Canada’s tech industry just put a number on what I have watched happen for years.

There are at least 517 U.S.-based tech firms founded by Canadians, entrepreneurs we educated here and then watched leave. Together those companies have raised more than US$400 billion.

Read that figure again. That is future tax base, future jobs, and future intellectual property, all generated by Canadian minds and all owned somewhere else.

Lucy Hargreaves of Build Canada called it a “five alarm fire.” Pierre Poilievre blamed taxes and red tape. Investors blamed density and scale. Everyone weighed in on why founders leave.

I want to talk about something more useful: the mechanism that keeps them.

The Data Describes a Structural Collapse, Not a Trend

The Dominion List numbers deserve close reading, because they show acceleration, and acceleration changes the policy calculus.

Before 2023, roughly 20 founders left for the U.S. each year. In 2023 that jumped to 60. In 2024 it hit 93, and it stayed elevated at 87 in 2025. The pace has more than quadrupled since the AI hiring boom began.

The retention picture is worse. In 2016, about three quarters of Canadian founders who raised over $1 million stayed in Canada. By 2024 that number had fallen to roughly one third.

This is a pipeline failing in real time. Ilya Sutskever of OpenAI, Garrett Camp of Uber, Chris Olah of Anthropic. The names on the list read like the roster of companies Canada should have anchored at home. Of the 517 companies, 88 percent of their founders came out of Canadian universities. Waterloo, Toronto, McGill. We built the talent. Someone else captured the value.

The Bank of Canada quantified the damage in December 2024. Selective emigration of our highest earners, our engineers and researchers and founders, accounts for up to 75 percent of the GDP per adult gap between Canada and the United States.

That single statistic reframes the entire debate. The founder exodus is the productivity crisis. They are the same problem.

Why They Leave Has Nothing to Do With Loyalty

The commentary this week offered plenty of explanations. Andre Charoo of Maple VC pointed to density, the pull of being around other people building billion-dollar companies. Hargreaves pointed to capital gains treatment and income taxes. Poilievre pointed to Ottawa.

All of these observations circle one underlying fact that most of the discussion skipped.

Capital follows incentive structure. Founders follow capital.

Canadian founders who relocate to the U.S. raise nearly twice as much capital as those who stay. When relocating doubles your access to fuel, the decision to move stops being about ambition or patriotism. It becomes arithmetic. The economic calculus resolves itself before the founder even boards the plane.

Density in San Francisco and New York is real. Of the 517 companies, 287 sit in San Francisco alone. Density is downstream of capital. Capital pools where the incentive structure rewards deployment. Fix the incentive structure and the density problem begins to correct itself.

The tariff environment makes this urgent. Ottawa is actively trying to diversify away from the U.S. economy while 60 percent of Canadian venture investment in 2025 came from U.S. parties, the highest share since 2017. We are declaring economic independence while outsourcing the financing of our own innovation.

Sovereignty rhetoric without capital sovereignty is theater.

The 517 companies are therefore not the problem. They are evidence of the problem. Canadian founders are responding rationally to the capital environment available to them. If we want different outcomes, we have to change the economics that produce those outcomes. That is the broader argument behind Canada Doesn’t Have an Innovation Problem. It Has a Capital Formation Problem. Founder flight, foreign ownership, IP migration and the shortage of domestic scale-ups are different symptoms of the same underlying capital-formation failure.

Canada Already Runs the Solution. It Just Runs It in the Wrong Sector.

Here is what makes this situation genuinely strange to anyone who studies capital formation.

Canada invented and perfected the exact instrument this crisis demands. We have operated it for more than 70 years. Flow-through shares let companies pass eligible expenses through to investors as tax deductions, which changes investor behavior at the moment of decision.

The results in mining speak plainly. Flow-through shares unlock over $1 billion annually in private capital for resource exploration. Much of the junior mining sector exists because this mechanism exists.

The policy question writes itself. Technology is the strategic resource of the 21st century. Canada restricts its most proven capital formation tool to rocks in the ground while the companies building AI, quantum systems, and digital infrastructure leave for jurisdictions with better capital access.

