The Government of Canada will share how it plans to deploy its previously announced “early growth-stage” funding envelope today, alongside a call for expressions of interest in the latest version of its longstanding fund-of-funds program.
The breakdown of the former had been eagerly awaited by Canada’s venture capital (VC) sector, with leading investor advocacy organizations having presented competing visions for how the funds should be distributed in recent months.
Both developments are being announced this afternoon in Toronto at local autonomous driving unicorn Waabi’s office. The two programs total $1.75 billion CAD, and will be managed by the Business Development Bank of Canada, and encompass the Government of Canada’s Venture and Growth Capital Plan. The feds hope the funds will help to attract at least $3.8 billion CAD in private capital to invest in Canadian technology companies across stages.
With the $750-million Early and Growth Stage Investment Strategy, first promised in Budget 2025, the federal government has confirmed that it aims to address financing gaps for nascent and scaling domestic technology companies alike, though the bulk of the funding has been allocated towards the latter group.
Of that, $675 million will go to addressing “later- and growth-stage” gaps and ensuring that more tech firms at the Series B stage and beyond have the capital they need to scale and remain anchored in Canada. The remaining $75 million has been dedicated to bolstering the country’s pre-seed and seed-stage startup investment landscape in sectors like advanced manufacturing, cleantech, life sciences, quantum, and other strategic industries.
The feds have not yet made clear how much of this $750 million will go directly towards other funds versus startups.
The other key part of the Government of Canada’s Venture and Growth Capital plan is its $1-billion Growth Venture Capital Catalyst Initiative (Growth VCCI), initially announced in 2024 by the previous Liberal government. Through that initiative, the feds aim to attract an additional $2.1 billion in private dollars to invest in Canadian firms by co-investing in other fund-of-fund managers.
The country’s current Liberal government revealed earlier this year that Growth VCCI would include a core, $700-million VC stream for other fund-of-fund managers, $200 million for firms that invest directly in life sciences startups and $100 million for emerging managers, who typically invest in early-stage companies, including VCs focused on strategic sectors and located outside traditional hubs.
The federal call for expressions of interest for that first stream of Growth VCCI is opening today and will remain so until Jan. 21.
Canada’s VC sector has been waiting for this news since 2025 and 2024, respectively. While industry leaders whom BetaKit spoke with expressed excitement that this process is finally moving, based on historical precedent and the current stage, it could still take at least 12 to 18 months before this capital actually reaches the country’s fund managers and, ultimately, tech startups, if government does not take steps to expedite the process.
On the Growth VCCI side of the equation, feds must now gather submissions and choose recipients, and then those firms will need to secure a certain amount of private capital in order to unlock any government funding. The ultimate size of fund managers’ Growth VCCI allocations will be dependent on how much they are able to raise elsewhere. Given the state of the VC fundraising market, which has seen steep declines in dollars raised and funds closed in recent years, that last step could take longer than usual.
The same will likely hold true for the Early and Growth Stage Investment Strategy, which has yet to release a call for expressions of interest at this time.
In recent months, industry organizations representing Canadian investors, including the National Angel Capital Organization (NACO), the Canadian Venture Capital & Private Equity Association (CVCA), and the Canadian Startup Capital Association (CSCA), had each put forth differing assessments on where the ecosystem’s biggest challenges lay alongside competing visions for how that $750-million envelope ought to be spent.
While its ultimate breakdown aligns much more closely with what the CVCA had been calling for, it still includes some funding for the early-stage ecosystem.
Feature image courtesy Melanie Joly via LinkedIn.
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