Where have all the Canadian startups gone?

Prior to starting Leaders Fund 9 years ago, my co-founders and I all built and sold different companies based here in Canada, like Workbrain and Rypple. The country has been good to us providing a high quality of life and opportunities to build. Along the way we received a ton of help from local founders and entrepreneurs, and that’s one of the reasons we created Leaders Fund: to give founders both capital and the kind of hard-earned experience we wished we’d had more of when we were operating.

We invest in Canada, the US, and Israel, and this gives us a unique perspective and ability to see how ecosystems compare. In recent years, I had a nagging feeling that the Canadian startup pipeline was shrinking while others seemed busier than ever. And speaking with other VCs, I noticed similar sentiments. The language shifted from “we invest in Canada” to “we invest in Canadian founders, wherever they build."

So we asked ourselves: was this just anecdotal or was something bigger happening? What the conversation was missing was data, and a shared set of facts.

What the data shows

With support from our friends at Specter, we analyzed nearly 3,000 venture-backed startups founded by Canadians between 2015 and 2024. We tracked where they were founded, how much they raised, and how quickly they scaled.

The results were clear — and troubling — all pointing to one conclusion:

The COVID pandemic in 2020 was a massive shock to Canada's innovation economy. While other ecosystems have rebounded, we haven't. If nothing changes, we risk losing a generation of scaleups.

We're sharing our study, The Future at Risk: Canada's Shrinking Startup Pipeline, because it’s never been more urgent to confront the data and take bold action.

Let's look at the facts.

1. Since 2020, Canada has been contributing fewer of the world’s high-potential startups.

(For the purposes of this study, startups that raised more than $1M USD were considered "high-potential.")

In fact, the US went from producing 11x more high-potential startups than Canada in 2015, to 45x in 2024.

2. Founders are increasingly starting their companies abroad.

Since COVID, we've experienced a steady increase in the number of Canadian founders choosing to build abroad.

In 2024, nearly half of Canadian founders who raised $1M+ were based in the US.

And the data suggests those that move see massive benefits.

For example, Canadian founders in the US raise nearly 2x more capital.

Funding totals only tell part of the story. Our analysis looks at round sizes, differences in graduation rates (how likely companies are to advance beyond early rounds), the pace and momentum between funding milestones, and their reliance on non-dilutive capital like grants and tax credits.Funding totals and round sizes only tell part of the story. Our analysis also looked at differences in graduation rates (how likely companies are to advance beyond early rounds), the pace and momentum between funding milestones, and their reliance on non-dilutive capital like grants and tax credits.

The findings paint a clear picture of the challenges facing the Canadian ecosystem. Download the study to dive into the complete analysis.

Why this is important

Founders matter. They create jobs, attract investment, and anchor ecosystems. If Canada loses a generation of scale-ups, we risk missing out on the next Shopify — and the prosperity that comes with it. One company can drive hundreds of billions in economic impact. We need to maximize our chances of that company being built here.

What needs to change

National pride is not enough to keep founders here. The only real solution is to make Canada a place where ambitious entrepreneurs believe staying is the best choice for their company and their future.

Recent US policy changes highlight how much ecosystems are shaped by deliberate choices. The government's new $100K H-1B visa fee will add real costs for companies bringing talent south. While it remains to be seen how much this will influence founders' decisions, we do see the signal that policy can tilt the playing field. If Canada lowers barriers while the US raises them, we have a window to make building here the more attractive choice.

Here are a few steps that could help:

1. Eliminate capital gains on startups. Create a more aggressive, Canadian version of the US Qualified Small Business Stock exemption to incentivize company formation here.
2. Adopt a “Buy Red” culture, make it tax deductible: In Israel, the “Buy Blue” mindset helps Israeli companies land their first customers at home. They’re funded locally, get to a few million of ARR locally and are able to raise abroad thereafter. We should adopt this mentality, but take it a step further. If you buy true Canadian technology, it should be tax deductible.
3. Let 1,000 companies bloom. Like China did in the EV and solar markets, the Canadian government should massively incentivize startup formation in key industries where Canada can lead globally, then let the market decide which companies have the right to survive.
4. Engage founders in shaping government programs. Programs like SR&ED cost billions but often bog down startups in process. Founders should help redesign them so they actually work for entrepreneurs.
5. Change the culture. Put Tobi’s face on the $5 bill. Too often, we cut down winners instead of elevating them. We need to champion and celebrate companies like Shopify, Stackadapt, Ada, 360 Insights, Cohere and many others and use them to inspire the next wave.
6. Invest in future leaders. Longer-term, we need to deliberately cultivate leadership capacity through initiatives like Huron University’s Nation Builder program, designed to nurture thoughtful, courageous builders who understand how prosperity is created and how to lead with conviction.

Our role

At Leaders Fund, we’ve benefited enormously from building in Canada. This study is one way we give back — by surfacing data, sparking debate, and pushing for action.

Our goal is simple: to make Canada the best place for ambitious founders to build. Because we need more Shopify’s, and we should do everything in our power to make sure the next one is started here.

So if you're building something here in Canada, let us know how we can help. We want to hear from you.