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Canada's Answer to Tariffs: Venture Capital, Not Counter-Tariffs
Graphite Ventures' $120M fund, backed by Ontario and OMERS, targets the $5M-$25M funding gap; 50% US tariffs pressure Canadian startups to sell or move south.
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Washington's 50 percent tariffs on Canadian goods should be met with more Canadian venture capital, not counter-tariffs, Graphite Ventures managing director Aaron Bast argues.
Bast laid out the case in an opinion piece for BetaKit. Ottawa cannot outspend Silicon Valley, he wrote. American venture firms hold the most capital. Canada's opportunity is to be the first-conviction investor in founders building durable, globally competitive businesses before the rest of the world fully understands what they are building.
The tariffs, announced last month, cover a broad list of Canadian goods, hockey sticks included. Prime Minister Mark Carney responded that Canada is ready "because we have been focusing on what we can control." What Canada controls is capital, Bast wrote.
Bast credits the federal AI strategy, the push toward Canadian-controlled investment, the economic sovereignty agenda, and the Ontario Municipal Employees Retirement System's (OMERS) commitment to add at least $10 billion in new Canadian investment over five years. Together they shifted the question from whether Canada should bet on itself to how the bet should be made, he wrote.
Canadian early-stage funding is in a sustained decline, RBCx has found. Bast puts the risk in the "valley of death," the financing gap between $5 million and $25 million. The failure that comes before the gap, at the seed stage, is just as real, he wrote. Companies that fail to raise either disappear or get acquired before reaching scale. Others move south for American capital, taking the jobs and intellectual property with them, he wrote.