Reversing Brain Drain: What Canada Must Do Now to Lead and Win

Every few years, the conversation about brain drain returns to the headlines like a stubborn echo. Canada has a long history of developing world-class talent, only to watch it—and the prosperity it could create—leave for better opportunities. Most head south to the US.

Despite knowing this is a recurring problem, we’ve done little to stem the tide. The result is a problem that has intensified.

At Leaders Fund, we see this up close. We invest in early-stage startups across Canada, the US, and Israel, working with founders at the stage where ambition meets opportunity. In recent years, we’ve watched Canada’s startup ecosystem lose ground and wanted to understand why. 

We studied nearly 3,000 venture-backed startups founded by Canadians between 2015 and 2024. Each had raised more than US$1 million, enough to signal investor confidence and the potential to scale.

The findings are a wake-up call for Canada’s long-term competitiveness in technology and innovation. They point to challenges that can’t be solved by founders or investors alone, which is why I recently presented them, along with recommendations for action, in testimony before the House of Commons Standing Committee on Industry and Technology. 

1. Company Formation is Slowing 

Before the pandemic, the US produced 11 to 15 times more high-potential startups than Canada. By 2024, that gap had widened to 45 times.

2. Ambitious Founders are Leaving

Among Canadian-led high-potential startups launched in 2024, only one-third are headquartered in Canada, while nearly half have relocated to the US, where they raise twice as much capital and reach key milestones nine months faster than those who stay. 

In short, it’s simply easier and more rewarding for Canadians to build in the US. 

Where Talent Goes, Prosperity Follows 

The people who build companies also build jobs, tax revenue, and long-term economic momentum. Every departing founder takes with them not just an idea, but an entire ecosystem of opportunity: the engineers they would have hired, the IP they would have created, and the communities that would have grown around them.

Talent is the foundation of competitiveness. Capital follows people, not the other way around. When our best builders and operators head south, so does the future economic activity they would have generated here.

Canada doesn’t lack ideas or education. Our universities and research institutions are world-class. What we lack is the bridge between invention and wealth creation: the ability to turn world-class research and talent into world-class companies that stay and scale here.

That gap shows up in slower job growth, weaker productivity, and missed opportunities for Canadians to participate in innovation-led industries. This isn’t just a tech story. It’s a prosperity story that shapes our ability to fund public services, invest in communities, and create mobility for the next generation.

Reversing it means making Canada the place where talent starts, stays, scales, and thrives.

Canada Still Has the Ingredients. We Just Need the Recipe

The trends are worrying, but they’re not irreversible. Canada still has what it takes to compete; we need to align policy, capital, and culture in the same direction.

Our talent base remains exceptional, and our startup ecosystems are rich with experience. We’ve proven that global success can happen from here. Companies like Shopify, StackAdapt, Ada, 360Insights, and Cohere have achieved global scale while remaining Canadian.

Timing may also be on our side. The US is tightening immigration, including a $100,000 H-1B visa fee that could deter international talent. That creates a small window for Canada to attract top talent builders, but only if our own systems work. Our Start-Up Visa Program, for instance, currently takes 53 months to process, compared with just 13 days for a comparable US visa.

There’s also momentum behind Ottawa’s commitment to act as a first customer for homegrown AI and defence firms. It’s a promising idea that could signal confidence in Canadian innovation. But execution, not announcements, will determine whether it matters.

This moment calls for more than just slowing losses. It’s about rebuilding Canada’s startup engine so founders, engineers, and innovators no longer have to choose between ambition and geography.

Others Faced This Crossroad and Chose to Build

Canada isn’t the first country to confront the challenge of talent flight and sluggish commercialization, and others have shown it can be turned around.

Israel’s Yozma Deep-Tech program shows how smart policy can unlock private capital. By offering grants to new venture funds backing companies in fields like semiconductors and quantum, it lowers early-stage risk and keeps IP anchored at home.

In the US, the Small Business Innovation Research (SBIR) program has proven for decades that government procurement can seed innovation by acting as a startup’s first customer, a model that has launched hundreds of market leaders.

And China’s “Thousand Startups Bloom” strategy shows the power of focus. By identifying and investing heavily in sectors like electric vehicles and solar energy, China created industries that now dominate global markets.

These examples share a common thread: clarity of purpose, follow-through, and political will. When countries treat innovation as a national priority rather than a talking point, they create the conditions for builders to thrive.

Creating a Canada Worth Building In

Reversing brain drain is about creating a Canada that ambitious people choose to build in, because the conditions, opportunities, and rewards make it the best place to do so. 

1. Reward risk:
Eliminate capital gains on startups and create a more ambitious, Canadian version of the US Qualified Small Business Stock exemption to reward founders and early employees.

2. Unlock more early-stage capital:
Expanding angel investor tax credits would encourage more people to back local founders and help more startups raise their first round at home.

3. Adopt a “Buy Red” culture:
In Israel, “Buy Blue” helps startups land early customers and reach meaningful revenue at home before expanding abroad. Canada should go further by making the purchase of Canadian technology tax-deductible for both public agencies and private buyers. 

4. Let 1,000 companies bloom:
Incentive company formation in areas where Canada can lead globally, such as AI, quantum computing, or critical minerals for battery technology, to name a few, and then let the market decide which companies will thrive.

5. Engage founders in shaping government programs:
Initiatives like SR&ED cost billions yet often bog startups down in paperwork. Redesign them with founders at the table, focusing on speed, simplicity, and measurable impact.

6. Change the culture. Celebrate ambition:
In the US, Musk, Jobs, and Huang are household names. In Canada, even billion-dollar founders are rarely recognized. Our builders should not be anonymous. We need to make entrepreneurial success something to aspire to.

7. Invest in future leaders:
Teach young Canadians how prosperity is created and cultivate leadership through initiatives like Huron University’s Nation Builder program, which develops thoughtful, courageous leaders who understand both economics and purpose.

A Chance to Lead, If We Choose It

We need to restore Canada’s belief in itself as a builder nation.

We live next to the world’s largest economy, so the pull south will always be strong. But that isn’t destiny. We may never match the US in size or scale, but we can compete on speed, focus, and conviction.

Canada’s prosperity depends on whether we act decisively now by aligning government, capital, and talent around ambition.

This is a shared responsibility.

• Government must remove friction and buy innovation.
  
  
• Investors must fund earlier and faster.
  
  
• Business leaders must choose Canadian tech first.
  
  
• Educators must cultivate risk-takers and builders.
  
  
• Canadians must celebrate those who create.
  
  

The next generation of Shopify-scale companies can, and should, be built here. But that will only happen if we give their founders every reason to stay and succeed at home.