Canada’s startups are being left behind by global peers, and the slower growth is costing the country tens of billions in lost value. 

A new report from the National Angel Capital Organization (NACO) and Startup Genome estimates that Canada’s largest tech hubs—the Toronto-Waterloo area, Vancouver and Montreal—collectively missed out on US$66 billion between 2019 and 2024.

NACO is a national Canadian association representing angel investors, while Startup Genome is a global research and advisory firm that benchmarks startup ecosystems worldwide.

The forfeited value corresponds to roughly 133,000 fewer startup jobs and US$77 billion less in public-market value down the road, according to the study, with fewer companies scaling to the point of becoming large employers or listed firms. 

The authors calculated the lost value by comparing Canada’s growth to global tech ecosystems of similar sizes. Looking at metrics like fundraising and exit value, the authors found that Canada’s main startup hubs grew about 2.2 per cent annually from 2019 to 2024, while global peers grew between nine and 17 per cent.

The report links Canada’s slow growth to a dearth of early-stage funding. Seed rounds in Canada’s top tech cities are about 40 per cent smaller than in comparable U.S. hubs, it found, a disparity that’s grown dramatically since 2012. Canadian startups also take between 15 per cent and 40 per cent longer to start raising money than their U.S. peers. 

The gaps are particularly wide for life sciences companies, where startups raised between 75 per cent and 85 per cent less in Canada than in the U.S. AI-native companies also start off slower in Canada, with 66 per cent less early funding and taking 31 per cent longer to close seed rounds. 

In dollar terms, the report estimates an annual shortfall of at least US$141 million in seed and pre-seed funding and another US$181 million at the Series A level—the latter largely a downstream consequence of too few funded early-stage companies advancing to the next stage. 

NACO chief executive Claudio Rojas said Canada’s lagging seed and pre-seed funding has a ripple effect on the entire startup ecosystem. It means there are fewer startups that grow into large, successful companies, creating fewer jobs and fewer public companies. That in turn means investors collect less money to cycle back into new startups. 

The report traces some of the gaps back to government policy changes around 2017, when Ottawa replaced the Venture Capital Action Plan, which backed funds investing at the earliest stages, with the Venture Capital Catalyst Initiative, which favoured more established companies. 

More recently, venture capital in Canada has become more concentrated in fewer large companies. The Canadian Venture Capital and Private Equity Association’s annual report published last week shows that dollars invested in later-stage and growth rounds increased 25 per cent and 60 per cent, respectively, compared to 2024. Megadeals—those worth $50 million or more—accounted for roughly two-thirds of total capital raised in 2025. 

At the same time, early-stage funding has shrunk. In 2024, seed-stage capital fell nearly 47 per cent year-over-year, CVCA found, and continued to dip slightly in 2025. The bigger drop last year, however, was among Series A and B deals, where investments at these stages fell to just two-thirds of 2024 levels, with the deal count falling 28 per cent year-over-year. “Series A gaps are inherited from seed-stage deficits,” Rojas said at a NACO event for founders and investors last week. “Strengthen the foundations and the benefits cascade forward.”

In the 2025 federal budget, the government said it will launch a strategy to address “early growth-stage funding gaps,” which will include $750 million in cash to support startups. The details of the strategy haven’t been released.