The Economic Cost of Canada’s Founder Exodus

A scenario-based examination of jobs, payroll, GDP, tax capacity and entrepreneurial ecosystems

517 Canadian-founded U.S. technology companies. More than US$400 billion raised.

A National Post story stopped me cold. The article, by Jesse Snyder, reported that there are at least 517 U.S.-based technology companies founded by Canadians—or by entrepreneurs educated in Canada who later moved south—and together those companies have raised more than US$400 billion. That figure is not Canadian GDP that somehow vanished, and it is not a measure of tax revenue that Canada automatically forfeited. It is, however, a powerful signal of the scale of company-building activity that Canadian talent has helped create outside Canada.

My first reaction was frustration. My second was a more useful question: what did this pattern potentially cost Canada economically? How many jobs might have been created here, how much payroll might have flowed through Canadian communities, how much GDP might have been recorded in Canada, and how much government revenue might have been associated with that activity? Just as important, what entrepreneurial momentum did we lose when founders, senior teams and scaling companies built their ecosystems elsewhere? So, I dusted off my economics degree from McGill and asked a more important question: What might Canada have gained if more of those companies had scaled here?

The analysis below is not a claim that Canada “lost $400 billion.” Capital raised is not the same thing as revenue, profit, GDP or tax receipts. Nor is it reasonable to assume that every company or every job could have remained in Canada. What follows is a transparent counterfactual scenario model designed to answer a narrower question: what might the Canadian economy have looked like if even a portion of those 517 companies had built and scaled substantially more of their operations here?

What might Canada have gained if more of that scaling had happened here?

Assumption 1: Direct employment per company

The model begins with an assumed average of 500 direct employees per successful company. Some companies in the group will employ far fewer people, while mature scale-ups can employ thousands or tens of thousands. The figure of 500 is therefore not presented as an observed average; it is a modelling assumption that readers can replace with their own.

At 500 employees per company, the maximum theoretical direct employment base would be 258,500 jobs: 517 companies × 500 employees. Because assuming that 100% of this activity could have remained in Canada would be unrealistic, the model applies three retention scenarios—25%, 50% and 75%.

The middle case assumes that only half of the company-building activity might reasonably have occurred in Canada. Under that assumption, the model produces approximately 129,250 direct Canadian technology jobs. At that point, the issue is no longer about 517 founders; it is about the scale of the ecosystem those companies could support.

Assumption 2: Employment spillovers

Technology companies create employment beyond their own payrolls. Employees buy homes, eat in restaurants, use professional services and support local retail. Companies purchase legal, accounting, recruiting, marketing, commercial real estate, equipment, transportation and financial services. Growing firms also attract suppliers, competitors, investors and additional startups. Research on innovation clusters has found substantial local employment multipliers around high-tech jobs.

To avoid overstating the case, this model uses a conservative 1:1 multiplier—one additional Canadian job for every direct technology job. In the 50% retention scenario, 129,250 direct jobs would therefore support another 129,250 indirect and induced jobs, for approximately 258,500 total Canadian jobs. This is intentionally below the much larger multipliers sometimes reported in academic research.

Assumption 3: Wages and payroll

For direct technology employment, the model uses approximately $99,000 in average annual compensation, based on an annualized professional, scientific and technical-services wage benchmark. For associated jobs created around those companies, it uses a lower average compensation of $60,000.

• Direct payroll: 129,250 direct technology jobs × $99,000 = approximately $12.8 billion per year.
• Associated payroll: 129,250 additional jobs × $60,000 = approximately $7.8 billion per year.
• Total annual payroll in the 50% scenario: approximately $20.6 billion.

That payroll is not an abstract accounting figure. It becomes household income that supports mortgages in Ottawa, rent in Waterloo, daycare in Montréal, restaurant spending in Toronto, contractors in Calgary, groceries in Halifax, cars in Windsor, investments in Vancouver and retirement savings across the country. One technology job affects far more than one stakeholder; it circulates through an entire community.

Assumption 4: GDP per worker

To estimate economic output, the model uses approximately $90,000 of GDP per direct technology-sector worker and a lower $70,000 of GDP per associated worker. These figures are deliberately simple productivity benchmarks rather than claims about the exact output of the 517 companies.

• Direct GDP: 129,250 direct workers × $90,000 = approximately $11.6 billion per year.
• Associated GDP: 129,250 associated workers × $70,000 = approximately $9.0 billion per year.
• Total annual GDP in the 50% scenario: approximately $20.7 billion.

This is not a comparison between US$400 billion of capital raised and $20.7 billion of GDP; those are fundamentally different measures. The purpose of the calculation is to estimate the approximate annual economic footprint that might have been captured in Canada if a meaningful share of the scaling activity had occurred here.

