The federal government has opened applications for its largest-ever venture capital funding program, giving private investors the opportunity to bid for the main tranche of a $1.75 billion package. 

Industry Minister Mélanie Joly announced Thursday that Ottawa is accepting bids for $700 million in government money for funds-of-funds, which invest in venture capital firms. The government expects its capital to attract another $2.1 billion from private investors, offering arrangements that reduce their risk and provide a greater share of potential returns.

The call for proposals comes nearly two years after the government first announced $1 billion for the flagship funding program, which it’s calling the Venture and Growth Capital Catalyst Initiative (Growth VCCI). It’s Ottawa’s fourth iteration of this kind of program, and by far the biggest. The program’s previous budget was $450 million. 

Like its predecessor, the program divides funding into three streams: along with the $700 million for funds-of-funds, $200 million to life-sciences funds and $100 million to emerging managers—often defined as investors raising their first few funds. Firms selected for the program will have to raise $3 from private investors for every government dollar they receive.

Joly also announced how Ottawa will divide a separate $750-million pool to address “early growth-stage” funding gaps, which has been the subject of months of debate within Canada’s investment industry. It’s earmarking $75 million for pre-seed and seed-stage investments in startups, with the remaining $675 million reserved for later-stage financing in an attempt to help companies scale in Canada. 

The Canadian Venture Capital & Private Equity Association (CVCA) had urged Ottawa to put the full $750 million behind Canadian growth-stage funds capable of leading Series B and later rounds. Those are the stages at which domestic investors drop out of rounds, leaving Canadian companies to rely on foreign capital, according to a CVCA analysis. 

The National Angel Capital Organization, meanwhile, argued that the shortage begins much earlier and that the government should prioritize filling the early-stage funding gap with the $750 million. The group had pushed for the money to be split into a $500-million matching fund for pre-seed and seed investments, and $250 million for operational expenses for organizations that support young startups, such as angel networks, early-stage funds and venture studios. 

While a fraction of the money will go to companies at the earliest stages, NACO welcomed the government’s decision. “For the first time, Canada’s venture capital strategy starts at pre-seed,” CEO Claudio Rojas told The Logic. Ottawa’s previous venture capital programs focused on seed and later funding stages. 

Rojas said supporting startups at their earliest stages is essential to building up the number of Canadian companies that could eventually land larger investments. Without that, he argued, growth-stage investors will look elsewhere for opportunities.

CVCA CEO Benjamin Bergen said the news was a “strong outcome” for scaling Canadian companies. “It gives Canadian investors greater capacity to finance innovation and growth here, alongside the private and international capital already coming into the market,” Bergen said in a statement. 

Ottawa is seeking applications from qualified funds-of-funds managers, including private investment firms and pension funds, until Jan. 21, 2027. The government estimates its combined $1.75-billion package will attract at least $3.8 billion in private capital, bringing the total investment to more than $5.5 billion.

VCCI works by putting public money into privately managed funds and funds-of-funds, which raise additional capital from investors and ultimately back Canadian venture funds and companies. The program, which is managed by the Business Development Bank of Canada, has become a major source of capital for Canada’s venture industry. 

Canada’s investment industry has been waiting nearly two years to begin bidding for the money. Investors who spoke to The Logic said the delay has been frustrating, and they don’t expect to see the money any time soon. Ottawa announced $450 million for its last VCCI program in April 2021, but did not open applications until May 2022. Four funds-of-funds managers were selected five months later. A lacklustre venture capital market meant fundraising among the selected firms stretched well into 2024.

The programs have nevertheless become a substantial part of Canada’s venture capital infrastructure. Ottawa has invested about $1.2 billion in recipient funds since launching the first iteration in 2014. Those managers had raised $3.7 billion from public and private investors and venture funds supported through the program have invested $6.4 billion in Canadian companies. 

Growth VCCI is arriving at a time when startups and scaleups are finding it increasingly hard to raise capital. Canadian VC firms raised $2.1 billion in 2025, down from more than $8 billion at the 2021 peak, while the five largest funds captured roughly 80 per cent of money raised, according to a January report from RBCx. 

Bergen and Rojas both stressed that the government needs to move fast to get the money to the investors raising new funds and companies that need capital. “Federal commitments made while managers are raising can unlock additional private capital and increase the amount of capital available to Canadian companies,” Bergen said. “Moving quickly will allow the government to capture that leverage.”