A Letter from Canada's Early-Stage Investment Community

We are Canada's angel investors, angel groups, pre-seed and seed funds, venture studios, and early-stage investment organizations. We write with one voice, and with one purpose: to urge you to deploy the full $750M early-stage envelope at the pre-seed and seed stages, as recommended by the National Angel Capital Organization (NACO) in Seeding Growth: The Case for Early-Stage Capital in Canada's $1.75B Venture Strategy (March 31, 2026).

The National Angel Capital Organization (NACO) is Canada's national infrastructure for early-stage capital. Established in 2002, NACO has demonstrated steady leadership with a longstanding track record as the steward of angel investment activity in Canada. For more than two decades, NACO has been a trusted partner with the Federal Government and provincial governments including close working relationships with the Governments of Alberta, British Columbia, Ontario, Quebec, and Yukon. NACO represents over 4,000 individual investors and serves as the national umbrella for more than 100 member organizations.

The undersigned organizations support the National Angel Capital Organization in its recommendations and stand behind the evidence, analysis, and program design set out in its white paper. Together, our members have deployed hundreds of millions of dollars of risk capital into thousands of Canadian companies. We know this ecosystem from the inside, and we know what it needs now.

A Generational Moment

Canada stands at a decisive point for its innovation economy. The choices made in the coming weeks will shape the next decade of company formation, technology leadership, and economic sovereignty. Budget 2025's $1.75B Venture Capital Strategy is a meaningful commitment. The $1B institutional component addresses later-stage capacity, and that mandate matters. But the remaining $750M, the early-stage envelope, is the piece that determines whether the broader strategy succeeds or stalls.

Deployed at the earliest stages, $750M seeds the pipeline of Canadian companies that every downstream fund, every institutional investor, and every growth-stage program depends on. Deployed anywhere else, it leaves the structural weakness at the root of our ecosystem unaddressed and guarantees that the Government will be called upon to intervene again in four years, propping up another cohort of undercapitalized companies. The jurisdictions that are getting this right, like the United States and increasingly the EU, don't try to guess right. They fund thousands of attempts, knowing that a few will define entire industries. That's what drives growth, attracts capital, and builds lasting economic strength. Canada's advantage won't come from narrowing the field. It will come from expanding it.

The Evidence

NACO's white paper, grounded in a joint analysis with Startup Genome of approximately 65,000 funding rounds across Canadian and comparable U.S. ecosystems, documents a structural gap that can no longer be ignored:

• Canadian startups at seed receive rounds 40% smaller than U.S. peers, take five months longer to close, and enter a seed funnel 20% narrower.
• The documented annual early-stage funding gap is $323M US — more than $1.6 billion over five years.
• Only 22% of Canadian Tier 1 seed-funded startups progress to Series A, compared to 28% for U.S. Tier 1. Canada's top three ecosystems have lost $66 billion US in startup ecosystem value over five years.
• Canadian AI-native startups raise approximately half as much at seed as their U.S. counterparts, and take 31% longer to close rounds. In a sector where speed is decisive, this gap is existential.
• CPP Investments now allocates 47% of its portfolio to U.S. assets and only 12% to Canada, the lowest domestic share in its history. A decade of VCAP and VCCI has not reversed this. Scaling later-stage vehicles alone will not produce the domestic returns needed to attract Canadian institutional capital. A deep, well-capitalized pipeline will.

Early-stage investment is also where Canada has a structural advantage. Pre-seed and seed are hyperlocal, high-risk, and relationship-driven. This is where domestic ownership is determined, where the cap tables that will anchor Canada's future champions are written, and where economic sovereignty is either built or quietly ceded.

We Endorse NACO's Two Recommendations in Full

We collectively endorse NACO's recommendations for the $750M envelope. These recommendations were grounded in a 9-month industry-led national consultation process with over 250 ecosystem leaders, and backed by the research and data outlined in NACO and Startup Genome's report on Canada's Funding Gaps.

Recommendation 1 — Early-Stage Matching Funds Program ($500M). A competitive, equity-based program operating at a 2:1 private-to-public leverage ratio that mobilizes an additional $1 billion in private investment, reaches 500–1,000 Canadian companies, and is designed to fill the most urgent gaps: 60% to strategic sectors (AI, quantum, aerospace & defence, life sciences, advanced manufacturing, clean energy), 30% to non-urban regions, 15% for emerging fund managers.

Recommendation 2 — Early-Stage Infrastructure Funding Initiative ($250M). A five-year operational investment in the foundational layer of Canada's angel networks, venture studios, and pre-seed/seed-stage venture funds. Targeted to strengthen 125 early-stage investment organizations, onboard 10,000 net new active investors and LPs, support funding of 5,000 companies at pre-seed and seed, and deliver a 5x private capital mobilization multiple per public dollar.

Together, these pillars close the documented $1.6B US structural gap and build the pipeline depth that generates stronger returns at every subsequent stage. They are not in competition with the $1B institutional component. They are the condition that makes it work.

The Canadian angel and early-stage investment networks span every region of the country. These local organizations know how to deploy this capital, crowd in private dollars alongside it, and strengthen the infrastructure that makes it sustainable.

We ask you to act on NACO's recommendations with the determination and urgency this moment calls for. Canada's innovation economy does not need incrementalism. It needs bold action that will deliver real change, create an environment where entrepreneurs can launch and scale globally competitive companies, and ensure that the founders, talent and capital needed to build those companies choose to stay and grow in Canada.

Respectfully,