Ottawa Commits $675 Million to Keep Late-Stage Startups in Canada

By Daniel Okafor

Canada will deploy $675 million toward later-stage companies, the single largest piece of a $1.75-billion plan Ottawa says will help homegrown firms scale at home rather than sell or relocate abroad. Industry Minister Mélanie Joly announced the Venture and Growth Capital Plan in Toronto on Oct. 22.

The plan splits into two programs. Both were funded in Budget 2025. The Business Development Bank of Canada (BDC) will manage the investments on the government's behalf.

What is in the $1.75 billion?

The first component is the $1-billion Venture and Growth Capital Catalyst Initiative. Joly broke it into three streams:

• $700 million for a fund-of-funds stream that leverages private venture capital
• $200 million dedicated to life sciences
• $100 million for emerging fund managers, including those outside traditional venture hubs

The second component is the $750-million Early and Growth Stage Investment Strategy. It directs $75 million to pre-seed and seed companies. The remaining $675 million goes to later-stage companies — the software and AI suppliers that appear on enterprise vendor shortlists — where access to enough capital often decides whether they keep scaling in Canada.

Who will run the money?

BDC, the federal development bank, manages the investments. Its president and CEO, Isabelle Hudon, framed the plan as a question of options for founders.

"We need to give entrepreneurs more options to access capital early, scale their businesses and keep them here," Hudon said.

Joly cast the program against a volatile global backdrop.

"In a more complex and unpredictable global economy, Canada is investing in Canadian champions to compete globally, create jobs and strengthen Canada's position as a leader in venture capital," Joly said.

Does the government have a track record here?

Yes, and Ottawa is citing it. According to the government's backgrounder, previous federal venture programs invested $1.2 billion. That money helped fund managers raise $3.7 billion. Combined, the programs supported more than $6.4 billion in investment flowing into Canadian companies.

That leverage ratio matters. Every public dollar in those earlier programs pulled roughly three dollars of private fund manager capital behind it, and the new plan is built on the same fund-of-funds logic — public money positioned as a limited partner that crowds in private venture capital rather than replacing it.

What does the plan not solve?

Capital addresses one constraint. It does not create customers. Canadian firms still need buyers willing to move from a pilot project to a real contract, and that step is where many homegrown vendors stall.

In June, Startup Genome CEO JF Gauthier argued governments should "stimulate local corporate demand" by connecting startups with corporations willing to become early customers. His point: procurement is part of the growth story. A company can raise capital, but somebody still has to buy what it is selling.

That leaves a gap the new $1.75 billion does not directly fill. The catalyst initiative and the investment strategy put money into funds and companies; neither program, as announced on Oct. 22, includes a procurement or corporate-demand mechanism.

What happens next?

BDC now takes over execution. How fast the $700-million fund-of-funds stream reaches private managers, and whether the $100-million emerging-manager stream lands with funds outside Toronto, Montreal and Vancouver, will determine whether the plan changes where Canadian companies scale — or just how much they raise before they leave.