Evidence of meeting #8 for Industry and Technology in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was productivity.
A recording is available from Parliament.
Liberal
October 20th, 2025 / 12:35 p.m.
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
Thank you.
I have a couple of questions on growth capital.
Mr. McQueen, you mentioned the relative size of the BDC and the overall financing space. As you may know, the Competition Bureau is doing a study of the financial sector, in particular big bank lending to small and medium-sized enterprises. Do you have any perspectives on policies or approaches that could increase financing from the big financial pools of capital that are available?
Founder, Wellington Growth Partners Inc., As an Individual
I lived that tale. The CIBC bought my firm because it wanted to put more money into the innovation economy and did not have a solution to do so. It acquired a team, and we committed $10 billion—over five years to firms and funds across this continent—of bank capital, shareholder capital, from zero. It can be done. You just have to have the will. You have to have the stomach, and you have to have talent. It's a choice.
The deputy governor of the Bank of Canada was talking about how we need more competition in this sector and how we need new banks. Well, the OSFI team is not in favour of that. I can tell you that as someone who once met with them to try to launch a bank in this country to serve this industry. You don't get a second meeting, whereas in the United States, they have started 29 or 30 new banks in the last 12 months. It's much more entrepreneurial there, I think, in that sector, and of course, you get more competition.
The BDC has sat there now for 75 years. If our industry and our country need more competition, that is a very obvious way to get it. We privatize. We privatized CN, and we privatized Air Canada. We privatized De Havilland and so many other firms. It just was never privatized in 1990-91—and I was working on the Hill at the time—because of the recession. We're overdue for that.
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
Governments, Liberal and Conservative, have created, and then continued to fund, taxpayer-supported venture capital strategies, which are maybe less visible to the actual entrepreneurs, but they're on the receiving end of funds from those strategies. This is a question for anyone on the panel, really. What are your views on continuing those kinds of investments through federally and sometimes provincially funded venture capital funds?
Founder, Wellington Growth Partners Inc., As an Individual
The $3 billion of BDC's $50 billion that it has in our sector is from government investors. Those are government employees making risk decisions, and that money could be put better to doubling the size of VCCI, I think. There's no question that in 2009, $1.6 billion went into our innovation economy from venture capitalists. It was $7 billion last year. That's a huge change. VCAP and then VCCI followed in that period, so it's working. Let's just do more of that. The fact that the government is the largest VC in the country is good or bad, depending upon your point of view, but it isn't working, and we should try something different.
Co-Founder & Managing Partner, Leaders Fund
Well, maybe to add to that, I would say that in other innovation economies that are doing really well, when the operators have skin in the game, it makes a big difference. For example, if you're running a venture capital firm—to Mark's point—and you raised $100 million of private capital and the government said, “If other investors have trusted you with $100 million of capital—and your own money, too, by the way—we should double that, right?”.... Those types of programs mean you get professional investors making venture decisions.
The second proposal we have that we think would unleash a huge amount of investment opportunity.... Bear in mind that the challenge with early-stage venture is that many things don't work out. What you're trying to do is create the conditions to develop outliers. You know, we talk about Shopify here in Ottawa as an example. That one outlier generates probably hundreds of millions of dollars of income tax revenue each year for Canada because it's an outlier, but many small businesses don't succeed. If we said, for example, that you have up to x dollars per year that any Canadian could invest either directly or through a fund and, as Mark said, in a flow-through manner where you could write it off immediately and then pay a capital gain if it works in the future, you could unleash a huge amount of private capital into the earliest, highest-risk phase of the cycle.
There is a reason we haven't done what the U.S. does; it is because you need a virtuous cycle of wins to get people to take more risk. If you have a huge win and make a lot of money, you're more willing to take part of those gains and invest that at the earliest risk stage of the business.
Those are the things that we would talk about: unleashing the Canadians and levering up more venture capitalists. I would bet that if you look at the return rates of a firm like ours versus those of BDC, you will see that they're considerably higher.
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
In your study “The Future at Risk”, you refer to the lower amounts of raises that are done by Canadian entrepreneurs. Is that related to this phenomenon? I've heard from Canadian venturers that the terms they're offered in Canada are also inferior. Is this part of that: that the pool is too small and that the number of successful bets is not high enough?
Co-Founder & Managing Partner, Leaders Fund
I would put it to two things.
First of all, in the study that we did, number one, you're seeing a lot of high-potential people leave. The question is not what the other 90% of people are doing; it's what the top 10% of people who are likely to create outsized returns are doing. Part of the issue is that a lot of those folks have left the country. They're still starting their businesses, but instead of starting them here, they're starting them elsewhere. Therefore, you have fewer high-quality opportunities to invest in.
I think part of it is just that the talent migration is creating fewer opportunities. I'm of the view that, outside of very early-stage investing, good Canadian companies can find capital not only from Canadian investors but from U.S. and international investors. I think it's less an issue of “if you're doing well, can you get money?” and more of whether you have enough businesses forming of which some percentage of them go on to be big.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Thank you, Mr. Chair.
Good afternoon to our four witnesses. I'd like to thank them for being here and for their very interesting presentations.
Mr. Chair, I'll begin with a short procedural intervention. We received a document provided by a former colleague, whom I salute. The research presented there seems extremely interesting. I'd like to remind all committee members that the usual way to distribute documents is to send them to the clerk, who makes sure that they're translated. It's customary for all committee members to receive documents in both official languages at the same time.
