Canada Unveils $1.75 Billion Venture Capital Strategy to Keep Startups at Home
The Canadian federal government is launching a $1.75 billion venture capital strategy, including a $1 billion expansion of the Venture and Growth Capital Catalyst Initiative and a new $750 million program, to fund startups and anchor intellectual property in Canada.
Industry Minister Mélanie Joly announced on Thursday that the federal government, led by Prime Minister Mark Carney, will inject $1.75 billion into Canada’s venture capital industry to support fast-growing startups. The funding fulfills a commitment made in last November’s federal budget.
Of the total, $1 billion over three years will be allocated to the Business Development Bank of Canada (BDC) for the fourth iteration of the Venture and Growth Capital Catalyst Initiative (VGCCI). Previous iterations of the VGCCI ranged from $390 million to $450 million. The latest round includes a $700-million allotment for fund-of-funds managers that finance venture capital firms, requiring recipients to raise $3 in private capital for every $1 provided by Ottawa. An additional $200 million is committed to domestic VC fund managers backing Canadian life sciences companies, while $100 million is designated for emerging fund managers focused on strategic sectors or operating outside traditional hubs.
A separate new $750-million program directs $675 million through the BDC for later-stage domestic companies scaling their operations, alongside $75 million for nascent pre-seed and seed-stage companies. The broader strategy aims to bolster Canada’s economic independence, address homegrown financing gaps for young companies from early to late stages, and encourage pension funds and institutional investors to participate in domestic venture capital.
The initiative is intended to keep startups, intellectual property, and early corporate decisions anchored in Canada. Currently, 517 U.S.-based tech firms with Canadian or Canadian-educated founders have collectively raised more than US$400 billion.
While industry leaders welcomed the move, some angel investors argued the plan falls short of requests for earlier-stage funding infrastructure. The National Angel Capital Organization had requested $500 million to match early-stage investments and $250 million for operational infrastructure. The new plan provides only $75 million for pre-seed and seed stages, leaving those specific demands unmet.
Previous VGCCI programs took approximately 18 months from budget announcement to the selection of fund managers. Based on that timeline, winners for the current initiative may not be chosen until late spring 2027.