Seed VC Expansion: Support existing generalist Seed funds and sector-focused ones. ● Broaden the mandate of existing Fund of Funds or create a new mechanism or function to manage injections of capital into seed funds: o Angel group sidecar or related funds: existing and new ones with requirements to raise more private capital alongside public capital (2:1 or 3:1) and to formally offer mentorship.
Instrument
More injection in Seed VC Funds Yes, for top startups; very important in AI
Angel Group Sidecar funds
Objective
Yes, for average and top startups Yes (though may not be primary intent)
Larger rounds
More small rounds
No
Faster rounds (esp. AI)
slightly for top startups
Yes for Seed
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