On May 6, 2026, Brice Scheschuk submitted this brief to the House of Commons Standing Committee on Finance as part of pre-budget consultations for the 2026 federal budget. We are publishing it here so the policy ideas can contribute to the broader public conversation on how Canada can compete for founders, investors, and capital.

Recommendations

Recommendation 1: That the federal government wind down, or eliminate if not yet rolled out, federal venture capital investment programs — including (not exhaustive) BDC direct and indirect equity investing, EDC venture capital investments, the $1 billion Venture and Growth Capital Catalyst Initiative (Growth VCCI), the $750 million early-growth stage funding gaps program, the Strategic Response Fund (SRF) equity streams, the Innovation Superclusters, the innovation streams of Regional Development Agencies, and so on — over three years, and simplify and transfer the federal innovation equity investment mandate and capital to Recommendation 2.

Recommendation 2: That the federal government legislate a 20-year Maple 8 pension fund mandate requiring Canada’s eight largest pension plans to allocate 0.3% of assets annually (approximately $7.5 billion per year) to Canadian venture and growth equity, with a dedicated early-stage (pre-seed, seed, and series A) sleeve; pair this with $2.5 billion in annual federal government LP co-investment that rides pro-rata alongside Maple 8 allocations on a statutory formula, with no federal role in investment decision making.

Recommendation 3: That the federal government eliminate capital gains taxes on primary (treasury) investments in active Canadian businesses made at entry valuations under $100 million. Add a capital gains tax to primary real estate residences and a $750,000 lifetime capital gains exemption per individual ($1,500,000 per couple) on gains (not sale proceeds) from sales of primary residences.

Recommendation 4: That the federal government dramatically expand the Canada Small Business Financing Program (CSBFP) to mirror the U.S. Small Business Administration (SBA) loan program. Design an insurance element such that borrowers could, but are not required to, personally guarantee loans. Expand the program beyond members of the Canadian Payments Association (CPA) to include fintechs. Over time, aim to significantly reduce the size of the BDC’s loan programs.

Canada’s Entrepreneurial Economy is in Freefall

The Canadian government has initiated a series of sovereign and pro-growth economic measures over the past year including major projects, trade diversification, inter-provincial trade, defence industrial strategy, arctic security, Build Canada Homes, and many more. From 2015 to 2024, Canada had a net investment outflow of $1 trillion. In 2025, the trend reversed and Canada had an inflow of $100 billion, perhaps an early sign of success from the government’s efforts.

What is missing over the past year is addressing the alarming decline in the entrepreneurial economy in Canada. The data is unambiguous:

• Since early 2024, more businesses have been exiting than entering the market, with the gap widening in 2025 marking one of the worst periods outside the pandemic.
• Canada produces 33 small businesses per 1,000 adults, compared to 124 in the United States and 73 in Israel.
• Since 2020, Canada has been contributing much fewer of the world’s high potential startups.
• From 2015-2020, roughly 70% of Canadian-founded high-potential startups were launched in Canada. By 2024, that number had fallen to 32.4%. Canadian founders are leaving Canada to build elsewhere.
• Canada’s top three startup ecosystems — Toronto-Waterloo, Vancouver, and Montreal — have shed a combined $66 billion USD in ecosystem value since their respective peaks.
• 2025 was the worst year for Canadian VC fundraising since 2016.
• Canada now ranks last among G7 nations in investment in both machinery and equipment and intellectual property.

The entrepreneurial economy is the primary engine of job growth and wealth creation for Canada. A reduction in entrepreneurial activity results in negative compounding economic impacts over decades. We need to arrest this decline and create conditions for entrepreneurs to flourish. There are many levers to be pulled, and these recommendations address a few of the biggest issues. Other areas to reform that are not discussed here include: corporate taxes, government procurement, regulatory burden, labour shortages, entrenched oligopolies (e.g. banking), etc.

This submission addresses three structural blockages in Canada’s capital formation system: a fragmented federal innovation complex run by government employees with many equity and debt mandates that have produced poor outcomes and returns over more than a decade; a world class Maple 8 pension plan institutional capital base that sits largely on the sidelines of Canadian venture; and a generational opportunity to incentivize investments in early-stage active Canadian businesses rather than unproductive primary real estate residences.

Recommendation 1: Wind Down the Federal Innovation Investing Complex

Get the government out of venture capital investment decision making

Over the past fifteen years, the federal government has built a sprawling innovation financing apparatus with the intent of creating a sustaining Canadian venture capital ecosystem as well as directly financing Canadian high-performance companies. As evidenced by the data cited in the prior section, the programs have not worked. We are at a decade low for Canadian VC fundraising and lack of availability of Canadian capital is a primary reason for founders to build elsewhere. A new approach is necessary.

Incentives and Performance. Public-sector investment teams operate without carry, without equity upside, and without the accountability of raising successor funds from private LPs. Investments are often allocated to quota systems and regional targets that have no relationship to risk-adjusted returns. These are not performance failures of individuals; they are predictable outcomes of structure.

The conclusion is not that the federal government should invest better. It is that the federal government should not be the primary vehicle for venture risk capital. We cannot keep repeating the same programs and expecting a different result.

Recommendation: Over three years, sunset all federal venture and innovation equity investment programs including (not exhaustive) BDC direct and indirect equity investing, EDC venture capital investments, the $1 billion Growth VCCI, the $750 million early-growth stage funding gaps program, the SRF equity streams, the Innovation Superclusters, the innovation streams of Regional Development Agencies, and so on. Preserve IRAP in its simplest form as a direct R&D grant. Simplify and transfer the federal innovation equity investment mandate and capital to Recommendation 2.

