Liam Gill writes that Canada needs to unlock domestic capital to grow economic resiliency.
Liam Gill is the lead of the Capital Program at MaRS Discovery District, where he helps Canada’s most promising early-stage companies connect with the capital they need to scale.
This week, Prime Minister Mark Carney will gather global financiers in Toronto for the country’s first-ever Canada Investment Summit. The message will be clear: Canada needs foreign capital to drive economic growth. While more foreign direct investment helps, it also distracts from a bigger problem: Canada isn’t deploying the wealth it already has. In a world where economic sovereignty is increasingly important, building a resilient, innovation-driven economy starts with unlocking domestic capital.
Consider the Dominion List, which tracks Canadian founders building companies in the United States; there are currently 517 US technology companies with a Canadian founder, worth a combined $574 billion CAD, with 56 valued at over $1 billion US ($1.4 billion CAD). For context, all of Canada’s startups combined raised just $9.13 billion CAD last year, and this country is home to only 33 startups valued at over $1 billion USD. This isn’t a comparison between US entrepreneurs and Canadian entrepreneurs; it’s a reminder that Canadian founders are currently contributing more to the US economy than Canada’s.
Canada doesn’t have a capital shortage. It has an incentive problem.
That’s not their fault. Canada has the talent, but what it doesn’t have, for founders who want to scale, is accessible capital. So they go where they can get it.
This does not need to be the case.
We have capital. Canada is home to nearly 177,000 families worth more than $7.5 million. These are exactly the households that fuel angel investing everywhere else in the world. In the US, more than 300,000 active angel investors made over 70,000 deals last year, worth more than $25 billion USD ($34 billion CAD) combined. In Canada, angel investors made just 490 deals worth $114 million CAD, about 0.33% of what their US counterparts invested.
Canada doesn’t have a capital shortage. It has an incentive problem. We’ve built an economic system that incentivizes this money to sit in non-productive assets like GICs and real estate instead of productive assets like technology startups that create jobs, tax revenues and economic growth.
The exodus of founders to the US should worry Canadians even more, given that 88 percent of Dominion List founders were educated at Canadian, publicly funded universities, meaning our taxpayer dollars are subsidizing US growth. The trend is accelerating; more than half of the companies on the list were founded in 2023 or later.
Some of the biggest names on the list, OpenAI, Anthropic and xAI, were founded or built in part by people educated in Toronto. Modern AI itself was invented at the University of Toronto. Given that, it is not surprising Torontonians are behind so much of the field’s progress. What is surprising, unfortunately, is that we still haven’t found a way to get our own high-net-worth individuals to back these talented researchers so they can build world-class companies at home instead of somewhere else.
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The National Angel Capital Association quantified just how large this gap is, finding that Canada faces an annual pre-seed and seed-stage funding shortfall of roughly $195 million and a Series A funding deficit of $250 million. Together, those gaps have cost Canada’s three largest technology hubs (Toronto-Waterloo, Vancouver and Montreal) an estimated $92 billion in lost ecosystem value over the past six to eight years.
If Prime Minister Mark Carney wants to build Canada’s economy on the foundation of its own talent and entrepreneurs, he needs to unlock the domestic capital to fund it. That means tax incentives for investors backing innovative startups—the kind the US and UK already offer. It also means educating Canadians who built wealth in manufacturing or real estate on the returns technology investments have historically delivered. US technology angel investors averaged a 27 percent internal rate of return, significantly outpacing public markets or real estate.
As we invite the world to invest in Canada, the clearest signal we can send is that we believe in our own potential enough to invest in ourselves. Foreign capital should complement and amplify domestic capital, not replace it. We have a real chance to combine both to build world-class companies here at home. But if Canadians won’t invest in Canada, why would anyone else?
The opinions and analysis expressed in the above article are those of its author, and do not necessarily reflect the position of BetaKit or its editorial staff. It has been edited for clarity, length, and style.
Image courtesy Julian Gentile via Unsplash.