Senate Panel Prepares Report on Canada’s $5 Million-$25 Million Startup Funding Gap
Updated
Updated · The Globe and Mail · Jun 19
Senate Panel Prepares Report on Canada’s $5 Million-$25 Million Startup Funding Gap
2 articles · Updated · The Globe and Mail · Jun 19
Summary
Canada’s Senate banking committee is set to release a report targeting the “valley of death” that leaves startups struggling to raise roughly $5 million to $25 million needed to scale.
OECD data cited in the review ranks Canada third from the bottom on SMB lending, while investment in Canadian growth-stage firms fell to near zero last quarter and loans to smaller businesses cost far more than in peer countries.
Witnesses told senators the gap pushes firms to seek foreign capital, sell early or move abroad: Ranovus raised just 17% of its US$160 million from Canadian investors before turning to California, and Eddyfi was sold to ESAB for about $2 billion.
Proposals expected in the report include a pension-backed private debt growth fund that could add $3 billion to $5 billion in lending over five years, new SME-focused banks, and tax incentives such as a 30% refundable credit for qualifying investments.
The debate has gained urgency as Ottawa seeks stronger domestic companies amid U.S. protectionism, while hundreds of Canadian SMBs are expected to seek financing to tap rising federal defence spending.