As Prime Minister Mark Carney's government approaches its seventh month, it faces challenges reminiscent of those encountered by previous administrations. The government has struggled to find a clear direction since Justin Trudeau's rise to power. Carney's team may benefit from revisiting a pivotal moment in the party's history during the 2012 leadership campaign, when Trudeau competed against the late Marc Garneau, a respected astronaut and engineer.

Garneau proposed a significant idea: to enhance Canada's economic competitiveness by fostering technological leadership. He suggested exempting startup investments from capital gains taxes to encourage financing for innovative technology. However, this proposal did not gain traction. Instead, the Harper government introduced a Venture Capital Action Plan in 2013, which was later replaced by the Venture Capital Catalyst Initiative (VCCI) in 2017. These initiatives have collectively received nearly $2 billion in funding but have fallen short of expectations.

Critics argue that the government's approach has hindered the growth of a successful tech startup ecosystem. By allocating funds to government-selected managers, the programs have been criticized for lacking the agility and risk-taking necessary for innovation. Additionally, the focus on late-stage investments has not addressed the needs of early-stage startups, which often struggle to secure funding in a competitive market.

In 2021, U.S.-based Tiger Global made substantial investments in Canadian companies, highlighting the availability of capital for late-stage startups. However, the VCCI has faced scrutiny for prioritizing political goals over economic growth. Small Business Minister Rechie Valdez stated, "The VCCI is more than a financial investment; it’s about reimagining Canada’s VC landscape in a way that empowers people from all backgrounds to pursue their entrepreneurial goals through increased investment and access to capital."

The program mandates that fund managers implement policies promoting equity, diversity, and inclusion, which some argue detracts from the primary goal of fostering technological innovation. Local politics have also influenced capital allocation, with funds distributed across various provinces to avoid perceptions of favoritism toward Toronto.

As of the end of 2023, of the $1.18 billion allocated to large fund managers in 2017, only $843.2 million had been deployed, with $160.8 million returned and remaining investments valued at $893 million. This results in a six-year return of 25 percent, significantly lower than the one-year return of the TSX 60 index, which offers a less risky investment option.

Moreover, the VCCI has not curbed the trend of Canadian entrepreneurs and intellectual property leaving the country. A significant portion of artificial intelligence patents produced by Canadian researchers is now being sold abroad, with reports indicating that approximately 75 percent of these patents exit Canada. This trend raises concerns about the future of Canada's technological landscape and its ability to retain valuable intellectual property.