Feb 10, 2026
Two Gen Z tech entrepreneurs founded a $34 million tech company in Canada only to leave for San Francisco to scale up their venture. Their reasons for leaving for the U.S. shed light onto Canada’s venture capital ecosystem’s weaknesses and where policy makers can begin to effect change.
Mai Trinh, an international business graduate from Simon Fraser University, and Gabriel Ravacci from Brazil, co-founded the tech startup Internet Backyard, which helps the computer economy with financial infrastructure through automated billing and financial software. Speaking with CTV News, Trinh cited two main reasons for relocating to the United States: complex visa requirements and a lack of funding.
Advertisement
As an international student working with a Brazilian co-founder, Trinh noted how Canada’s Startup Visa wait time is 10 years, so they were working towards permanent residency. However, under Canada’s Comprehensive Ranking System, which uses points towards PR qualification, the duo needed to work for other employers while building their startup — an unsustainable option.
Anecdotally, Trinh also noticed that American investors have much deeper pockets, making it easier to raise funds. After incorporating in Delaware — a well-known tax-advantaged location to incorporate in the U.S. (2) — they raised US$4.5 million (C$6.1 million) while valued at US$25 million (C$34 million) in only one week. In contrast, the tech startup raised US$3 million (C$4 million) across all of Western Canada in the first quarter of 2025.
“You wake up one day, you realize your worth, and then you get out,” Trinh told the news outlet.
Unfortunately, Trinh and her co-founder aren’t the only Canadian tech founders leaving for better business conditions, which begs the question: Is the U.S. better suited for startups than Canada?
What the numbers say
While the debate as to which country has the better framework for startups to captialize is highly nuanced, there’s an easy way to find clarity on where entrepreneurs prefer to build: startup data, which tells a troubling narrative.
Research from venture-capital firm Leaders Fund shows that since 2015, Canadian-based startups that raised $1 million or more have been steadily declining. In 2015, around 70% of startups were based in Canada. In 2024, that number sat at just over 32% (3).
Advertisement
The reasons why Canadian startups are building in the U.S. is multi-faceted, but funding access is a salient motivator. Estimates from the Business Development Bank of Canada suggest that U.S. investors make up 40% of all venture capital money in Canada, as well as an average of 50% of founder deals in terms of size (4). Where there’s more money to be raised, there’s arguably a higher chance of startup success.
Recently, famed San Francisco-based startup accelerator Y Combinator stated it would no longer fund Canadian startups, only those that have been incorporated in the U.S. (5), adding further pressure on Canadian startups to relocate south. While the incubator has since walked back their statement and now allow Canadian startups to apply (6), the organization noted that they chose to remove Canada because, “we noticed that our top-performing Canadian companies reincorporated in the U.S.,” which is telling.
This isn’t to say that Canada has lost its entrepreneurial allure, but more needs to be done to keep our talent here. That said, many Canadian founders have reported gaining momentum. Canadian tech giant Shopify with a market cap of US$146.23 billion (C$198.28 billion) (7) hosts “Builder Sunday” events in both Montreal and Toronto, drawing hundreds of entrepreneurs every week. “All of them are planning to build their companies in Canada,” Shopify president Harley Finkelstein told The Globe and Mail (8).
Must Read
- Stop the leak: 5 costs Canadians (still) overpay for every single month. How many are sabotaging your 2026 budget?
- What's your worth? Here are the 3 net worth milestones that change everything for Canadians (and what they say about you)
- Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich — and that ‘anyone’ can do it
What experts say needs to change for Canada to retain talent
Fewer companies building out their operations in Canada has serious consequences. Passing on the next Wealthsimple, Shopify or Clio can lead to billions of dollars in economic impact and thousands of jobs being lost, the Leaders Fund’s report shows. So what can policymakers do to help retain top-tier Canadian talent? Experts have a few ideas:
- Create favorable tax conditions. Last year, the Canadian government proposed an increase to the capital gains tax rate, making founders that sell their businesses see more of their sale proceeds taken by the government. While the increase was canceled under Mark Carney in March of 2025 (9), founders are still reeling. Experts have suggested that Canada needs better tax incentives for startups, such as adopting the U.S.’s Qualified Small Business Stock system, which would allow qualifying Canadian startups to sell their shares with no capital gains tax whatsoever.
- Generate national sentiment. Starting a “buy Canadian” movement for startups, especially Canadian tech, could make funding easier, experts at Leaders Fund argue. Allowing Canadian tech purchases to be tax-deductible could lead to faster access to local capital, with less investment needed from foreign investors.
- Improve Canada’s visa program. Trinh isn’t the only founder to face visa wait times that inhibit scalability. Founders need to act quickly, and Canada’s startup visa program should match that pace. Since Donald Trump imposed a US$100,000 (C$136,000) fee on H-1B visas — visas that employers use to hire specialized professionals from other countries (10) — some founders have argued Canada’s policymakers should leverage the situation to push for smoother visa infrastructure for founders to attract talent (11).
Bottom line
Canada has a track record of creating impressive companies. But if it wants to stop losing cutting-edge Gen Z entrepreneurs like Trinh and Ravacci, policy needs to change. Until policymakers address the dearth of venture-capital funding for startups, adopt founder-friendly tax incentives and create more streamlined visa programs, we might watch the next Shopify scale in San Francisco instead of in our backyard.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CTV News (1); Harvard Business Services, Inc (2); Leaders Fund (3); BDC (4); The Logic (5); Y-Combinator (6); Yahoo Finance Canada (7); The Globe and Mail (8); Prime Minister of Canada (9); American Immigrant Council (10); BNN Bloomberg (11)
You May Also Like
- Here’s how to retire in 10 short years no matter where you live in Canada — even if you’re starting with $0 savings
- If you’re still feeling the pinch this month — don’t panic. Here are 5 easy ways to fix your finances without a total overhaul
- How Warren Buffett’s simple buy-and-hold real estate approach offers a lesson for Canadian homeowners and long-term investors
- Approaching retirement with no savings? Don’t panic, you're not alone. Here are easy ways you can catch up (and fast)
Brett Surbey is a corporate paralegal with KMSC Law LLP and freelance writer who has written for Yahoo Finance Canada, Success Magazine, Publishers Weekly, U.S. News & World Report, Forbes Advisor and multiple academic journals. He and his family live in northern Alberta, Canada.