For example, during the first hour of this meeting, a witness referred to tables that we hadn't been able to consult yet, because they're currently with the interpreters. That's why I'd like to remind you that common practice, to avoid language-based discrimination, is to send the documents to the clerk, who then arranges for them to be distributed. That was just an aside.
I have two questions, and they're for all four of you.
First, when it comes to high-growth and early-stage technology companies, there's a lot of talk about funding. Why is it important for those companies to be able to access venture capital or growth debt financing as opposed to traditional financing?
Who wants to start?
Founder, Wellington Growth Partners Inc., As an Individual
I heard the French version, but I did not get the translation, so I'll yield my time to Mr. Stein.
I apologize.
Co-Founder & Managing Partner, Leaders Fund
We are talking about debt financing versus equity financing. Mark ran a debt-financing business for start-ups.
What I would say—and then Mark can comment—is for very early-stage companies that are just trying to come up with a first product and get the first customers, debt is not usually available to them. It usually comes along in conjunction with equity financing.
Mark, you may want to add to that, given your expertise in this area.
Founder, Wellington Growth Partners Inc., As an Individual
Thank you.
Debt is great when there's a business. Debt does not work on an idea.
Equity is appropriate for pre-revenue companies, commercialization-stage revenue in the few hundred thousands. Once you have a business with revenue and critical mass—let's say, $5 million—debt is a perfect way to grow your business, whether it's equity or debt at that stage, and it protects the entrepreneur's stake in the business because there's obviously less dilution. If a business is going to go bankrupt someday, whether it's equity or debt doesn't make a difference.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Thank you very much.
I have a second question that anyone can answer. It's about start-ups. My impression is that when a start-up manages to do well in Canada, as a general rule, it's sold to bigger actors in the United States.
Have you found the same thing? What can we do to retain the economic benefits and take the start-up model to another level in the economy here?
Founder, Wellington Growth Partners Inc., As an Individual
It's a cultural thing, I will say, after some decades of observing the very phenomenon you're talking about.
The American entrepreneur is celebrated and there is incentive for that celebration to remain in that role longer. A first-time entrepreneur...the second and the third, obviously, is much better and more successful and creates more wealth for investors, more jobs and so forth.
Canada still, for some reason, is in its infancy in that mentality. A lack of capital is certainly part of it and that's why, as Dave said, you have people going to Austin, Texas—all things being equal— rather than going to Surrey, British Columbia, for a bunch of reasons. That's environmental.
We can do our best here—and I'm hoping that your committee is seized with that—in solving what we can solve and letting the entrepreneurs do what they do best, which is commercialize technologies.
Co-Founder & Managing Partner, Leaders Fund
The other point I would add to that is—being guilty of starting and selling two companies, both to American outfits—we created a lot of jobs. We created capital gains taxes that were paid to the government. We created a set of individuals who had the skill sets to go start new companies, which occurred. Selling isn't actually a bad thing. In other ecosystems, it happens quite frequently, but when the entire ecosystem grows.... Imagine you have 10 or 15 successful businesses. If 11 of them sell and four of them keep going and going, you're going to end up with the Shopifys and things of that nature, but those other 11 still contribute to skills, IP knowledge and wealth to invest in other start-ups.
We're a perfect example. After building two businesses, we're now investing in the next round of Canadian businesses. It's, in itself, not a bad thing. It's a function of the size and scale of the U.S. markets, but with more activity it will yield some public companies but also a lot of successful businesses that don't reach that stage as well.
Partner, Founder & Co-Chair, Osler’s Emerging and High Growth Companies Group, As an Individual
Just to jump in, that was clear from the 1980s and 1990s in Ottawa. You had a virtuous cycle that was created over a span of two decades, essentially a generation. With only one standard-bearer, Shopify, right now, it's difficult to create that virtuous cycle in the same way.
You have to take as many shots on net as you can in order to create the next generation of companies in this country, and that's going to require a significant amount of investment at the primary level and then ultimately funding the commercialization after the fact.
Liberal
Conservative
Brad Vis Conservative Mission—Matsqui—Abbotsford, BC
Thank you.
The Government of Canada has a strategic innovation fund of about $10.2 billion.
Where has this program made a measurable impact in innovation in Canada?
Partner, Founder & Co-Chair, Osler’s Emerging and High Growth Companies Group, As an Individual
One of the biggest allocations was to the EV project that didn't actually move forward, if I remember correctly. There are companies I work with that have received funding or, at least, were earmarked to receive funding. It is a laborious process to ultimately get access to that capital. It takes years and, to a certain degree, seems somewhat politically driven in terms of who actually gets the capital, so it's hard to say whether there have been any tangible results from that program.
Conservative
Brad Vis Conservative Mission—Matsqui—Abbotsford, BC
Mr. Bayne, can you quickly elaborate on how the government politicizes the strategic innovation fund?
Partner, Founder & Co-Chair, Osler’s Emerging and High Growth Companies Group, As an Individual
Some of the investments that were announced were to foreign companies coming in—for example, the EV factory that was going to be built was, I think, with Toyota or whatever—
Partner, Founder & Co-Chair, Osler’s Emerging and High Growth Companies Group, As an Individual
—that is not going to happen right now. However, there are a number of companies in this country, domestic companies, that are pushing the innovation economy but are not receiving funding in the same regard. That is a foreign national company that, yes, is ultimately going to potentially build something here, but they're receiving the money, not Canadian domestic companies.
