Nicolas Frendo

Nicolas Frendo – CFO – 4-minute read 

Toronto Built Start-ups, the TSX didn’t get them

I keep thinking about this contradiction.

Toronto has built one of the densest startup ecosystems anywhere. In the FundingCake directory shown in the screenshot above, Toronto ranks first in startup accelerators with 77. Even if that is best read as a directory count rather than a perfect census, the broader point still stands: Toronto is exceptionally good at producing startups, and we are proud of that!

However, in 2025, not a single venture-backed Canadian company exited through an IPO. Canada is still very good at starting companies, and still not good enough at keeping its best ones anchored here as they scale.

Why would a founder stay on the TSX if the real scale is in America?

That is the question I keep coming back to.

If I am building a venture-backed company and most of my late-stage investors are U.S.-based, my best public comps are U.S.-listed, and the deepest pool of tech investors is in the U.S., why would I treat Toronto as my natural end market?

TMX’s own 2025 data tells the story. Across TSX and TSXV, there were 449 new listings in 2025 but the overwhelming majority were not operating venture-backed companies. The total included 239 ETPs, 116 CDRs, 8 CPCs, and 1 SPAC. Across both exchanges, there were only 5 IPOs excluding CPCs, ETFs, closed-end funds, and SPACs, and only 2 such IPOs on the TSX itself.

So?…the Canadian public market was busy in 2025,  just not in the way a venture-backed founder would care about.

Why Canadian startups leave for the U.S.

First, more capital and Belief!

If the biggest rounds increasingly depend on foreign investors, then Canada is not fully financing its own winners. BDC says exactly that: bigger Canadian financings still rely heavily on foreign money. Maybe the BDC should step up itself?

Second, a bigger commercial center of gravity.

A lot of Canadian startups may be born here, but as they grow, the biggest customers, partnerships, and enterprise opportunities often end up being in the U.S. Once that happens, it is not just revenue that shifts south; strategy does too. 

Third, a stronger tech narrative.

The U.S. still offers the deepest ecosystem for software, AI, and venture-backed growth names. Even many successful Canadian public tech companies are interlisted or listed in the U.S. as well, which reflects where management teams believe the deepest investor base is.

Quick Fix (Unlikley)

If we want Canada’s best startups to stay Canadian, we need to be honest about why they leave. Part of the problem is policy, and part of it is that institutions like BDC and Canadian VCs have not done enough to make founders feel that scaling in Canada is the obvious path. 

We need more domestic growth capital and a much stronger commitment from Canadian investors to back our own winners instead of watching them mature for the benefit of the U.S. market. Otherwise, we will keep building great companies here only to see their biggest chapters written somewhere else.

Canadians and Canadian VC’s need to start investing in Canada!