Canada faces a classic innovation paradox: it excels at producing world-class academic research and top-tier talent, yet consistently fails to convert that excellence into long-term commercial success and domestic economic growth.
At a recent MaRS Morning event, experts unpacked where Canada is succeeding, where it is lagging, and the strategic shifts needed to retain economic value.
The Dynamic: High Input, Low Retention
Despite strong fundamentals, Canada’s innovation pipeline suffers from systemic leakage.
Strengths (The Good News)
Bottlenecks (The Declining Trends)
Talent Generation: High-quality graduates and strong academic research output.
Low R&D Spending: Abysmal and declining business spending on R&D compared to global peers.
Startup Density: A healthy influx of high-growth SMEs and early-stage startups.
Brain & IP Drain: Patents and graduate-level talent regularly migrate to foreign markets.
Global Recognition: Recognized hubs in AI, life sciences, and advanced tech.
Slow Tech Adoption: Established domestic firms fail to integrate advanced technologies.
The Underlying Issue: Canadian policy has historically focused on funding upstream research without building the protective ecosystem needed to commercialize and scale it locally. As a result, Canadian taxpayer-funded innovations are frequently bought out and scaled by foreign multinationals.
3 Key Prescriptions for Change
Addressing this crisis requires shifting focus from merely creating intellectual property to retaining its value within the country.
1. Treat Data and IP as Sovereign Assets
Vass Bednar (Canadian Shield Institute) emphasizes that data and intangible assets must be treated as critical national infrastructure.
The Solution: Build collective defensive IP pools, national data trusts, and sovereign digital infrastructure. This prevents promising Canadian scale-ups from having to sell off key patents to foreign buyers just to finance their growth.
2. Make Canada the Location of Choice for Scaling
Benjamin Alarie (Blue J) notes that a company’s initial choice of location dictates where its long-term wealth, leadership, and reinvestment remain.
The Solution: Eliminate scaling friction—such as conservative domestic growth capital and regulatory burdens—so entrepreneurs feel confident that launching in Canada will not compromise the speed, magnitude, or probability of their global success.
3. Drive Retention Through Demand-Side Procurement
Jim Banting (University of Toronto) argues that top talent stays when given challenging, impactful problems to solve in their own backyard.
The Solution: Leverage government and institutional procurement as a first customer. When Canadian public sectors (such as healthcare, defense, and transit) purchase homegrown technologies, they provide non-dilutive revenue and crucial commercial validation, allowing companies to scale and fund ongoing R&D independently.
MaRS Discovery District
https://www.marsdd.com/
MaRS is the world's largest urban innovation hub in Toronto that supports startups in the health, cleantech, fintech, and enterprise sectors.
When MaRS opened in 2005 this concept of urban innovation was an untested theory.
Today, it’s reshaping cities around the world. MaRS has been at the forefront of a wave of change that extends from Melbourne to Amsterdam and runs through San Francisco, London, Medellín, Los Angeles, Paris and New York. These global cities are now striving to create what we have in Toronto: a dense innovation district that co-locates universities, startups, corporates and investors.
In this increasingly competitive landscape, scale matters more than ever – the best talent is attracted to the brightest innovation hotspots.
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