Canada tries to stop tech startups from moving to U.S.: ‘American VCs were hungrier’
When Miles Schwartz co-founded payment company Zūm Rails Inc. in Montreal in 2019, he knocked on almost every Canadian venture capitalist’s door looking for funds. They all turned him down.
So by 2024, Zūm Rails was working on a US expansion, and Schwartz moved to Miami. The company raised C$10.5 million ($7.5 million) from US-based growth equity firm Arthur Ventures LLC that year.
“We tried raising with Canadian VCs,” said Schwartz, 35. “American VCs were hungrier, faster — between them reaching out to us, getting a term sheet was like literally one week.”
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Zūm Rails is one of many Canadian startups that have moved to the US to expand over recent years. Workplace tool Slack was conceived in Vancouver but moved to San Francisco before it was acquired by Salesforce.com Inc. for $27.7 billion in 2020.
A survey earlier this year by tech community organization TechTO found that of 48 Canadian Y Combinator founders who responded, 91% initially incorporated in Canada and 75% later established a US entity.
But now the problem is getting fresh attention from Canada’s government and business leaders, and they’re searching for ways to keep startups at home.
It’s part of a broader effort by Prime Minister Mark Carney to build an economy less reliant on the US, as it reels from President Donald Trump’s tariffs and threats. The latest part of his strategy was the first-of-a-kind Canada Investment Summit this week, which gathered the world’s top money managers in Toronto.
That summit resulted in a slew of patriotic announcements to rejuvenate Canadian business. Toronto-headquartered Radical Ventures unveiled a new late-stage growth fund with more than $1 billion of capital after an initial close, with much of it committed by Canadian pension plans and banks, Bloomberg News reported earlier.
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