Canada is bleeding startups. We can learn how to fix this from the U.K.

Andreessen Horowitz raised US$15.0B on Jan. 9 versus CA venture-capital firms' combined $2.1B in 2025, highlighting a major capital shortfall. Only 32.4% of Canadian-founded startups that raised $1M were incorporated in Canada, driving talent, jobs and IP south; UK SEIS/EIS programs have mobilized >$63B into 59,000 startups and supported 386,000 jobs and $50B revenue in 2023. The author recommends Canada adopt SEIS/EIS-style tax incentives (income tax credits, loss offsets, capital-gains exemptions) which could unlock ~$9B by mobilizing 0.1% of dormant domestic wealth—about 4.5x last year’s VC funding—and attract experienced angel investors and mentorship into the ecosystem.

Analysis

A credible, targeted tax-incentive program for early-stage investors will change deal economics more than headline fund-raising numbers: by compressing expected downside and improving after-tax IRR, it will increase willing check sizes and raise pre-money valuations at seed. Expect founders to demand larger seed rounds and follow-on reserve commitments within 12–36 months, which will accelerate competition for limited later-stage dry powder and push up Series A pricing by a material margin versus today.

Second-order winners include professional services that monetize increased deal flow (M&A boutiques, placement agents, custody platforms) and pension-linked asset managers that can launch venture strategies without sacrificing liability-matching profiles. Conversely, U.S.-centric accelerators and law firms that capture migration-related fees will see a slowdown of cross-border incorporation business; over 24–48 months this reallocates a small but persistent share of advisory revenue northward.

Key risks: political backlash over perceived revenue loss or fraud risk could result in sudden policy reversals or tight eligibility rules that blunt impact, and behavioral inertia among high-net-worth investors means capital reallocation will be gradual rather than immediate. Monitor bill language (wedge items: loss-offset rules, residency tests, and clawback periods) as near-term catalysts; the policy’s economic payoff will be realized mostly in years 2–5 after rollout.

Consensus assumes a large, fast capital inflow; I view that as partially overdone. The initiative will expand the investor base but won’t instantly convert conservative wealth holders into active angels — policies that pair tax incentives with curated syndication channels and deal flow guarantees will materially outperform plain tax credits alone.

Key Decisions for Investors

• Long DASH 6–12 month call spread (buy 1x 12-month call, sell 1x further OTM 12-month call) sized 1–2% NAV — rationale: tactically bullish on secular consumer-platform monetization with asymmetric premium-funded upside; target 200–300% return if catalyst-driven re-rating persists, max loss = premium paid.
• Long ABNB 9–12 month calls (small, 0.5–1% NAV) as a convex play on durable travel demand and platform pricing power — low delta exposure to event risk with >3x upside-to-loss if travel rebound and tech-sector multiple expansion continue over the year.
• DBX: no new directional exposure — sell 6–8 week OTM covered calls or 1x short call to harvest premium while avoiding chase; use proceeds to fund the ABNB/DASH option exposure. Limit assignment risk to 1–2% NAV and roll if called.
• Off-book idea: monitor Canadian policy bill text and, upon favorable wording (broad loss-offset + capital gains exemption), rotate 2–4% NAV into select Canadian-listed tech exposure and boutique managers over 12–24 months — size contingent on implementation clarity and anti-abuse provisions.