For the last few years, Canada has been sitting on the world stage as one of the foremost players in the tech scene. Largely due to its supportive government initiatives and highly skilled workforce, it’s been fostering innovation in a way other countries – Latin American and Southeast Asian markets, for instance – have struggled to keep up with.
This is especially true in Canada’s iGaming scene, which has entered a new era of expansion as of 2026. National net gambling revenue is now projected to exceed $15.5 billion annually, reflecting a steady climb in digital adoption across the provinces.
The online casino vertical remains the powerhouse of this growth, currently accounting for an estimated $9.57 billion of that total. This surge has been fueled by a shift toward regulated, competitive frameworks that are increasingly becoming the standard across the Canadian landscape.
But despite huge gains in sectors like iGaming and fintech, startup growth in Canada remains slow. Indeed, recent studies have shown that around $66 billion has been lost due to scaling issues and barriers to expansion, and this presents a worrying outlook for the country’s future.
So if the tech scene is flourishing, and particular sectors like iGaming and fintech are stable, why is startup growth so slow?
NACO and Startup Genome: The Report
To understand why startup growth has been so sluggish, it’s first important to look at the details of the report.
Delivered by Naco – the National Angel Capital Association – and tech organization Startup Genome, the report estimates that Canadian startups are missing out on $141 million annually at the pre-seed and seed stage, and $181 million at the Series A level compared to startups – in similar positions – in comparable US cities.
According to the report’s authors, this funding gap is the main contributor to Canada’s slower tech growth compared to its global peers, with the 65,000 funding rounds analyzed revealing how capital becomes increasingly difficult to access as startups move beyond the earliest stages of development.
Indeed, Canada saw 12% to 15% fewer startups get seed funding, relative to its number of startups created, than in the US ‘Tier 1’ ecosystems, and it’s these gaps that are translating to fewer exits, leading to lost ecosystem value.
Between 2019 and 2024, for instance, its top-tier ecosystems, Toronto-Waterloo, Montreal, and Vancouver, lost $66 billion in ecosystem value when measured as its market share of global startup funding and exits.
What is The Real Issue?
With the above report in mind, it’s clear that the issue resides in the gap between early success and long-term scalability.
Canada is highly effective at producing startups, there’s no doubt about that, and with state-backed competitions and accelerator programmes helping founders refine their ideas, there’s no doubt that some are given the platform to grow.
But when it comes to helping them grow into globally competitive companies, there seems to be a structural bottleneck somewhere that pulls the plug before businesses have had time to scale.
In other words, at the earliest stages, founders are often able to access grants, incubators, and angel investment, but as these businesses begin to scale, the available funding becomes far more limited.
Compared to the US, where deep pools of venture capital support companies through every stage of growth, Canadian startups often struggle to secure the larger rounds needed to expand operations and invest in talent, and this has been catastrophic for promising companies unable to reach their full potential.
What is the Answer?
So what’s the answer? Really, it comes down to funding and connectivity. In the 2025 Budget, the federal government pledged $750 million toward early-stage VC funding, and if distributed properly, this could make a sizable dent in Canada’s seed-stage gaps. But a clear plan for how this will be deployed has yet to be released.
At a NACO-hosted online roundtable earlier in the year, CEO Claudio Rojas called for national infrastructure to better connect early-stage support mechanisms, such as angel networks and venture studios, and this could be another step forward that helps to bridge the gap between early funding and scale-up investment.
Whether any of this will really come to fruition remains to be seen, but it’s clear that, if Canada wants to boost its tech scene – and other flourishing markets – effectively, something will have to be done to close this scaling gap and push startups more confidently into the future.
