Canadian AI minister Evan Solomon hinted that Canada could become a lead investor in Canada’s AI boom on The BetaKit Podcast.
The news: During a conversation with BetaKit editor-in-chief Douglas Soltys, Solomon said the federal government is considering taking a lead role in investment rounds for Canadian AI companies as part of its Canadian Tech Growth Fund. The comments came after Soltys asked Solomon how the feds would approach direct investment into AI, as laid out in the recent national AI strategy. Solomon said those roles could include debt and equity optionality for Canada, allowing it to apply some safeguards for the taxpayer money.
From the source: “There’s often a lack of a lead investor, we could play that role,” Solomon said. “We are in discussions of exactly what the structure would look like.”
Following the thread: While developing Canada’s national AI strategy, Solomon said the government consistently received feedback citing difficulty accessing the investment capital needed to scale in Canada. In response, the feds established the $500 million Canadian Tech Growth Fund as an instrument for the government to directly take equity stakes in AI startups. Historically, Canada has mostly refrained from making equity investments in startups, preferring to support through loans and grants. Taking a page out of the US’s playbook, the Government of Canada has said a federal investment fund will help AI firms attract private capital while having a “strategic anchor customer” in Canada.
Final thought: Investor confidence and access to capital remain a persistent hurdle for startups, both in AI and other sectors, in Canada. Having an entity like the Government of Canada as a lead investor could spur confidence among venture capital firms and bring further pile-on investment. However, some in the space—including the Council of Canadian Innovators’ Laurent Carbonneau—have cited a lack of detail on how equity investment would work, and what Canada’s investment strategy might look like, as a stumbling block in the government’s plans.
With files from Josh Scott.