To Improve Access to Capital in Quebec, Let’s Look at B.C's Venture Capital Tax Credit

By Jean-François Harvey
Director of Quebec Affairs

As Quebec prepares for its upcoming general election this fall, political parties are wrestling with a familiar political dilemma: how to stimulate private sector growth while navigating tight fiscal constraints. Outlined in our recently released election primer, What Quebec Innovators Need to Scale, public procurement was identified as an important demand-side lever to support domestic technology companies.

Creating the policy conditions for Quebec scale-ups to translate innovation into global economic success also requires a powerful supply-side tool, notably access to early-stage private capital. While Quebec has world-class research and technological talent, the province’s funding ecosystem constrains early-stage companies. To bridge this gap without adding massive public cost, the next government should look to a proven mechanism from western Canada, specifically British Columbia’s Small Business Venture Capital Tax Credit.

A Proven Model

For over two decades, B.C.’s tax credit program has set the benchmark for mobilizing angel and early-stage capital. The program offers a 30% tax credit to those investing directly in eligible young innovation companies or specialized venture funds.

Demonstrating its continued success, the B.C. government recently expanded the program by raising its overall budget and increasing the maximum annual claim limit per individual investor from $127,000 to $300,000 dollars. Economic models and industry evaluations point to a strong return on investment from this program, demonstrating that the tax credits issued are consistently offset by the direct tax revenues recovered at both the provincial and federal levels.

This positive feedback loop is driven by accelerated business growth, robust local hiring, and increased taxable economic activity.

Mobilizing Capital

Quebec has built strong public support structures, yet early-stage capital recycling and angel investment continue to lag behind. Adopting a similar venture tax credit in Quebec would directly address several critical structural weaknesses in the current funding ecosystem.

First, it would help rectify the province's over-reliance on public capital. Currently, more than half of the capital raised by Quebec venture funds comes from public or government-affiliated sources. A 30% tax credit provides a strong incentive for high-net-worth individuals, family offices, and local angels to invest, rebalancing the ecosystem toward private, self-sustaining capital.

Furthermore, this mechanism would help companies cross from the pre-seed to growth stage. While growth-stage capital is relatively available, early-stage startups encounter a shortage of lead angel investors during pre-commercialization and seed phases. A venture tax credit reduces the initial downside risk for private backers.

Beyond individual investors, the implementation of such a tax credit would unlock a vast reserve of untapped corporate venture capital. Following the abolition of former programs like Capital Synergie, Quebec corporations lack structured tax incentives to back local tech scale-ups.

Industry data from Deloitte Ventures and BDC Capital shows that only 6% of Canadian public companies with more than $1B CDN in annual revenue actively participate in venture investing, compared with approximately 40% of comparable U.S. companies. Expanding tax credit eligibility to corporate investors would likely encourage strategic partnerships between established industrial players and emerging scale-ups here in Canada.

A Pitch for Quebec's Next Government

Introducing new government spending is difficult to justify to voters. A venture capital tax credit offers a pragmatic alternative that requires minimal net outlay, mobilizes idle domestic wealth, and yields a direct positive return for the provincial treasury. Leading industry organizations, including Réseau Capital, BIOQuébec, and Québec Tech, have all identified investor tax credits as a key policy measure to strengthen Quebec's innovation financing ecosystem. By embracing this growth engine, whoever forms the next government can offer a concrete, high-impact commitment, ensuring Quebec's most promising scale-up enterprises secure the private domestic capital they need to grow, scale, and compete globally.

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About the Council of Canadian Innovators (CCI)

The Council of Canadian Innovators (CCI) is Canada’s business council for the 21st century economy. We are a collective of over 175 of Canada’s fastest-growing and most ambitious companies, and the founders, CEOs, and executives behind them, working together to improve the business conditions that help more homegrown companies scale, compete globally, and drive long-term prosperity.