News
November 17, 2025
Canada’s AI Startup Future: Insights and Actions from IVADO
Canada is recognized globally for its world-class artificial intelligence (AI) research. Yet, despite this strength, the country has not fully translated this research excellence into entrepreneurial activity, producing fewer AI startups than its potential would allow and limiting its ability to fully leverage innovation for economic and societal benefits.
Creating new AI startups is essential not only for economic growth, but also for addressing national priorities. They create highly skilled jobs; attract domestic and international investment; deliver innovations that meet major needs in fields like healthcare, agriculture and the environment; and can help communities, including Indigenous and minority ones, address the major social and economic challenges they’re facing.
“From AI Research Leader to AI Startup Nation: Canada’s Next Challenge”, the first publication in the IVADO Policy Series, “Canada’s AI Future: Harnessing Strengths, Addressing Gaps, and Charting a Path Forward”, highlights how AI startups are critical for Canada and address three main barriers to their growth:
- Conversion challenges: Students lack entrepreneurial education and drive and researchers aren’t incentivized to commercialize their work.
- Weak demand: Government procurement is complex, and large companies prefer established international vendors.
- Funding gaps: Access to capital is difficult, and tax rules currently favor foreign investment.
Without intervention, Canada risks seeing its brightest minds and most innovative ideas migrate to ecosystems abroad, such as the United States, the United Kingdom, or other emerging global tech hubs that offer more favourable conditions for AI startups to flourish.
To address these challenges, the publication, produced in collaboration with CIFAR and CEIMIA and funded by the Canada First Research Excellence Fund (CFREF), outlines several key actions:
- Foster entrepreneurship from the university level: Expand student venture programs and academia-industry collaboration.
- Create domestic demand: Streamline government procurement and create Canadian startup-specific pathways.
- Improve access to funding: Reform tax policies that discourage early-stage investment and treat AI computing costs as R&D expenses under the Scientific Research and Experimental Development (SR&ED) program.
“Canada has tremendous talent and research capabilities in AI, but converting this into thriving startups requires intentional support and collaboration across universities, government, and industry,” says Réjean Roy, Director of Training and Knowledge Mobilization at IVADO. “This publication provides actionable recommendations to help bridge the gap and ensure Canadian innovation reaches its full potential, benefiting not only the economy but society at large.”
“Canada is one of the world’s great AI nations, built on a long legacy of supporting talented researchers and bold ideas that have shaped the technology today,” says Elissa Strome, Executive Director, Pan-Canadian AI Strategy, CIFAR. “This report offers critical insights to help Canada boost its standing on the global stage, ensuring we translate our research strengths into real economic and social benefits for Canadians.”
“Canada has incredible talent and its academic leadership has long been recognized on the international stage. But the country cannot solely rely on its academic status anymore,” says Sophie Fallaha, CEO of CEIMIA. “In order to really leverage the world-class resources that we have, we need to install supportive conditions for our AI startups to emerge as Canadian champions. This is what this publication brings to the table: a concrete path forward for policymakers to place our nation as a top leader on the global AI market.”
This document summarizes a discussion led by Ann-Frances Cameron, Professor, Department of Information Technology at HEC Montréal, with Daniel Mulet, Partner at Radical Ventures; Nicole Janssen, Co-Founder & Co-CEO of AltaML; and Richard Chénier, Executive Director of Québec Tech. The text was further developed by IVADO, and ultimately reviewed by the Thematic Series’ editorial committee, which includes Catherine Régis (IVADO and Canada CIFAR Chair in AI), Elissa Strome (CIFAR), Greg Mori (Borealis AI and Fraser University), Nicole Janssen (AltaML), and Sophie Fallaha (CEIMIA).
