Enough Talk, Canada—It’s Time for Action to Protect Our Economy

In his recent article, "Welcome to the $100-Million Club," Sean Silcoff highlights a pivotal moment for Canadian innovation and investment. With more than 70 tech companies surpassing $100 million in revenue, Canada has built a record-breaking pipeline of scaled businesses, positioning the country for a wave of quality IPOs once market conditions stabilize.?

This momentum isn't accidental. It's the result of over a decade of strategic growth and collaboration across private and public capital allocation. But while the progress is undeniable, we face a critical moment. Without a bolder and cohesive national strategy, we risk losing this hard-earned progress and competitive edge.?

The Moment Calls for Action??

We need to attract and deploy investment here at home. Canada is void of a coordinated strategy for growth. At best, the absence of clear direction has resulted in fragmented approaches and missed opportunities. At worst, our own self-goal policies like the poorly designed tax increase on capital gains have only served to create uncertainty and a chill in capital formation.??

New leadership needs to prioritize growth, economic freedom, and smart capital deployment, and it is critical to address the uncertainty caused by the recent increase in the capital gains tax inclusion rate. Right now, both the Conservative Leader Pierre Poilievre and Liberal leadership candidate Chrystia Freeland have pledged to reverse this increase, yet the CRA continues to apply the higher rate until formal parliamentary processes are completed. This limbo creates a chilling effect on capital formation. We cannot wait. A clear signal from the new Minister of Finance, Dominic Leblanc Finance Canada / Finances Canada is urgently needed to stabilize the market—suspending the current inclusion rate for the upcoming tax season would demonstrate decisive action and reinforce confidence in Canada as an investment destination. This must go hand in hand with cutting red tape, rethinking our tax code, and putting forward a bold, practical industrial strategy to stimulate investment.?

Private capital plays a critical role, as a catalyst for transformative ideas, empowering businesses to scale and create jobs. By mobilizing private capital effectively, we can unlock the potential of high-growth industries and boost company formation, expanding the tax base.?

A Proven Track Record & How To Leverage It??

?It is time to seize this momentum. Canada’s public-private co-investment programs like the Venture Capital Action Plan (VCAP) and Venture Capital Catalyst Initiative (VCCI) have injected over $2.25 billion into the market, attracting over $3.53 billion in private capital. The results are clear: since 2013, we've seen venture capital investment skyrocket from under $2 billion annually to $11.9 billion as of Q3 2024. This investment has meant the creation of nearly 50,000 net new jobs, reaching over 730 Canadian companies.??

Programs like VCAP and VCCI shatter the typical perception of government initiatives. They position the government as an investor alongside other pools of Canadian capital. Not only will these dollars be returned to the crown, but, like any investor, the government also expects to earn a return. It’s a win-win—driving economic growth while efficiently utilizing public dollars.?

But capital alone can’t solve our challenges. We need a coordinated, strategic approach that focuses on company growth, productivity and reinvestment.??

Canada already has a competitive advantage in key sectors of the knowledge economy, such as AI, technology, life sciences, and advanced manufacturing. Our leadership in AI, supported by institutes like the Vector Institute, MILA, and Amii, puts us in a strong position—but retaining this edge requires a bolder commercialization strategy to keep talent and IP anchored in Canada. Similarly, Canada’s energy resources offer a unique advantage for powering data centers, AI infrastructure, and manufacturing—yet these strengths remain underleveraged. Now is not the time to slow down.?

The Role of Pensions and Private Capital??

Canada’s largest pension funds have long served as anchors of private investment, playing an important role in capital deployment across sectors including in innovation. However, there remains significant untapped potential to further align these capital reserves with Canada’s long-term growth objectives.?

If we are serious about building a resilient economy capable of supporting the next generation of industries, we must create a system that incentivizes these institutional investors to deploy more capital within Canada – across the economy. The absence of Canadian pensions as investors in Canadian private equity and venture capital funds largely stems from a structural mismatch in investment size. While Canadian funds typically seek investments between $5M to $50M, pension funds generally allocate $100M or more. This gap can be bridged by deploying pension capital through other entities into Canadian alternative fund investors.??

The fund-of-funds model, proven to drive growth, presents a significant opportunity to boost innovation, company formation, and economic growth. Beyond these areas, investment in energy infrastructure serves as a critical foundation for advancing technology and productivity. The 2024 Fall Economic Statement highlighted this potential, proposing incentives for pension plans to invest in sectors like data centres.?

This isn’t about government intervention but about reducing regulatory friction, streamlining approval processes, removing barriers to private capital deployment, and leveraging government to de-risk and incent investment. By positioning Canada as the obvious choice for long-term investment, we can ensure our domestic capital contributes to safeguarding our economy, while continuing to deliver reliable returns for pension plan members.?

What Needs to Change?

Canada’s prosperity depends on clear, decisive action. We can no longer afford to stumble through conflicting policies and short-term fixes. It’s time to unleash Canada’s ambition with a bold, strategic plan, a concrete industrial policy that clears the path for private investment, empowers pension funds to grow the economy at home, and ensures Canada’s industries lead on the global stage.??

Canada stands at a crossroads. Global trends toward isolationism and protectionism have been at play for years, and the re-election of U.S. President Donald Trump only heightens this reality. In the coming weeks, Canada will need to navigate significant uncertainty as signals from the U.S. administration indicate a renewed focus on tariffs and economic nationalism. This underscores an urgent need for Canada to build a stronger domestic economy and reduce reliance on external markets. The recommendations I’ve outlined here were essential before this development, and they remain critical now.??

We have the talent, resources, and innovative spirit to lead in the global economy, but without a bold, unified strategy to attract investment, focuses on commercialization and cut through red tape, we risk squandering this potential.?It’s time for decisive action. Let’s seize this moment to build a prosperous future.??