5. CONCLUSIONS AND RECOMMENDATIONS 5.1. The role of funding policy The goal of funding policy as a subset of public startup policy is to support the growth and development of a community of expert venture investors that can supply a competitive amount of capital to startups at a competitive speed, along with advice or mentorship, in order to fully play their role as funding pillars of the startup ecosystem. Achieving this goal will catalyze a faster-than-organic increase in the size, growth rate and success rate of startup ecosystems. In terms of developing a sustainable community of investors, this has been achieved in Canada with VC firms at series A and B+. However, this goal has not yet been achieved at Seed stage, with underresourced angel groups and seed VC firms that do not have enough capital to support the best Canadian startups. In terms of the impact on entrepreneurs, the data above shows that there is still significant room to increase success rates closer to those of US peers. The ‘attrition funnel’ shows that there remain lower rates of success – that is, fewer Canadian startups receiving seed funding, and fewer then progressing to scale, relative to the US. Fewer seed rounds means wasted opportunities and reduced dealflow in later-stages. The ultimate consequence of this lower funding rate is that Canada is failing to realise the opportunities of entrepreneurship, producing fewer firms that grow to scale (which would otherwise create economic value, jobs and innovations), and fewer firms that exit (which would otherwise recycle capital and experience back into the ecosystem to benefit the next generation of startups). In addition, data also shows that funding rounds are smaller and slower than US peers. This is likely to be increasingly problematic as numbers of AI startups increase, since these firms are typically receiving larger, quicker rounds. Given that
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