Money
Ottawa bets $1.75 billion that Canada's startups will stop moving south
A new venture-capital strategy promises early-stage cash and pension-fund money for homegrown firms — the government's answer to Silicon Valley brain drain.
Published: October 23, 2026 · Updated: October 23, 2026 · 2 min read
The federal government will invest $1.75 billion to back Canadian startups and keep them from decamping to the United States, Industry Minister Mélanie Joly announced in Toronto on Thursday, in a strategy Ottawa says will unlock far more private capital for homegrown innovators.
The plan has two parts. The first, called Backing the Builders: Canada's Early and Growth Stage Investment Strategy, directs $75 million to pre-seed and seed-stage companies — particularly in R&D-intensive sectors like quantum technologies and advanced manufacturing — and $675 million to later- and growth-stage businesses, the National Post reported.
The second is the Venture and Growth Capital Catalyst Initiative, through which Ottawa will put $1 billion to work starting in the 2026–27 fiscal year, co-investing alongside the private sector. It runs through three streams, including a $700-million fund-of-funds stream aimed at pulling pension funds and other institutional investors into venture capital, and a $200-million life-sciences stream backing Canadian fund managers focused on life-sciences companies, according to the federal announcement.
The talent problem
Joly, who made the announcement alongside entrepreneur Raquel Urtasun, framed the plan as a bid to keep founders, ideas and jobs in Canada. Canadian tech leaders have long argued that startups migrate south because U.S. investors and talent are easier to access: 517 U.S.-based tech firms with Canadian or Canadian-educated founders have collectively raised more than US$400 billion, according to a recent analysis by advocacy group Build Canada, the National Post reported.
"Our government's new venture-capital strategy will be bold, forward-looking and transformative for Canada's venture-capital industry by unlocking more private capital to back Canadian entrepreneurs and innovators," Joly said in a statement.
The trade-war backdrop
The announcement lands as Ottawa spends heavily to shield domestic industries from U.S. tariffs — the same day Joly threatened Cleveland-Cliffs with legal action over Stelco layoffs, and two days after the Carney-Ford $8.7-billion Ontario industry package. The venture plan is the innovation-economy counterpart to that industrial defence.
The government is now opening the bidding process for the funds, CP24 reported. Watch which fund managers and pension investors sign on — that is where the $1.75 billion either multiplies into something bigger or stalls.
What matters
What happened
Industry Minister Mélanie Joly unveiled a $1.75-billion venture-capital strategy in Toronto on Oct. 22.
Why it matters
Canada loses founders and scale-ups to the U.S. at an alarming rate — 517 U.S. tech firms with Canadian founders have raised more than US$400 billion. Keeping them home means jobs and a tax base here.
What we know
$75M for pre-seed and seed-stage firms (quantum, advanced manufacturing), $675M for later- and growth-stage businesses, and a $1B catalyst fund from 2026–27 that co-invests with pensions and institutional investors through fund-of-funds and life-sciences streams.
What we don’t
What’s next
The bidding process is opening now; the test will be whether Canadian pension giants actually put money into startup-focused funds.
Sources
- Innovation, Science and Economic Development Canada · other
- National Post (via europesays) · other
- CP24 · other
Mélanie Jolyventure capitalstartupsinnovationpensionsBuild Canada
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