August 26, 2026
Re. BIOTECanada feedback to inform the design of the life sciences stream of the Venture Capital Catalyst Initiative (VCCI)
Dear ISED,
Please see the attached BIOTECanada feedback to inform the design of the life sciences stream of the Venture Capital Catalyst Initiative (VCCI). The attached feedback are answers to the questions in the consultation discussion guide.1
BIOTECanada is the national industry association representing the broader Canadian biotech ecosystem which is national in scope and comprised of pre-commercial biotech companies, global pharma and biotech companies, investors, incubator and accelerator organizations, and academia.
Please acknowledge receiving the attached feedback.
Kindest regards,
Ron Boch, Ph.D.
Vice President, Biotechnology and Industry Affairs
BIOTECanada
613-230-5585 x 233
1. What are the current trends, opportunities, and challenges shaping investment in Canada’s life sciences sector?
BIOTECanada answer:
New investment and government support are key to ensuring that emerging life science companies can access capital that allows them to move along the development continuum. BIOTECanada welcomes the recent $150M life science fund from the Business Development Bank (BDC) and the previously announced Venture Capital Catalyst Initiative (VCCI). The sector requires additional dedicated allocations for life sciences.
While Life Sciences (LS) has consistently received <20% of venture capital (VC) investment dollars that have flowed into emerging Canadian companies (LS has had 1/3 the support of Information and Communication Technology, ICT), the sector has generated more aggregate value than any other on the order or ~50%+ (Sources: Canada’s Venture Capital Landscape Report May 2026 by BDC; RBC Spotlight: Capital Exited in Canadian Venture over the Past Decade 2024; adMare Institute Whitepaper 2025 – Does Canada Own its Life Sciences Future?). Life Sciences has been a bright spot in the innovation economy and should be viewed and supported as a key driver of economic growth, rather than a cost center.
Despite the financial performance of the life sciences sector in Canada, the sector remains significantly underfunded, leaving significant federal investments in Canada’s national life science innovation output (via agencies like CIHR, SRED and others) to erode within our universities and broader life science ecosystem. To optimize for Canada’s current innovation output, BIOTECanada estimates an annual increase of approximately $100 million of risk capital investment is required. Other nations like France, Japan, and Australia have recognized similar inefficiencies and have already implemented significant life science focused risk capital initiatives, such as the EIF program in Europe (https://www.eif.org/EIF_for/venture_capital_equity_funds/index.htm); Japan Agency for Medical Research and Development V-Eco program); and Australia MRFF program (https://www.health.gov.au/our-work/mrff?language=en). Similarly, Canada needs to implement life sciences’ focussed risk capital initiatives such as the Life Sciences Venture Capital Catalyst Initiative (LS-VCCI).
BIOTECanada strongly endorses the creation of the $200M Life Sciences Venture Capital Catalyst Initiative (LS-VCCI) and encourages its rapid deployment. Additionally, BIOTECanada encourages that this program be renewable on a cycle commensurate with other VCCI programs to catalyze the expansion of Canada’s domestic venture capital supply such that Canada’s nationally funded innovation capacity can be maximized.
It is estimated that there are 200-250 therapeutics companies in Canada seeking to raise an aggregate ~CAD$3.0 billion over the next year to achieve meaningful value-creating clinical milestones however there is estimated <CAD$600 million in domestic and engaged capital (source: BIOTECanada members), which will be deployed over a period of ~3 years to support them. Notable is that the vast majority of this capital only came online over the last year as many of these funds were out of the market for extended periods of time fundraising, with some funds still fundraising to final close.
While global syndication is an important validating part of the life sciences sector, the Canadian ecosystem has become deeply reliant on foreign investor participation. Canada requires the depth of capital domestically through LS-VCCI to enable these companies to scale.
2. How could the proposed terms and definitions (e.g., Life Sciences Sector, minimum fund size) be strengthened to better support the sector?
BIOTECanada answer:
Minimum fund size
Experience from life science investors suggests that a $15 million stand-alone life sciences fund is inviable and therefore the proposed minimum fund size should be changed. BIOTECanada recommends increasing the minimum fund size for a stand-alone life sciences fund to $75 million.
Canadian Presence
Any serious new entrants into the life sciences sector should be willing to put these resources in place ahead of the first financial closing of a fund. This will ensure that the commitment is made prior to any investment in that fund. BIOTECanada recommends changing the requirement to “Before the first close of the fund selected managers must have or establish a Canadian principal office that houses senior investment professionals”.
Canadian based company investments
The current subscale profile of Canadian focused life science venture firms is such that an overly onerous multiplier would dramatically limit the amount of LS-VCCI investment available to these firms. Therefore, reducing the impact of the LS-VCCI to catalyze the scaling of these managers in any great extent. Therefore, the leverage rate for funds meeting the 70% threshold of Canadian content should be meaningful but set at a level which continues to allow for scaling of these firms. BIOTECanada recommends a leverage requirement for funds that invest in Canadian companies to be 2.0x, in line with large sovereign international investors that have similar national requirements (e.g., British Patient Capital, Bpifrance), and in all cases higher than many provincial requirements (e.g., Quebec, Ontario, BC, Alberta).
