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\t<\/p>\nWhen Jason Robinson set out to build a cleantech manufacturing plant in southern Ontario, the moment seemed made for him. The co-founder and CEO of Toronto-based Evoco had spent a decade developing sustainable materials for global footwear, car and furniture brands, and with the country buzzing with talk to \u201cbuild Canada\u201d and buy domestically, Evoco seemed to embody the kind of homegrown, globally ambitious innovation business leaders and politicians wanted to champion.<\/p>\n
But as Robinson tries to raise money and grow his business in Canada, he says the \u201celbows up\u201d spirit hasn\u2019t translated into real support. \u201cThere\u2019s lots of talk, very little action. \u201d<\/p>\n
Domestic investing data highlight how little has changed in the eight months since U.S. President Donald Trump\u2019s trade policy triggered a chorus of appeals for economic patriotism.\u00a0<\/p>\n
Talking Points<\/p>\n
Despite messages to support Canadian companies and buy their products, entrepreneurs and investors say the discourse has yet to translate into support for domestic tech startups
\nPitchBook data shows Canadian venture capital investors\u2019 backing for domestic firms as a share of overall deals has declined nearly four per cent compared to 2023 and 2024\u00a0
\nThe decline in domestic investing comes as more Canadian founders move abroad<\/p>\n
In the quarter that ended Sept. 30, Canadian VCs made 66 investments in domestic companies, down from 125 deals the previous quarter and 104 a year earlier, PitchBook data shows. About two-thirds of all deals backed by Canadian investors went to foreign companies. As of Sept. 30, the share of Canadian investments in Canadian companies this year was 3.9 per cent below the average for the same period in 2023 and 2024. \u00a0<\/p>\n
Robinson is trying to raise between $25 million and $30 million to grow his company, which counts global brands including Vans, Michael Kors and Lacoste among its customers. He plans to set up a domestic manufacturing facility for Evoco\u2019s plant-based materials, which are alternatives to petrochemical and animal-derived products like foam in shoe soles or leather car interiors. Currently, the company makes its products at a factory in Vietnam.<\/p>\n
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Robinson said getting support from government and private investors in Canada is more difficult\u00a0 than it was two years ago, when he raised a $12-million round led by Montreal investment conglomerate Circular Innovation Fund. These days, he\u2019s getting more traction with investors in Europe and Asia. While he ideally wanted to build out the business in Canada, he\u2019s instead pursuing a licensing agreement with a manufacturer in Italy and is considering expanding operations in Vietnam. \u201cWe are hoping to still have some support here in Canada,\u201d he said, \u201cbut that\u2019s seemingly challenging at the moment.\u201d\u00a0<\/p>\n
Canadian founders have long lamented the dearth of capital available in the country to fund their growth. That\u2019s driven many entrepreneurs to raise money<\/a> from foreign\u2014mostly American\u2014investors and, in some cases, to relocate to the U.S.\u00a0<\/p>\n Gideon Hayden, co-founder and managing partner of Toronto-based Leaders Fund, said the steady stream of startups moving stateside reinforces the venture capital shortage\u2014a cycle the buy-Canada push has yet to break.<\/p>\n A recent study<\/a> conducted by Leaders Fund found the rate of promising startups leaving Canada for the U.S. has accelerated over the past decade. From 2015 to 2019, 70.3 per cent of Canadian-led \u201chigh-potential\u201d startups\u2014those that had raised at least $1 million and were founded over that period\u2014were based in Canada. In 2024, just 32.4 per cent of such companies were located in Canada, with nearly half based in the U.S.\u00a0<\/p>\n That means there are fewer good companies in Canada for investors to back, said Hayden. \u201cIf you\u2019re looking to invest in venture scale businesses\u2014companies that have the potential to grow really fast, they operate in massive markets\u2014the pool for those startups locally has shrunk,\u201d he said.\u00a0<\/p>\n Hayden said he noticed a shift in the language VCs use to describe their support for Canadian innovation while doing the study, which tracked nearly 3,000 startups. \u201cIt went from \u2018we invest in Canadian companies\u2019 to \u2018we invest in Canadian founders wherever they reside.\u2019\u201d\u00a0<\/p>\n Whether they\u2019re talking about backing Canadian firms or Canadian founders abroad, Hayden said national pride isn\u2019t enough to get most VCs to write a cheque. \u201cCanadian investors would love to invest in Canadian startups,\u201d he said, \u201cbut at the end of the day, the job of venture capital is profit maximization.\u201d<\/p>\n Stephanie Curcio, co-founder and CEO of NLPatent, an AI-powered patent research firm, said domestic support falls short in more ways than just capital. Curcio worked as a Bay Street lawyer before making the leap to entrepreneurship in 2018 and starting NLPatent, which mainly serves law firms, in 2021. \u201cI was expecting that the Canadian legal ecosystem would embrace my business with open arms,\u201d she said, \u201cand that, unfortunately, was not the case.\u201d\u00a0<\/p>\n With the exception of a former employer, Curcio\u2019s early customers were largely American. It wasn\u2019t until the business started taking off in the U.S. that other Canadian law firms began buying her product, she said. \u201cPeople are picking the Canadian cereal off the shelf,\u201d said Curcio, \u201cbut when it comes to technology, Canadians are not choosing to buy in Canada.\u201d\u00a0<\/p>\n Tech industry leaders have called on governments to step up as customers for Canadian businesses. The Council of Canadian Innovators has urged<\/a> the federal government to overhaul its procurement processes to make it easier for startups to participate. The industry association, which represents scaling companies, also suggested the government set a target for how much it will purchase from small and medium-sized firms.\u00a0<\/p>\n