Invest1 publisher3 min readPublished
Canadian angels backed 490 deals last year against more than 70,000 in the US
MaRS Discovery District's Liam Gill says Canada's constraint is undeployed domestic wealth, and the figures he cites price the country's yearly seed and Series A shortfall at about 2,500 dollars per wealthy family.
The Investor · Invest desk
What happened
- Prime Minister Mark Carney gathers global financiers in Toronto this week for the first Canada Investment Summit, with the pitch that the country needs foreign capital to grow.
- The Dominion List counts 517 US technology companies with a Canadian founder, worth a combined C$574 billion, of which 56 are valued above US$1 billion.
- The National Angel Capital Association puts Canada's annual pre-seed and seed shortfall at roughly $195 million and its Series A deficit at $250 million.
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Why it matters
- constraint The binding constraint is the number of households writing cheques: the combined annual gap equals about 0.034 percent of the C$1.33 trillion held by 177,000 families at the $7.5 million threshold alone.
- exposure Canadian taxpayers carry the education cost while the equity is domiciled elsewhere: 88 percent of Dominion List founders were educated at publicly funded Canadian universities, and more than half of the listed companies were founded in 2023 or later.
- cost The association's $92 billion lost-value estimate across Toronto-Waterloo, Vancouver and Montreal works out to between $11.5 billion and $15.3 billion a year, a cost borne by the three hubs.
- decision Ottawa now has two competing asks on the same file: courting foreign allocators at the summit, and funding a domestic tax expenditure for angel investors of the kind the US and UK already run.
Gill's central comparison is the shakiest part of his argument. C$574 billion of accumulated enterprise value at 517 US companies with a Canadian founder [2], against the C$9.13 billion all Canadian startups raised last year [4], is 63 times over [1]. It also sets a stock of valuations against one year of primary capital. And the 574 is top-heavy: the 56 companies above the C$1.4 billion line [3] account for at least C$78.4 billion, leaving the other 461 with an implied average near C$1.08 billion each [2], which only holds if almost all of them sit just under the unicorn threshold. Gill notes that OpenAI, Anthropic and xAI were founded or built in part by people educated in Toronto [13].
The angel numbers are smaller and duller, and they hold. Canadian angels did 490 deals worth C$114 million last year, which Gill puts at 0.33 percent of what American angels invested [8]; more than 300,000 US angels did over 70,000 deals worth C$34 billion [7]. The deal count ratio is 0.7 percent [3]. So the average Canadian cheque, about C$233,000, is roughly half the US average of about C$486,000 [4].
Set against household wealth, the gap Gill wants closed is small. The National Angel Capital Association puts Canada's annual pre-seed and seed shortfall at roughly 195 million dollars and the Series A deficit at 250 million [14], or 445 million a year together [5]. Canada has nearly 177,000 families worth more than 7.5 million dollars [6]. Closing both gaps works out to about 2,500 dollars per family per year [6]. "Canada doesn't have a capital shortage. It has an incentive problem," Gill wrote [9].
The incentive claim rests on returns. Gill cites a 27 percent average internal rate of return for US technology angel investors, ahead of public markets and real estate [16]. A Canadian tax credit would be leaning on that number. Gill cites no Canadian equivalent. If returns here run materially below 27 percent, because rounds are smaller and follow-on thinner, then a credit pays households to take a worse bet, and the money sitting in GICs and real estate that Gill describes [10] is behaving rationally.
I would separate the two halves of the gap. The 195 million pre-seed and seed shortfall is closeable by roughly 840 additional cheques a year at the current Canadian average [7], which is the kind of behaviour change a credit of the sort the US and UK already offer [18] could plausibly buy. The 250 million Series A deficit is a different market: cheques at that stage come from funds with mandates, and nothing in the 27 percent figure says a Canadian family office will lead a round. Gill is lead of the Capital Program at MaRS Discovery District [17].
What to watch
- Whether Ottawa introduces an investor tax credit, and whether it reaches only pre-seed and seed or extends to Series A rounds.
- Whether the next Canadian angel count moves above 490 deals, and whether average cheque size climbs toward the US average.
- Whether the Dominion List's post-2023 cohort keeps expanding at the pace Gill reports.