Extending flow-through shares to tech could unlock roughly $500 million a year in new investment. That estimate rests on the demonstrated mechanics in mining, applied to a sector with far more investable companies.

This is domestic capital. Canadian money, currently sitting on the sidelines, redirected into Canadian companies through a structure Canadian tax law already understands.

The International Proof Is Sitting in Plain Sight

Skeptics will say tax incentives for early-stage tech investment sound risky and untested. The United Kingdom settled that argument years ago.

The UK’s Enterprise Investment Scheme and Seed Enterprise Investment Scheme have raised approximately £34 billion for 59,000 companies. Britain took the same core logic that powers Canadian mining flow-throughs, applied it to early-stage companies, and built one of Europe’s strongest startup ecosystems on top of it.

The pattern-matching here is the whole point. Proven mechanisms port across sectors when you understand their mechanics rather than their branding. Mining flow-throughs and the UK schemes solve the same problem: mobilizing private risk capital into strategically important, high-uncertainty ventures where ordinary market incentives underdeliver.

Canada holds both halves of the proof. The domestic template works. The international application to tech works. The only missing element is the decision to connect them.

The Cost of Waiting Compounds

I want to be precise about what inaction costs, because the losses stack across every layer of the pipeline.

• The student layer: 66 percent of software engineering graduates from Toronto, UBC, and Waterloo left Canada for work after graduating. We fund world-class education and export two thirds of its output.
• The research layer: Nearly $250 million in federal scholarships flows to graduate researchers annually, and two in three of them are considering leaving before finishing their degrees.
• The founder layer: A 365 percent increase in departures since 2023, with retention collapsing from 75 percent to 32 percent in eight years.
• The company layer: The U.S. went from producing 11 times more high-potential startups than Canada in 2015 to 45 times more in 2024.

Chad Bayne, co-chair of Osler’s technology practice, described the endgame:

“If too many of our best and brightest move to the U.S. early on, it will be harder to bring them back, and you’ll have a lost generation.”

Ecosystems collapse through network effects running in reverse. Every founder who leaves takes mentorship capacity, angel capital, and the gravitational pull that keeps the next founder home. Once that unwinds, no single policy rebuilds it.

The Argument Ottawa Needs to Hear

The founder exodus data and the flow-through share case belong in the same conversation because one is the diagnosis and the other is the treatment.

The diagnosis: 517 companies, $400 billion in capital raised elsewhere, a doubling capital gap, and a retention rate that fell by more than half in eight years. The disease is structural. Founders respond rationally to where capital lives.

The treatment: a 70-year-old Canadian tax mechanism with a billion-dollar annual track record, validated internationally at £34 billion of scale, ready to be extended to the sector that now determines national competitiveness.

💡 The core insight: Canada does not need to invent anything. It needs to stop restricting a proven instrument to a single sector while its innovation economy finances itself through foreign capital and one-way plane tickets.

Hargreaves said the smartest response to American protectionism is to make Canada the obvious place for the next 517 founders to stay and build. I agree with the destination. The vehicle already exists. Extending flow-through shares to technology companies makes Canadian capital abundant enough that staying becomes the rational choice.

Ownership determines everything. Who builds, who stays, who profits. Right now the structure decides against Canada by default. The structure can be redesigned, and the blueprint is already in the Income Tax Act.

What You Can Do Right Now

Policy moves when public pressure and institutional logic operate at the same time. The institutional logic is documented above. The pressure is your part.

Take one of these actions today:

• Share this article with one founder, investor, or policymaker in your network.
• Send it to your MP with a single question: why does our best capital formation tool exclude our most strategic sector?
• Forward it to Finance Canada ahead of the next budget cycle.
• If you believe the upside from Canadian innovation should stay in Canadian hands, add your voice publicly in support of extending flow-through shares to technology.

The data is on the table. The mechanism is on the shelf. The next 517 founders are making their decisions right now.