TORONTO, March 05, 2026 (GLOBE NEWSWIRE) — National Angel Capital Organization (NACO) today released Canada's Funding Gaps, a comprehensive data-driven report prepared in partnership with Startup Genome, a leading startup ecosystem research and advisory organization. Drawing on approximately 65,000 funding rounds since 2006 across eight Canadian ecosystems and seven leading U.S. peer cities, the report establishes that Canadian startups are being systematically underfunded at the seed stage, and that this gap has grown wider, not narrower, under successive federal venture capital programs. KEY FINDINGS Canada's top three startup ecosystems — Toronto-Waterloo, Vancouver, and Montreal — have shed a combined $66 billion USD in ecosystem value since their respective peaks. Over the last 6-8 years, Toronto has fallen from 13th in the Global Startup Ecosystem Rankings to 20th; Vancouver has dropped from 15th to 36th; Montreal from 20th to 39th. Behind those rankings lies a funding architecture that is structurally broken at the seed stage: its foundation. The median seed round for a Canadian startup is 37-40% smaller than for a comparable U.S. peer, and that gap has widened sharply since 2017. Proportionally, 12-15% fewer Canadian startups receive seed funding compared with U.S. Tier 1 ecosystems. Fewer seed-stage companies means fewer Series A contenders, fewer breakout rounds, and ultimately fewer exits. The gap compounds at every successive funding stage. Canadian startups take over five months longer on average to close a seed round than their U.S. counterparts, and 13 months longer to reach Series A. The report estimates Canada's minimum annual funding shortfall at $141 million USD at the seed and pre-seed stage and a further $181 million at Series A. The report makes clear that Canada's Series A gap is a consequence of persistent underinvestment at seed. Canadian AI-native startups — which are part of the fastest-growing startup category globally — raise only half as much at seed as their U.S. equivalents and take considerably longer to do so, even as AI-related companies represent 20% of all Canadian startups formed over the past two years, up from just 4-5% five years ago. THE STRUCTURAL CHALLENGE Canada has long faced structural underinvestment in seed-stage capital. While federal programs have successfully expanded later-stage financing capacity, capital has disproportionately flowed through institutional managers oriented towards Series A and beyond. The data shows: The result is a persistent structural imbalance at the front end of the capital pipeline. One that, if left unaddressed, will continue to constrain Canada's productivity growth, firm formation, and long-term competitiveness. “Canada has a structural gap at the top of the funding funnel — the pre-seed and seed stage where fast-growing startups are built toward Series A, Series B, and beyond. When that entry point is underfunded, fewer companies make it through, growth slows, and we get fewer exits. That gap has cost us dearly: 133,000 jobs we could have created if we'd continued growing at the pace of our peers. But this is fixable. We have the innovation power and the entrepreneurial talent. By investing in the right infrastructure at the top of the funnel, we can unlock the $66 billion in market share that should be ours.” — JF Gauthier, CEO, Startup Genome WHY THIS MATTERS NOW The geopolitical backdrop makes the report's urgency acute. With the United States aggressively expanding its domestic startup investment infrastructure and AI-driven disruption accelerating across every industry, Canada faces a narrowing window to reposition its innovation economy. Startup ecosystems globally grew at a CAGR of 9.5% from 2019-2024; four to six times faster than the broader economy. Canada's startup CAGR over the same period: 2.2%. The report estimates that Canada's ecosystem decline has already translated into a loss of approximately 133,000 high-paying jobs and roughly $143 billion in combined startup and public tech sector value. “Canada's startup slowdown is not inevitable. We have been watering the top of the tree while the roots are dying. If we realign incentives to strengthen seed formation, we will see more companies scale, more intellectual property commercialized domestically, and more long-term value created in Canada. The choice is ours.” — Claudio Rojas, CEO, National Angel Capital Organization ABOUT NACO The National Angel Capital Organization (NACO) is Canada's national infrastructure for early-stage capital. Established in 2002, NACO represents over 4,000 individual investors and serves as the national umbrella for more than 100 member organizations, including angel networks, syndicates, and early-stage venture funds — from coast to coast to coast. NACO members have deployed more than CAD $1.8 billion into over 2,000 Canadian ventures. Learn more at nacocanada.com. ABOUT STARTUP GENOME Startup Genome is a leading policy advisory and research organization for accelerating startup ecosystem performance. It has advised more than 155 clients across 45+ countries and produces the Global Startup Ecosystem Report, the definitive annual ranking of the world's startup ecosystems. Learn more at startupgenome.com. MEDIA CONTACT media@nacocanada.com Photos accompanying this announcement are available at: https://www.globenewswire.com/NewsRoom/AttachmentNg/db0bfd11-59cf-4556-87f7-e86f30a80577 https://www.globenewswire.com/NewsRoom/AttachmentNg/0562ac58-447e-461e-b2f5-4ea943643bab https://www.globenewswire.com/NewsRoom/AttachmentNg/b4a9c7d2-503f-41f7-9802-d9c6c5f6b32a
Full report available at nacocanada.com
Canada's Funding Gaps — New Report from NACO and Startup Genome
Released March 4, 2026, Canada's Funding Gaps is a joint report by the National Angel Capital Organization (NACO) Startup Genome analyzing early-stage capital shortfalls across the Canadian startup ecosystem.
Canada's Startup Seed Rounds Are Falling Behind
Canadian seed rounds were comparable to U.S. peers as recently as 2017. Today, startups in Canada's top ecosystems raise seed rounds 37-40% smaller than those in comparable American tech cities, based on an analysis of approximately 65,000 funding rounds.
Canada's AI Startups Face a Critical Funding Gap
AI-native startups in Canada receive seed rounds 66% smaller than their U.S. counterparts and wait 31% longer to close them, according to new data from NACO and Startup Genome. Canadian AI startups raised a mean of $1.4M over 21 months, compared to $4.2M over 16 months in the United States.