Government of Canada Unveils $1.75-Billion Venture Capital Plan
The Government of Canada announced a $1.75-billion CAD injection into the domestic venture capital ecosystem, combining a $750-million early and growth-stage funding envelope with the latest iteration of its flagship fund-of-funds program, BetaKit reported. The dual initiatives, managed by the Business Development Bank of Canada (BDC), aim to stimulate private investment and support technology companies across all stages of development.
Announced at the Toronto headquarters of autonomous driving unicorn Waabi, the comprehensive Venture and Growth Capital Plan seeks to attract at least $3.8 billion CAD in private capital. Industry stakeholders have long debated how the federal funds should be allocated, with competing visions presented by leading investor advocacy groups ahead of the official breakdown.
Early and Growth Stage Investment Strategy Breakdown
Promised under Budget 2025, the $750-million Early and Growth Stage Investment Strategy targets financing gaps for both nascent and scaling domestic tech companies. Of that total, $675 million is earmarked for later- and growth-stage gaps to ensure firms reaching the Series B stage and beyond have sufficient capital to scale domestically, according to BetaKit. The remaining $75 million focuses on pre-seed and seed-stage investments in strategic sectors such as advanced manufacturing, cleantech, life sciences, and quantum technology.
“The hardest cheque isn’t the first one,” said Waabi founder and CEO Raquel Urtasun, introducing Minister of Industry Melanie Joly at the announcement. “The pre-revenue growth rounds are really where too many promising companies are lost along the way.”
Minister Joly noted that while Canada excels at starting companies, too few domestic investors back the critical growth phase. The federal government is currently seeking feedback to inform the design of the later stream before November 23, while consultations and calls for proposals for the pre-seed and seed portion will follow at a later date, Innovation, Science and Economic Development Canada (ISED) confirmed to BetaKit.
Growth Venture Capital Catalyst Initiative Launch
The second pillar of the federal plan is the $1-billion Growth Venture Capital Catalyst Initiative (Growth VCCI), initially announced in late 2024. Designed to attract an additional $2.1 billion in private dollars, Growth VCCI co-invests alongside fund-of-fund managers with a matching ratio of at least 3:1 private to public capital.
The program structure includes a core $700-million VC stream for fund-of-fund managers, $200 million dedicated to direct investments in life sciences startups, and $100 million for emerging managers who typically back early-stage companies outside traditional hubs like Vancouver, Toronto, and Montréal. The call for expressions of interest for the first fund-of-funds stream opened on January 21, with applications closing on January 21.
Participating funds-of-funds must establish a principal office in Canada, ensure at least 60 percent of their fund investments target Canadian VC firms, and direct 90 percent of their direct investments into domestic startups. These funds must raise a minimum of $150 million and secure a first close within 18 months of confirmation.
Investor Advocacy Organizations Propose Competing Visions for Funding
Ahead of the federal announcement, organizations including the National Angel Capital Organization (NACO), the Canadian Venture Capital & Private Equity Association (CVCA), and the Canadian Startup Capital Association (CSCA) put forward contrasting proposals for the $750-million envelope. Leading investor advocacy organizations presented competing visions for how the funds should be distributed in recent months. The final breakdown closely mirrors the CVCA's recommendations while retaining specific funding for early-stage companies.
“CVCA has been making the case for a strong capital base that can follow Canadian companies as they grow, and the announcement today really is a continuation of that,” CVCA CEO Benjamin Bergen told BetaKit. Meanwhile, NACO CEO Claudio Rojas praised the inclusion of pre-seed funding, noting that past programs failed to reach that level.
Despite the positive reception, industry leaders cautioned that historical precedent suggests capital could take 12 to 18 months to reach actual fund managers and startups. Both Bergen and Rojas emphasized the necessity for the federal government to execute the rollout with agility and speed to match a competitive global market.
When Does the Growth VCCI Call Close?
When does the call for expressions of interest close?
The call for expressions of interest for the first Growth VCCI fund-of-funds stream opened on January 21 and is scheduled to close on January 21.
How much private capital does the federal government hope to attract?
The federal government aims to attract at least $3.8 billion CAD in private capital across both programs, with Growth VCCI specifically structured to draw an additional $2.1 billion.
What are the investment requirements for participating funds-of-funds?
Participating fund managers must establish a principal office in Canada, raise a minimum of $150 million, allocate at least 60 percent of fund investments to Canadian VC firms, and ensure 90 percent of direct investments go to domestic startups.
How is the $750-million Early and Growth Stage Investment Strategy split?
The envelope allocates $675 million to later- and growth-stage financing gaps beyond the Series B level, while dedicating $75 million to pre-seed and seed-stage startups in sectors like cleantech, life sciences, and quantum technology.