How to Get Funding for Your Tech Startup in Canada?
- Date : March 27, 2025
- Added By : CAD IT Solutions
- Reading Time : 5 Minutes
The process of creating a tech company in Canada, in Oakville, Toronto or any other city is a process that is full of opportunities as well as challenges. One of the biggest challenges that new tech entrepreneurs face is how to raise enough capital to actually make their businesses a success. The Canadian startup ecosystem has laid out many ways to get funding, which include government grants, venture capital, crowdsourcing, and angel investors.
This guide will define what funding options are available for your tech startup and how to go about getting funding in Canada.
This article will first define what a Canadian startup ecosystem is and how it relates to your business.
Canada is one of the most promising startup ecosystems with some of the most active tech hubs being Toronto and Oakville. Toronto is also part of the “Tech Corridor” and is one of the fastest growing tech hubs in North America while Oakville offers a healthy business environment with a good amount of innovation combined with good infrastructure.
It is important to note down the different types of funding that are available before attempting to get funding. This article is specifically written for tech startups in Canada, if you own a different kind of business, the information here might not apply to you completely, but it will still be useful.
Sources of Funding for Tech Startups in Canada
- Government Grants and Programs
One of the biggest advantages of starting a tech company in Canada is the existence of numerous government funded funding initiatives. Some key options include:
a) Scientific Research and Experimental Development (SR&ED) Tax Incentive
SR&ED offers tax credits and refunds to companies that spend on R&D. If your tech company is developing or implementing new or improved products, processes or software then this program is for you.
b) Industrial Research Assistance Program (IRAP)
The National Research Council sponsors IRAP which offers financial support to SMEs developing innovative technologies.
c) Canada Digital Adoption Program (CDAP)
This program assists businesses to enhance their digital adoption by providing grants and zero-interest loans.
d) FedDev Ontario Funding Programs
If you own a tech startup in Oakville or Toronto, FedDev Ontario has grants and contributions for business growth and development.
To get government funding, you need to submit good business plans and explain how the funds will create new innovations and wealth.
- Angel Investors and Venture Capital
a) Angel Investors
Angel investors are wealthy individuals who provide funding at the early stages of the business in exchange for equity. Some of these investors are seasoned entrepreneurs who offer financial as well as managerial guidance.
Notable Angel Groups in Canada:
Maple Leaf Angels (Toronto)
Golden Triangle Angel Network (GTAN)
York Angel Investors
b) Venture Capital (VC)
VC firms provide funding to high-growth potential startups in exchange for ownership stakes. If your tech startup has high potential for growth, has a new and unique business model, and has a good management team, then you stand to get VC funding.
Top VC Firms in Canada
BDC Capital
Real Ventures
Inovia Capital
OMERS Ventures
Do not attempt to meet with the VCs without a business plan, pitch deck, and a clear path to profitability.
- Startup Incubators and Accelerators
Incubators and accelerators offer not only funding but also mentorship and networking. Some programs also provide office space, business development services and contact with investors.
The best Incubators & Accelerators in Toronto and Oakville include:
MaRS Discovery District (Toronto)
DMZ (Toronto Metropolitan University)
Haltech (Oakville)
Communitech (Waterloo which is close to Oakville)
Most accelerators grant seed funding in the form of equity and have a focus on mentoring and product development.
- Bank Loans and Other Financing Options
Canadian banks and credit unions provide different kinds of loans to small businesses but tech startups are likely to fail to meet the requirements for traditional lending because they have no collateral. However, it is possible to get a fintech lender or another type of financing:
Government backed Loan Programs:
The BDC offers financing for startups from the BDC.
The CSBFP assists new businesses in obtaining capital through this program.
Fintech and Alternative Lenders:
Clearco (previously Clearbanc) offers revenue based funding.
Thinking Capital offers business loans without collateral.
- Crowdfunding
Startups can raise funds directly from consumers through crowdfunding platforms, which validate the market demand in the process. There are different types of crowdfunding:
Reward-Based Crowdfunding: Kickstarter, Indiegogo
Equity Crowdfunding: FrontFundr, SeedUps Canada
This method is suitable for tech startups with consumer oriented products or services or new technologies that can be presented to the public.
- Partnership and Investment by Corporates
It is evident that large corporations invest in startups in order to create new technologies and gain a competitive edge. If your tech company is based in AI, fintech or clean tech, then you stand a chance of getting support from existing companies.
Some programs, including the C100 Fellows Program, help connect Canadian startups with Silicon Valley investors while shops like Shopify and RBC invest in tech businesses.
Guides on How to Get Funding for Your Business
- Write a Business Plan
Your business plan should include: Market analysis, Financial planning, Competition analysis, and Value proposition. Investors and lenders want to know that you can generate money and make your business a big one.
- Build a Solid Network
Going to tech conferences, startup conferences, and networking events will help you meet investors and mentors. Some of the most popular startup events in Toronto and Oakville include:
Collision Conference (Toronto)
Elevate Tech Festival (Toronto)
TechTO (Many tech networking events)
- Improve Your Pitch
A good pitch should be able to describe the problem, the solution, the opportunity and the funds needed in the market. Whether you are presenting to VCs, angels or grant committees, make sure that your story is backed up by numbers.
- Exploit the Local Startup Ecosystems
The use of local resources like incubators, government programs, and startup hubs also enhance your credibility and funding possibilities.
- Show Traction and Scalability
Startups that have some market proof are more attractive to investors. This can be measured by user growth, revenue, or partnerships, or by product development milestones.
- Use Several Funding Sources
Using only one funding method is risky. You should try to get grants, angel investment, crowdfunding, and loans to create a good financial plan.
Conclusion
This article provides step by step instructions on how to get funding for your tech company in Oakville, Toronto or any other city in Canada. This means that, for the tech entrepreneurs in Canada, there are government grants, venture capital, incubators, and crowdfunding. When you have a strong business plan, the right contacts and knowledge of what is available in your region, you will be able to get the funding you need to build your startup and make it a successful tech company in Canada.