Canada Needs Pension Funds to Back Startups More

Canada’s major public pension funds, collectively known as the Maple Eight, manage a staggering $2.6 trillion in assets. However, only a small portion of these funds is directed toward the country’s venture and growth companies, which are critical for innovation and job creation. The recent Canada Investment Summit highlighted this disparity, with pension funds and insurers committing $100 billion to domestic investments, yet early-stage tech companies saw minimal new funding. The most notable announcement for this sector was the $1.4-billion Radical Breakouts Fund, which underscored the scarcity of capital for innovation.

Canadian venture-capital fundraising has declined significantly, dropping 39 percent year-over-year to just over $2 billion in 2025, down from a peak of $7.4 billion in 2022. This lack of domestic investment has led many of Canada’s most promising companies to seek financing from the U.S. In 2024, 84 percent of Canadian companies’ growth-stage fundraising rounds included American investors, and in 2025, 60 percent of venture capital raised in Canada came from American sources, the highest share in a decade. This trend raises concerns about the potential relocation of these companies to the U.S.

The solution may lie in a proven model: the Venture Capital Action Plan (VCAP) and the Venture Capital Catalyst Initiative (VCCI), which have successfully catalyzed private financing for Canada’s innovation economy. An independent study found that a combined government commitment of about $1.2 billion under these programs has attracted more than $17 billion in private financing. The programs work by investing alongside private capital in a subordinated role, ensuring that private investors are repaid first and earn enhanced returns. This structure aligns with the institutional duties of the Maple Eight and has delivered strong results, with cash distributions to private investors outperforming global benchmarks.

To further engage the Maple Eight, Canada’s Budget 2025 earmarked $1 billion for a new Venture and Growth Capital Catalyst Initiative (Growth VCCI). However, to attract significant private capital, the program must be structured to invest across the full lifecycle of innovative firms, from startups to later-stage growth companies. Additionally, pension funds should publicly report their allocations to Canadian venture and growth investments. By doing so, the federal government can make a compelling case for the Growth VCCI based on returns rather than nationalism, thereby moving real money into Canada’s innovation agenda.