IMHO, while everyone whines about Canada’s lackluster funding environment or culture of risk avoidance, the real problem is SR&ED. American investors and found

IMHO, while everyone whines about Canada’s lackluster funding environment or culture of risk avoidance, the real problem is SR&ED. American investors and founders are always stunned to learn that a Canadian small business can get about 60% of each engineer’s salary back in the form of a refundable tax credit. This amounts to a silent partner in every Canadian tech startup - a partner who is non dilutive and (crucially) who doesn’t care at all whether the venture makes money. Sounds great, but here's the catch: SRED allows companies that should have died long ago to keep on living, draining the talent pool for projects that are commercially “meh” at best. And it doesn’t take an economist to figure out that if a country rewards non performing companies through government incentives, investment will be crowded out. And that’s exactly what we see in Canada. In essence, we don’t have great venture capital because we “don’t need it”. SRED is the big game in town, and it doesn’t reward companies that succeed commercially. It rewards far too many losers. We should get rid of SRED, let the bad companies perish, and then allow private investment to fund risk.