Recommendation 2: Mandate Maple 8 Venture Capital with 20 Years of Certainty

Create 20 year certainty of $10 billion per year of venture capital

Canada’s eight largest public-sector pension plans — the Maple 8 — manage approximately $2.5 trillion in assets. This capital base is among the most sophisticated and long-duration institutional pools in the world. Very little of it is deployed in Canadian venture or growth equity.

The reason is a mandate gap, not a talent gap. Maple 8 CIOs are measured against global benchmarks on risk-adjusted returns across long horizons. Canadian venture, at its current scale and structure, does not compete for discretionary allocation. This is a solvable structural problem.

Model the mandate on the CDPQ’s dual mandate that includes optimal returns and Quebec development. In this case, the mandate would include Canadian early and growth stage entrepreneurial development.

Design. Legislate a requirement that the Maple 8 collectively allocate 0.3% of assets per year — approximately $7.5 billion at current AUM — to Canadian venture and growth equity. At least 20% of that allocation must be deployed in pre-seed, seed, and series A investments or funds. Plans retain full discretion over manager selection, fund structure, and individual investment decisions. Plans may invest in-house, allocate to Canadian GPs, co-invest with global funds opening Canadian offices, and/or support platforms such as Creative Destruction Lab, angel groups, etc. — whatever delivers returns.

Federal co-investment, not federal decisions. Pair the mandate with a $2.5 billion annual federal LP commitment that rides pro-rata alongside Maple 8 allocations on a statutory formula (illustrative: $1 federal for every $3 Maple 8). The federal government makes no investment decisions, receives normal economics, and absorbs no first-loss risk. Total domestic commitment is approximately $10 billion per year, with other capital likely to lift aggregate capital availability to Canadian companies to $15 billion a year over time.

Twenty years of certainty. Legislate the mandate for 20 years with a statutory review. Predictability is the operational variable that determines whether global funds open Toronto offices, whether Canadian GPs can raise follow-on funds, and whether founders build here rather than relocating to the U.S. Short-horizon programs cannot produce long-horizon behaviour.

Recommendation 3: Use the tax system to incentivize early-stage active business investments while removing the tax shelter on primary real estate residences for the wealthiest Canadians

Incentivize founders to start businesses in Canada and investors to invest at the earliest, riskiest stages

Canadian entrepreneurs are not starting enough businesses to generate future jobs and wealth. Early-stage capital availability is severely limited.

Eliminate capital gains taxes on primary (treasury) investments in active Canadian businesses made at entry valuations under $100 million. The definition of active Canadian businesses should be much broader than the traditional QSBC definition. Canadian businesses should be able to grow globally, be held through any structure (individual, partnership, corporation, trust, etc.), be public or private, and do not need constraining rules at time of exit. The estimated decline in tax receipts from this is $5 billion per year, which is manageable when compared to other major government spending initiatives.

Ensure that Alternative Minimum Tax (AMT) rules are harmonized with this recommendation such that no AMT is payable on these capital gains.

Canada’s largest tax shelter is primary real estate residences. An owner of a $10 million primary residence in Toronto or Vancouver will pay no capital gains taxes when they sell the property. Meanwhile, entrepreneurs and early stage investors, who take extreme risk of time and capital loss, pay the same capital gains taxes as owning and selling a large public company stock.

This recommendation is not to tax housing for all Canadians. The goal is to incentivize capital allocation for the wealthiest Canadians away from their primary residence and to early-stage entrepreneurs. A lifetime capital gains exemption limit of $750,000 per individual ($1,500,000 per couple) on gains (not sale proceeds) from sales of primary residences will ensure the vast majority (greater than 99%) of Canadians will never pay capital gains taxes when they sell their primary residences.

Recommendation 4: Significantly expand the CSBFP to be the primary federal lending program for small business entrepreneurs

Target $15 billion a year in CSBFP guarantees to small businesses across Canada

The CSBFP is a relatively small federal government loan guarantee program that has been successful in the niches it serves. It harnesses the broad distribution capabilities of banks, credit unions, and caisse populaires to reach small business entrepreneurs rather than maintaining its own infrastructure to directly service borrowers. It is similar to the U.S. SBA loan program, but loan sizes are smaller and categories of coverage are more limited.

Increase maximum loan sizes to $5 million including intangible assets and goodwill which will facilitate entrepreneurship through acquisition. Increase qualifying company size to $50 million in revenue or $15 million in net worth or $5 million in net income.

Founders are typically required to personally guarantee loans from the BDC. Design and offer an insurance program that allows founders to avoid a personal guarantee under the CSBFP.

Eligible lenders need to be members of the CPA or obtain specific approval. Consider expanding eligible lenders to include fintechs and alternative lenders.

Recommendation: Expand the CSBFP by increasing maximum loan sizes and types of loans. Design an insurance element such that borrowers could, but are not required to, personally guarantee loans. Expand the program beyond members of the CPA to include fintechs. Over time, aim to significantly reduce the size of the BDC’s loan programs.

About Brice Scheschuk

Brice Scheschuk, CPA is a Canadian entrepreneur and investor. He is the Managing Partner of Globalive Capital, co-founder of ZeroStone.ai, and previously co-founded and served as CFO of WIND Mobile, which he helped build into one of Canada’s largest wireless carriers before its sale. He is an active angel investor with 50 investments in venture funds and more than 120 investments in primarily Canadian technology companies alongside long-time business partner Anthony Lacavera. He co-founded not-for-profit MindFrame Connect and is a frequent speaker to Canadian founders on mentorship, resilience, and capital strategy.