What’s happening in Canadian innovation policy and why BAIs should care.
Quebec election scheduled for October 2026 with likely government shift. Innovation policy positions being shaped now across all parties.
Why it matters for BAIs
Window for BAI ecosystem positioning in Quebec. MAIN (CAIN partner) is mobilizing. Provincial innovation strategy may shift significantly post-election.
Innovation Canada launched ExploreIP — a free online platform showcasing Canadian technologies from public sector institutions. Designed to help BAIs bring new technologies to market.
Why it matters for BAIs
Free tool BAI members can use immediately. Helps connect startups with available IP from Canadian universities and research institutions.
Budget 2025 mobilizes $1 trillion over 5 years. Includes $925.6M for sovereign AI compute infrastructure, $1B Growth VCCI through BDC (3 years starting 2026-27), and the Productivity Super-Deduction delivering the lowest METR in the G7 (4.5 pp below the US). Deficit projected at $78.3B.
Why it matters for BAIs
The Growth VCCI and AI compute funding create new capital channels for BAI-supported companies. BAIs should help portfolio companies access the Super-Deduction for capital investment.
SR&ED enhanced credit expenditure limit doubled to $6M. Capital expenditure eligibility restored. CRA pre-claim approval processing target cut from 180 to 90 days.
Why it matters for BAIs
BAIs should ensure portfolio companies are maximizing SR&ED claims. The doubled limit and capital restoration significantly expand the benefit for scaling companies.
The BAI Performance Measurement Framework data project will not be funded this fiscal year. Data processing continues but the next report is approximately 2 years away. Stats Canada also experienced cuts.
Why it matters for BAIs
No centralized BAI performance data for at least 2 years. CAIN's collective intelligence survey becomes the only source of field data.
Federal spending concentrated on defense, BDC capital programs, and sector-specific bets (AI, quantum). Small business and entrepreneurship support effectively deprioritized.
Why it matters for BAIs
BAIs should align programming with defense and priority sectors where possible. Pure entrepreneurship support is not a federal priority right now.
The $1B Growth Venture Capital Catalyst Initiative is being designed with 3 streams: fund-of-funds, life sciences VC, and emerging managers. BDC administers. Industry feedback deadline is April 7, 2026.
Why it matters for BAIs
CAIN members should submit feedback by April 7. The emerging managers stream could support BAI-affiliated venture funds. Fund-of-funds design will shape capital flows for years.
Canada pursuing trade diversification aggressively: Indonesia FTA negotiations, $70B UAE investment deal, India talks relaunched, CPTPP membership expanding. Reducing US trade dependence.
Why it matters for BAIs
New export markets create opportunities for BAI-supported companies. BAIs should help portfolio companies explore CPTPP markets and diversify beyond the US.
The Minister's office reached out directly to CAIN for an urgent call about supporting female entrepreneurs and the research project.
Why it matters for BAIs
Government is reaching out to CAIN proactively. Women's entrepreneurship programs may have ~1 year of funding left (Patrice). Opportunity to shape what comes next.
ISED is developing a new early growth financing strategy with $750M in funding. Preliminary recommendations going to cabinet late 2026. Formal consultations with the BAI ecosystem expected in the following months.
Why it matters for BAIs
CAIN and MAIN are confirmed on the consultation list. Members should prepare data on seed pipeline gaps to inform policy design.
Major restructuring at ISED. Approximately 65-70 of 130 staff affected. Michael describes it as “the most disconnected period of public policy making in 18 years.” Operational capacity severely degraded.
Why it matters for BAIs
Expect slow responses from ISED. Contract and program administration will be impacted. Relationships with individuals (Michael, Patrice) more important than institutional channels.
BDC scaling defense-related innovation portfolios with billions in new investment. Michael offered to connect CAIN with BDC Policy director.
Why it matters for BAIs
BAIs with defense-tech or dual-use companies should explore BDC programs. CAIN to follow up on BDC Policy director intro from Michael.
Canadians took 10 million fewer trips to the US. The #ElbowsUp movement reached 1.4 million members. Provincial governments implementing local procurement preferences.
Why it matters for BAIs
Consumer sentiment aligns with procurement policy. BAIs can leverage this cultural moment to position Canadian startups as domestic alternatives in multiple sectors.
