While Canada’s lagging innovation performance is nothing new, the ongoing US trade war and economic crisis have made addressing it a more urgent concern.
During a MaRS Discovery District panel Thursday morning, leaders from Blue J, the Canadian Shield Institute, the University of Toronto (U of T), and North South Ventures unpacked some of their biggest worries—from the country’s current understanding of foreign direct investment to its talent retention and tech adoption struggles—and suggested some possible antidotes.
“When you look at graduate students, compensation is much higher in other countries, and places to work on interesting problems here aren’t as plentiful.”
A 2025 Council of Canadian Academies report found that Canada’s performance in science, technology, and innovation continues to decline compared to other countries.
Former MaRS CEO and current North South Ventures general partner Ilse Treurnicht, who moderated the event’s panel, said the report found Canada’s ability to attract and develop talent and the performance of its higher education system remain “bright lights.”
But Treurnicht said the report also resurfaced longstanding concerns, including “abysmal and declining” overall business and government research and development, difficulty retaining talent, intellectual property (IP) leakage, low rates of tech adoption and commercialization, a lack of policy focus, and limited access to domestic financing..
Panellist Vass Bednar, the managing director of think tank the Canadian Shield Institute, argued that Canada needs to update how it evaluates foreign direct investment if it hopes to ensure tech sovereignty and avoid remaining a digital 51st state. To Bednar, the answer lies in Canada building, operating, and controlling more tech assets, rather than “renting” them from companies based elsewhere.
At the moment, Bednar said she thinks Canada lacks the right framework to adequately talk about the $13 billion Meta plans to pour into building the country’s largest AI data centre, or Anthropic’s $10-million commitment to AI research in Canada.
On Meta, Bednar said, “That number is going to go somewhere, and at some point we’re going to say, ‘Wow, money came here.’ How do we think about that in terms of the AI value chain and where we are and where we want to be?”
Bednar questioned why she read headlines calling Anthropic’s commitment an investment given that it comes largely in the form of Claude credits. “Now we’re counting coupons.”
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Talent-wise, U of T assistant vice-president of innovation, partnerships, and entrepreneurship Jim Banting asserted on stage that “there’s just really nowhere” for many of the skilled individuals Canada is training to land right now.
“When you look at graduate students, compensation is much higher in other countries, and places to work on interesting problems here aren’t as plentiful,” Banting said. Keeping them here, he said, will require the development of more IP and ambitious companies.
Toronto-based AI tax research platform Blue J aims to be one of them. The tech firm is approaching 6,000 clients, following a $167-million CAD Series D a year ago. On stage, its founder and CEO, Benjamin Alarie, claimed private tax advisors are using Blue J’s software to analyze Canadian tax law “faster and more comprehensively” than the Canada Revenue Agency.
Boosting adoption of AI among Canadian businesses will require companies like his to address a clear pain point and make the deployment process “relatively straightforward,” Alarie said.
Banting thinks one of the ways that Canada could create more Blue Js is by concentrating its investments on sectors where the country could win globally.
“Pick a select number of areas where Canada could have a leadership role, and focus funding programs more deeply on those, versus spreading funding programs across a wide range of things that make it difficult for any one of the groups to get critical mass,” he said.
Feature image courtesy Josh Scott for BetaKit.