Assumption 5: Illustrative tax capacity

Canada’s overall tax-to-GDP ratio was 34.9% in 2024 according to the OECD. Applying that ratio mechanically to the middle-case GDP estimate gives an order-of-magnitude indication of the public revenue associated with an economy of that size: $20.7 billion × 34.9% ≈ $7.2 billion per year.

That number should not be described as “$7.2 billion of taxes Canada lost.” There are too many variables for such a claim. A more defensible description is that approximately $7.2 billion represents the annual tax capacity associated with the level of economic activity in the middle scenario. It encompasses the broad fiscal base generated through personal income taxes, payroll contributions, corporate activity, consumption taxes, supplier income and other secondary economic effects.

Scenario results

These figures are not predictions and they are not presented as a commissioned economic-impact study. They are a transparent scenario. Readers can cut the assumed headcount, retention rate, employment multiplier, wage level or GDP-per-worker estimate and see how the results change. The debate should be about the quality of the assumptions and the scale of the opportunity—not about pretending that a single scenario is perfectly precise.

Who has a stake in this?

The consequences of where a technology company scales are distributed across a wide set of stakeholders. The founder is only the most visible participant. In the 50% scenario, the potential effects extend to the following groups:

• Canadian workers — Engineers, developers and scientists, but also salespeople, marketers, product managers, recruiters, administrators, lawyers, accountants, construction workers, hospitality workers, landlords and service businesses.
• Canadian entrepreneurs — Capital availability influences not only where companies are founded but, more importantly, where they scale. A startup can be Canadian at 10 employees and functionally become an American economic asset by the time it reaches 1,000.
• Canadian investors — When ambitious companies move south early, Canadian investors may have fewer opportunities to participate in the wealth creation that follows. Successful founders and employees also become tomorrow’s angel investors and venture capitalists.
• Universities and colleges — Canada invests heavily in educating scientists, engineers and entrepreneurs. If those people systematically build their highest-growth companies elsewhere, Canada effectively helps develop economic assets for another country.
• Governments — The public-sector impact extends beyond personal income tax. Headquarters, corporate activity, procurement, intellectual property, research spending, capital gains, future taxpayers and supplier ecosystems all influence the fiscal base.
• Communities — Headquarters matter. Where management sits, where IP is owned, where investment decisions are made and where employees learn how to build a global company can shape a local economy for decades.

The cost we cannot easily calculate

The largest economic cost may be the one that does not fit neatly into a spreadsheet. An engineer who spends eight years helping build a world-class company may later become a founder. A colleague may become an angel investor. A senior executive may become a mentor. A product manager may join a venture fund. An employee whose stock options created wealth may finance another startup. In that sense, one great company can become a school for entrepreneurs.

That is how innovation ecosystems compound. Silicon Valley is powerful not merely because successful companies are located there, but because yesterday’s employee becomes tomorrow’s founder, investor, board member or mentor. When a country exports a scaling company, it may therefore export an entire entrepreneurial family tree: talent, capital, experience, suppliers, future founders and the institutional knowledge required to build the next company. This compounding effect may ultimately be more important than any single-year GDP or tax estimate.

How Flow-Through Shares Could Help Canadian Technology Startups

Canada already has a long-standing precedent for using the tax system to encourage private citizens to finance strategically important, high-risk economic activity: Flow-Through Shares. The mechanism has helped mobilize private capital for qualifying resource exploration by allowing eligible expenditures to flow through to investors for tax purposes.

The policy question is whether an appropriately designed version of that mechanism could help mobilize Canadian private capital for qualifying Canadian technology companies. The attraction is that it would not require government to pick individual winners. Instead, government would establish the rules and incentives, private investors would decide which opportunities deserve capital, and founders would have another reason to finance and scale Canadian innovation in Canada.

The argument is therefore not for “another subsidy for tech.” It is for a financing mechanism that mobilizes private risk capital and complements existing research and innovation programs. If Canada has used a market-based tax mechanism to support one strategically important industry, it is reasonable to ask whether the same principle could be adapted to another.

Why not me? Why not us? Why not now?

This brings me back to Kanwal Rekhi’s June presentation in Ottawa and the entrepreneurial question that runs through his excellent book: “Why not me?” It is a powerful question because it rejects the assumption that someone else must be the one to build, compete or take the risk. Canada should ask the same question collectively.