3. Are the proposed Eligibility Criteria and Call for Expressions of Interest process appropriately structured to support timely capital deployment while providing sufficient flexibility for fund managers planning to fundraise in the near future?
BIOTECanada answer:
Minimum fund size
There is no specialized and experienced active VC investor in Canada that is raising a $15 million fund. BIOTECanada recommends the minimum fund size on a stand-alone basis must be at least $75 million (see answer to question 2 above). Anything smaller will have issues with raising any subsequent fund.
Life science sector definition
The BIOTECanada recommendation is that the focus of funds of the Life Sciences – VCCI should not principally include “health tech” (software, non-Health Canada regulated software, services, tools, etc.) in the LS-VCCI funding mandate. Health tech is not what stakeholders are referring to as life science.
Fundraising status and money “flow”
BIOTECanada recommends a limit between the first close of a fund and the application date to VCCI (ex: 2 years max). Funds that have not achieved a first close should have a limit of the size of the fund ask they can have (for example, 1/3 of a fund based on a size that is not more than 150% of their previous fund size).
A “recycling” mechanism should be in place if the allocated dollars are not utilized. BIOTECanada recommends a maximum of 24 months, after VCCI allocation where the fund needs to have drawn 100% of the VCCI money and allocating to: fund of fund with the requirement it be reinvested in life science funds, or allocating to the BDC life science fund, or co-invest side fund to the existing VCCI recipients.
4. Are there specific market gaps or key segments (e.g., drug development and medical technologies) that should be subject to additional consideration during the evaluation and selection process?
BIOTECanada answer:
The venture capital community globally has done an excellent job historically in addressing nascent market opportunities. BIOTECanada recommends this program rely on market dynamics to surface those opportunities that have real market potential. Furthermore, any program element that undercuts market forces in venture investing seems counterintuitive.
With respect to the program in general, it appears to be focused on building Canadian domestic venture capital capacity. Given that focus, it does not make public policy sense to have non-Canadian firms, or subsidiaries of global firms, eligible for the program.
5. How could design better support new entrants and emerging managers in the life sciences sector?
BIOTECanada answer:
For emerging managers
BIOTECanada recommends the following:
- Ensure emerging life sciences managers are qualified for the $100M envelope.
- Allow for flexibility in fund sizing and the matching rules such as a lower ratio (1:1) and/or counting provincial sources as to matching.
For new entrant managers
The situation for new entrants is different. New entrants are not necessarily emerging managers. In fact, the design rules as proposed could end up allowing non-Canadian managers to access the LS VCCI envelope. Top international managers however would not simply accept the LS VCCI rules unless such a Canadian fundraise can be construed in the aggregate of a much larger fund and broader geographic strategy (so as not to deviate from their original investment thesis), and in fact the very best ones are likely to refuse obligations to staff an office in Canada. BIOTECanada recommends, as per sections 2 and 3, more market-standard Canadian content obligations would make it easier to attract top international managers in Canada.
6. Are there other parameters or operational efficiencies that should be considered in the context of design?
BIOTECanada answer:
VCCI funds of funds managers (LP’s) have made important historical commitments to LS over the history of the program. It is important that the investment interest in Canadian Life Science Venture Managers (GP’s) that has led to these historical investments continues to grow within the VCCI growth FoF program.
In a resource constrained environment where LP’s have a portfolio of GP relationships to manage across all sectors, one of the unintended consequences of the VCCI growth – LS program might be that the program is perceived as unintentionally providing VCCI Growth FOF managers (LP’s) an opportunity to reduce their life science investment exposure because an alternate arm of VCCI Growth can make up for these reductions.
To provide an incentive for VCCI growth FoF managers to increase their historical life science commitments, these LP’s could be provided with a “pass through” consideration from the VCCI Growth – LS program. (Example below)
- FoF manager (A) has closed a $300 million of committed capital in its Fund
- Historical commitment into LS GP (B) by A of $20 million
- New commitment into B of $25 million – increase of $5 million
- VCCI-LS invests to B matching the $25 million commitment by A.
- For the purposes of calculating its fees, A assumes its committed capital is $305 million (original $300 million of commitments +$5 million pass through (match of the increased FoF LS investment from VCCI-LS)
This theoretical pass through provides the FOF managers with a fee-based incentive to expand beyond their historical commitments in the LS sector and should offset any perverse incentives to erode any historical commitments in high performing LS GP’s. Note: this recommendation assumes that the cohort of VCCI Growth – Fund of Funds managers remain the same as in previous program cycles.