Canada spends a lot of time talking about how to help technology companies scale.
The 2026 FTS-Tech Pre-Budget Submission asks an earlier question:
What if the financing problem starts before promising Canadian technology companies ever get the chance to scale?
Before Series B. Before Series C. Before anybody starts talking about unicorns.
Before the head office moves. Before the intellectual property follows. Before a company’s first serious investors, advisers and board relationships become anchored somewhere else.
The first question is simpler: Can a promising Canadian technology startup raise its first meaningful risk capital here?
The submission argues that this first financing equation deserves more attention. It cites NACO/Startup Genome work reporting that Canadian seed rounds are about 40% smaller than comparable U.S. rounds, take more than five months longer to close and feed into a cumulative pre-seed, seed and Series A funding gap above US$1.6 billion over five years.
The point is not that foreign capital is bad. The submission explicitly welcomes global investment. The question is whether Canadian founders also have a viable Canadian financing path at the moment those first relationships are being formed.
The Proposal: Test FTS-Tech for Three Years
The recommendation is straightforward: launch a capped, three-year Flow-Through Shares for Technology pilot – FTS-Tech – initially focused on four areas already identified in the 2025 commitment:
- Artificial intelligence
- Quantum computing
- Biotechnology
- Advanced manufacturing
The proposed ceiling is up to $500 million annually in qualifying technology expenditures financed through private investors’ risk capital.
That distinction matters. The proposal is not for $500 million a year in direct government spending.
Government would define the eligibility rules, tax treatment and safeguards. Private investors would decide which qualifying companies receive their money. Investors would bear the investment risk and, where companies succeed, could participate in the financial upside.
Canada Already Knows the Mechanism
Flow-Through Shares are not a new Canadian tax concept. The submission notes that versions of the mechanism have been used for decades to help finance uncertain activity in strategically important sectors.
It also looks to the United Kingdom’s EIS and SEIS programs. They are not mechanically identical to Canadian Flow-Through Shares, but they apply a related principle: change the investor’s after-tax risk/reward equation while private investors – not government officials – choose the individual businesses they want to finance.
The UK evidence is useful, but the submission does not claim that Canada would automatically reproduce British outcomes. It treats more than 30 years of UK experience as evidence from which Canada can design and evaluate its own test.
The 517-Company Question
The submission also examines a curated list of 517 U.S.-based technology companies with a Canadian-connected founder. Together, the list is associated with roughly US$414 billion in capital raised.
That number does not prove why those founders built in the United States. The submission says so explicitly.
The list is not a census, and the proposal does not claim that financing was the sole or decisive reason any individual founder chose the United States. The narrower point is that Canadian-developed talent is building a very large amount of enterprise value inside the U.S. technology and capital ecosystem – and that capital availability can influence where financing relationships form.
That leads to the policy question FTS-Tech is designed to test: could more Canadian technology startups establish their early financing relationships here before the path is set somewhere else?
Put Guardrails Around It. Then Measure It.
The proposed pilot is deliberately bounded. The submission recommends an annual ceiling, objective eligibility rules, coordination with SR&ED, anti-avoidance measures, Canadian economic-substance reporting and an independent evaluation.
After three years, the choices should be explicit: expand it, continue it, redesign it or end it.
Primary KPI: additional private capital mobilized per dollar of federal tax expenditure.
That turns the proposal into a testable policy experiment rather than an open-ended commitment.
And Then There Is Ownership
The cover letter puts another idea beside Buy Canadian and Build Canadian: Own Canadian.
The proposal would create another potential channel through which eligible Canadians who choose to accept startup investment risk could put their own money into qualifying Canadian innovation and, if those companies succeed, participate in the value created.
It is not a promise of returns, and it would remain subject to securities law and investor-protection rules. The submission’s principle is simpler: government defines the rules; entrepreneurs earn the investment; private investors decide where to put their capital; Canada measures the result.
Read the Proposal. Then Decide for Yourself.
FTS-Tech is not presented as a solution to every problem in Canadian innovation finance. It is a specific three-year test of whether improving the after-tax risk/reward equation can mobilize more private risk capital for qualifying Canadian technology startups early enough to matter.
Read the proposal. Challenge the assumptions. Look at the evidence.
Then decide for yourself. If you support the initiative after reviewing it, the supporter page explains how to add your voice.
