Mark Carney pushes pension funds to invest in Canadian startups

The remarks, reported by BetaKit, come as policymakers seek to address concerns about the country’s declining share of global venture funding, which has reportedly halved over the past decade despite growing pension assets under management.

Carney’s framing is pointed: he asks whether the current model, where some of Canada’s largest pension funds allocate a relatively small portion of their portfolios to domestic private equity and venture capital, is sufficient to build the next cohort of anchor companies. The question isn’t new—founders and investors have long criticized the outflow of capital to other markets—but Carney’s intervention elevates it from industry griping to policy consideration. His role as adviser suggests the conversation may be moving beyond voluntary guidelines toward potential regulatory levers, though no concrete proposals have emerged.

The timing is notable. Canada’s pension funds have expanded their alternative investment teams in recent years, often with strong performance in global markets. However, those gains have largely come from offshore assets. Some observers point to international examples, like sovereign wealth funds in other countries, which play a more active role in seeding local startups.

Waabi, the Toronto-based autonomous trucking startup, complicates the narrative. Its COO told BetaKit that the technology is ready for deployment, yet the company has faced challenges securing the scale of funding its peers in other markets command. Waabi’s situation highlights a broader pattern: Canada produces strong early-stage companies but often lacks the growth-stage capital to keep them competitive. The pension funds’ cautious approach may reflect not just risk aversion but also structural constraints—smaller domestic funds may struggle to move the needle for massive institutional portfolios, even if they could transform individual sectors.

What’s missing from Carney’s provocation is a clear mechanism. Compulsion could risk forcing funds into underperforming assets, while past efforts at moral suasion have had limited impact. A potential middle path might involve setting aside a portion of pension capital for domestic mandates, similar to how some European funds target local startups. But even that model would require a robust pipeline of investable companies—a persistent gap in Canada’s ecosystem, where late-stage funding has faced challenges even as early-stage deals remain active.

The open question is whether Carney’s push is a trial balloon or the start of a structural shift. If it’s the latter, the coming months may reveal whether the government is prepared to tie pension allocations to broader economic goals, or whether this remains another call to arms without concrete action. For founders, the message remains the same: build something compelling, but don’t assume institutional capital will arrive on its own.

Sources: betakit.com