• Why not us? Why shouldn’t Canadians finance the next generation of Canadian technology champions?
• Why not here? Why shouldn’t a founder be able to build a globally significant company from Ottawa, Waterloo, Montréal, Calgary, Halifax or Vancouver?
• Why not technology? If Flow-Through Shares can mobilize risk capital for one strategically important industry, why not explore a carefully designed equivalent for qualifying technology companies?
• Why not now? If capital and talent are mobile, delay has an economic cost.

What the Avro Arrow Can Teach Canada About Losing Technology Talent

There is a historical reason this discussion feels familiar. In the 1950s, Canada was building the Avro CF-105 Arrow, one of the most technologically ambitious aircraft programs of its era. The project brought together an extraordinary concentration of Canadian aerospace engineering talent. When the federal government cancelled the program on February 20, 1959, the aircraft disappeared—but the talent did not.

The engineering workforce scattered. Many highly skilled people moved to U.S. aerospace companies, and a number of former Avro engineers joined NASA and major American contractors involved in the emerging human space program. Canada had invested in creating a difficult project, the project had created world-class expertise, and when the domestic opportunity vanished another country was ready to absorb the people and apply that expertise to its own ambitions.

The lesson of the Arrow is not that every ambitious project should be preserved regardless of cost or changing circumstances. The historical debate about the Arrow involved defence policy, technology, budgets and strategic priorities. The lesson relevant here is simpler: once a country develops extraordinary technical talent, that talent does not disappear when opportunity disappears. It moves. Capital moves. People move. Intellectual property moves. Companies move. Opportunity moves with them.

In 1959 the talent was concentrated in aerospace. Today it may be AI researchers, quantum scientists, software engineers, cybersecurity experts, robotics companies, semiconductor specialists, clean-technology entrepreneurs and biotechnology founders. The form changes, but the economic dynamic is familiar: Canada develops talent and ideas, while another ecosystem sometimes provides the capital and scale that turns them into global companies.

Canada should not build walls around its entrepreneurs or discourage people from learning and competing in the United States. The better objective is to build an economy in which leaving Canada is a choice rather than a financing requirement—an economy in which a founder can say: I can raise the capital here, hire the team here, keep the headquarters here, build the intellectual property here and still create a global company.

The National Post article started me with a number: 517 companies and more than US$400 billion raised. The model above cannot tell us precisely how much Canada lost, but it does show why the question deserves serious attention. Even the deliberately moderate 50% scenario points to roughly 129,250 direct technology jobs, 258,500 total jobs, $20.6 billion in annual payroll, $20.7 billion in annual GDP and an economic tax capacity on the order of $7.2 billion per year.

Challenge those assumptions. Cut them in half. Use a different employment multiplier. Build a better model. I welcome that. But after testing the math, we still have to confront the strategic question: how much Canadian-created economic activity are we willing to watch scale somewhere else before we change the financing environment at home?

Canada has been here before. After the Avro Arrow, the talent went where the opportunity was. More than six decades later, we should understand the pattern. Let us create more of the opportunity here, mobilize more of the capital here and build more of the companies here.

The talent is here. The ideas are here. The entrepreneurs are here. Let’s give them another reason to build here. Let’s seize the day.

If you believe Canada should seriously explore extending Flow-Through Shares to qualifying Canadian technology companies, add your voice at CanFlowthrough.com. The question I do not want another generation of Canadians asking ten years from now is: “Why didn’t we?”

Appendix: Economic Model Assumptions and Formulas

The scenario model is intentionally simple and transparent. It is not a forecast and does not claim that Canada historically lost the calculated amounts. Its purpose is to allow readers to change the assumptions and observe how the results move.

Core formulas used in the model:

• Potential direct jobs = Number of companies × Average direct employees per company
• Direct Canadian jobs = Potential direct jobs × Share of activity retained in Canada
• Associated jobs = Direct Canadian jobs × Employment multiplier
• Total jobs = Direct Canadian jobs + Associated jobs
• Direct payroll = Direct Canadian jobs × Average direct annual compensation
• Associated payroll = Associated jobs × Average associated annual compensation
• Total annual payroll = Direct payroll + Associated payroll
• Direct GDP = Direct Canadian jobs × Direct GDP per worker
• Associated GDP = Associated jobs × Associated GDP per worker
• Total annual GDP = Direct GDP + Associated GDP
• Illustrative tax capacity = Total annual GDP × Tax-to-GDP ratio

Source note

Sources used for factual benchmarks include the National Post article that prompted this analysis, Statistics Canada, OECD tax-to-GDP data, high-tech employment-spillover research, and Government of Canada/NASA materials on the Avro Arrow and the migration of Avro engineering talent. Scenario outputs are illustrative calculations based on the stated assumptions. I am not claiming my ‘economics’ skills are state-of-the-art. All errors and any omissions belong to me.