Canada’s venture capital industry association has urged the federal government to use its $750-million startup program to bolster funding for growth-stage companies, arguing they have the most potential to generate economic returns for the country. 

In recommendations submitted to the departments of Innovation and Finance, the Canadian Venture Capital and Private Equity Association (CVCA) argued that Ottawa should direct the money—announced in the 2025 budget to fill early growth-stage funding gaps—to investment funds capable of leading large financing rounds. The group said the strategy should support companies raising Series B and later rounds, where Canadian investors often have less capacity to participate. 

Strengthening that part of the market, it said, would help more firms scale in Canada, allowing the country to retain ownership, decision-making and economic value as startups grow.  

In its submission, CVCA said Canada has built a relatively strong pool of early-stage startups, supported in part by the government’s Venture Capital Catalyst Initiative, which has put $1.2 billion into the space, with another $1 billion on the way. But the association said those companies struggle to raise money as they grow. That’s in part because Canada generally does not have funds big enough to write large cheques, the association claimed.

Having relatively few large domestic VC funds means Canadian companies often rely on foreign capital to scale, according to the CVCA. The association found that Canadian-only investors contributed more than 70 per cent of the deal value in rounds under $5 million in 2024, but that share fell to 12.7 per cent in deals larger than $50 million, with the share of U.S. investors increasing with the size of each round. CVCA’s analysis of 35 of the largest Canadian growth rounds between 2021 and 2024 found that American investors led 20 of them, with just seven Canadian leads. “A lot of the upside is going south of the border,” said CVCA chief executive Benjamin Bergen. 

The CVCA said Ottawa’s new program could help close that gap by strengthening domestic funds that can invest in and lead bigger deals. That would help give Canadian investors greater influence, as lead investors typically enjoy more board seats, governance rights and a greater say over exit strategies—factors that can shape where companies decide to grow their business and where economic value accrues. “If we want to capture the IP, the talent, wealth and sovereignty through the ownership of these firms, making sure there is a Canadian component is critical,” Bergen said. 

The submission acknowledged that early-stage funding has also been pinched in recent years. The association’s 2025 industry report shows venture capital has become increasingly concentrated in fewer, larger deals. Startups and scaleups raised about $8 billion in funding in 2025, down slightly from the year before, even as a late-year surge in megadeals pushed the fourth quarter to a record high. 

The CVCA said that’s a reflection of funds not having the capital to invest in new companies. Instead, they’re reserving the money they have to make follow-on investments in existing portfolio companies. A recent RBCx report found that investors’ share of money available for initial investments fell from 81 per cent in 2022 to 42 per cent last year. 

The CVCA also recommended the government deploy the $750 million quickly—starting this year—and prioritize sectors seen as strategically important to Canada’s economy, including AI, quantum computing, life sciences and clean energy.