FTFL – Growth Tech, Eh?

Continuing our FTFL cross-border series, for our February FTFL we visit Canada. While the Canadian venture ecosystem tends to be eclipsed by its neighbor to the south, there are some important growth tech lessons we can all learn from the Great White North.

First, a little history. Believe it or not, Canada’s public support for growth tech dates back over 80 years. In 1944, the Canadian government established the Scientific Research and Experimental Development (SR&ED) tax incentive program, which in the most recent fiscal year granted C$4.2B of tax credits against R&D expenses for over 20,000 companies. That equates to approximately 30,000 engineers funded by the Canadian government in FY24.

Also in 1944, Canada established the Business Development Bank of Canada, aka BDC. Today, its venture arm BDC Capital is Canada’s largest and most active VC investor, with several current funds totaling $1.2B+ investing in 50+ Canadian startups per year. 

This public support for growth tech has produced some big winners over the years. We looked at the top 10 largest acquisitions of Canadian VC-backed tech companies.

Telecom equipment blast from the past! Canada was a major part of Bowen’s networking infrastructure origin story, from dominant vendors like Nortel, Mitel and BlackBerry, to innovative startups like Colubris Networks and BTI Systems. Canadian tech has stayed at the forefront of innovation, from IP networking to data centers to AI. Also note that US buyers make up over half the top 10 list – a testament to the close partnership our two countries have had.

Moving to current investing trends, we wondered how Canada’s VC ecosystem stacks up against the US. By population, Canada is about 11% the size of the US – is their VC market similarly sized? (Admittedly, this is a bit of an unfair comparison as Silicon Valley, 0.1% of global population, represents 16% of the global VC market.)

Over the last 20 years, the number of VC tech deals in Canada has grown considerably, up to 10% of US levels. The lower VC deal value % implies that Canadian companies are getting smaller rounds than their US counterparts. We see this dynamic in a couple related stats: Canada has 20 Unicorns (or Narwhals, as they’re locally known), vs. 687 in the US, and there have been two $500M+ Canadian tech-focused VC funds raised in the last 10 years, vs. 219 in the US.

Canada’s VC market is more in line with Western Europe. When we look at tech VC funding over the last 5 years, Canada’s per capita amount ($713) is similar to Germany ($420), Ireland ($590) and Sweden ($997). And similar to Western Europe, Canada has to battle “brain drain”, as the allure of Silicon Valley dollars continues to draw talented entrepreneurs out of the country.

One area where Canada swings above its weight vs. the US is sustainability investing.

Over the last 3 years in the US, 34% of all VC dollars have gone toward AI, while 18% have gone toward AgTech, CleanTech and Climate Tech. In Canada it’s the reverse, with 23% of funding going to AI and 36% going to AgTech, CleanTech and Climate Tech startups like 4ag, Chrysalabs and Sulvaris. 

Sustainability investing in Canada is growing as the federal government’s net-zero emissions target by 2050 boosts investment in Climate Tech, AgTech, and low-carbon solutions. Canadian pension funds, like CPP Investments and Ontario Teachers’ Pension Plan, are shifting more capital into green infrastructure and sustainable projects, driven by rising sustainability demands. 

Canada is not just a North American leader, but a global leader in sustainability:

• 2nd largest producer of hydroelectricity
• 4th highest renewable electricity generation
• 20% of the world’s large-scale carbon capture, utilization and storage projects

While tariffs and politics will likely keep Canada in the spotlight for a while, we can’t overlook the strong role Canada has played in fueling our growth tech ecosystem and protecting our planet.

This article appeared in our February 2025 issue of From the Front Lines, Bowen’s roundup of news and trends that educate, inspire and entertain us. Click here to subscribe.