The lack of venture capital in Canada has been denounced consistently in studies and think tank reports, and by the media, entrepreneurs, and even venture capitalists themselves. But while the general consensus is that Canada does not have enough venture capital, we somehow manage to rank #4 in the world in the sale of technology companies.

How can we have too little venture capital funding but be so successful at selling companies? The answer lies in how we are funding companies and what stages we are able to fund.

This report shows that although Canada may not have as much funding in absolute terms as the United States (US), we actually fund more companies per 1 million population than the US, Germany and the United Kingdom (UK), thus competing very successfully in seed stage funding.

In terms of growth stage funding, we compare very favorably with all other members of the OECD except for the US and Israel.

Where we fall behind is the availability of later-stage funding, the capital required to create Unicorns. In mid 2016 Canada had two companies on the then-current list of Unicorns while the US had 96. The problem with later stage funding is that our VC funds are much smaller than those in the US. While we are able to fund numerous seed and growth stage entities we can’t afford to fund Unicorns.

As a result we end up selling companies before they reach the Unicorn stage, thereby ranking number 4 in the world at selling technology companies.

You can get a full copy of the report here.