The Canadian VC Challenge
Why We’re Still Not Competing Globally
There’s a quiet discomfort running through Canada’s startup ecosystem — and it’s time we gave it language.
For all the noise we make about becoming a global innovation leader, Canada’s venture capital system remains structurally misaligned with that ambition. Our funds underperform, our founders leave, and our ecosystem drifts — not for lack of talent or intent, but because the incentives, capital structures, and cultural defaults of Canadian VC were never designed to create outlier outcomes.
Here’s the real challenge: Canadian venture behaves more like private equity — but without the returns or the operating discipline to back it up.
Canadian VC: Venture in Name, PE in Behaviour
Let’s call it what it is: Canadian venture capital has absorbed the worst instincts of private equity — risk aversion, late-stage preference, profitability obsession — without importing the one thing PE does well: operational value creation.
Instead of acting like conviction investors, many Canadian VCs:
Wait until startups are post-revenue and "de-risked"
Write smaller cheques than their U.S. counterparts
Offer minimal support beyond the capital
Prioritize fund optics over founder outcomes
The result? A system that chronically underperforms and relies heavily on public money (pension funds, government LPs) while failing to build companies that scale globally.
The Numbers Don’t Lie
Canada’s VC landscape is dominated by public-sector capital — and with that comes increased scrutiny, conservative risk appetite, and a bias toward incremental progress. But innovation isn’t incremental. Innovation requires bold bets, fast pivots, and deep, hands-on support.
What Canadian Venture Is Missing
If we want to build globally competitive startups, Canadian VC needs to evolve beyond capital deployment. That means:
1. Operational Partnership
Startups don’t just need money — they need executional muscle. The rise of Operating Partners in U.S. PE and VC firms reflects this shift. Founders need real help: sales strategy, international expansion playbooks, hiring frameworks, and more. Most Canadian firms aren’t providing it.
2. Early Globalization
Our domestic market is too small to build giants. Companies need to think globally from Day One — and that means funding strategies, advisors, and go-to-market plans that assume international scale, not just local survival.
3. Diversified LPs
Canada relies too heavily on public LPs. To shift the culture, we need more private capital: corporate venture arms, family offices, and foreign LPs that understand high-growth innovation cycles and don’t flinch at early risk.
4. Clearer Signals for Founders
Too many founders are unsure what Canadian investors actually look for. Terms like “traction” or “readiness” remain vague. If we want better startups, we need clearer guidance, sharper feedback, and real accountability.
A Missed Opportunity — But Not a Lost One
Canada has real advantages: generous R&D tax credits, political stability, and extraordinary technical talent. But we keep squandering that advantage by copying the U.S. in all the wrong ways — and comparing ourselves to them without changing the inputs.
If we’re going to compete globally, we can’t keep playing safe. We need a venture ecosystem that acts with urgency, funds with focus, and supports with substance.
The Canadian startup ecosystem has become excellent at finding non-dilutive capital— but this is not enough to support growth and build companies. That can change. But only if we stop mistaking polite optimism for structural progress.