Y Combinator announced it will consider Canadian-headquartered companies for its accelerator program, reversing a previous geographic restriction.
Why it matters for BAIs
Competitive pressure for Canadian BAIs — YC is the gold standard. But also an opportunity: BAI-supported companies now have a global pathway without relocating.
Leaders Fund study tracking 2,932 startups over a decade shows only 32.4% remain HQ'd in Canada, down from 70% in 2019. Founders who move to the US raise nearly 2x as much capital.
Why it matters for BAIs
The core crisis CAIN is responding to. BAIs must evolve to help companies scale domestically. Data point for every government conversation.
ElevateIP renewed with $84.4M in funding to help BAIs support SMEs with intellectual property strategy, protection, and commercialization.
Why it matters for BAIs
Direct funding source for BAIs. One of the few surviving programs with dedicated BAI support. Members should apply or renew immediately.
New billion-dollar round of VCAP funding being deployed. Investment is pooling into mega-deals — 26 deals accounted for 66% of all 2025 VC funding.
Why it matters for BAIs
Improved VC landscape benefits BAI-supported companies. Watch for BAI-relevant program components.
OECD data shows Canadian business entries essentially unchanged since 2015 (191,000 to 190,399) despite substantial population growth. Other G7 economies expanded.
Why it matters for BAIs
BAIs are the front line of business creation. This stagnation is the problem CAIN members exist to solve — but only if they evolve.
25% tariffs on Canadian imports under IEEPA were ruled illegal by US courts on Feb 20, 2026. 10% tariffs remain under Section 122. CUSMA formal review begins July 1, 2026.
Why it matters for BAIs
Trade uncertainty accelerates the need for domestic market development. BAIs should help companies diversify beyond US dependence. CUSMA review creates both risk and opportunity.
Canada’s Defence Industrial Strategy (Feb 17, 2026) commits $180B in procurement over 10 years, $290B in capital investment, and launches BOREALIS ($6B over 5 years for frontier R&D). Defence Investment Agency centralizes procurement. NATO DIANA selected 22 Canadian firms from 3,680 applicants.
Why it matters for BAIs
BAIs with defence-tech or dual-use companies should position as pipeline accelerators. Halifax ocean tech, Ottawa cybersecurity, and Waterloo quantum corridors are best positioned.
Minister of AI and Digital Innovation Evan Solomon emphasized that Canadian innovation must be “commercialized and scaled here.” Focus on keeping AI development domestic.
Why it matters for BAIs
AI-focused BAIs are well-positioned. Members should frame programming around domestic AI commercialization to align with ministerial priorities.
Canada's standing on the OECD Product Market Regulation indicators fell from 10th (1998) to 26th (2023). Markets have become more closed on a relative basis.
Why it matters for BAIs
Evidence base for CAIN's competitiveness advocacy. BAIs operating in an increasingly restrictive environment compared to international peers.
ISED issued 1,133 workforce adjustment notices in January 2026 with 592 position eliminations (~9% of 6,526 staff). Strategic Innovation Fund lost $141.4M annually. Innovative Solutions Canada cut by ~$70M (~2/3 reduction). 12+ Trudeau-era innovation programs face expiring funding.
Why it matters for BAIs
Federal innovation capacity is severely degraded. CAIN’s data and collective intelligence become critical substitutes. Expect slow or no responses from ISED on routine matters.
Innovation Canada's ElevateIP program continues to fund accelerators and incubators to help startups manage intellectual property strategically.
Why it matters for BAIs
Direct funding source for BAIs. Members should check eligibility and apply if they haven't already.
The Buy Canadian Policy Framework (effective Dec 16, 2025) shifts from "best efforts" to mandatory Canadian preference in government procurement. Contracts ≥$25M get a 10% bid reduction + 25% Canadian value score. Threshold drops to ≥$5M by June 15, 2026. Roughly $70B in public spending affected.
Why it matters for BAIs
BAIs should immediately help portfolio companies become procurement-ready. CAIN is mapping which members can guide companies through government contracting processes.
This feed is curated by CAIN from government sources, reports, and ecosystem intelligence. Coming soon: rapid-reaction polling — tell us how each announcement affects your organization.
