Flow-Through Shares for Technology Startups: Senate Opens the Door

Something important just happened in Ottawa that could change the financing conversation for Canadian technology companies.

On October 14, 2026, the Standing Senate Committee on Banking, Commerce and the Economy formally recommended expanding Canada’s Flow-Through Share regime beyond the resource sector.

That matters because Flow-Through Shares for technology startups could provide Canada with a new way to mobilize private risk capital for qualifying technology development and commercialization expenditures.

Instead of asking government to pick winners, an FTS-Tech pilot would let private investors decide which eligible Canadian companies deserve their capital.

For Canadian technology startups, that could be much bigger than tax policy.

Because one of the hardest parts of building a technology company in Canada isn’t creating the idea.

It’s financing the ugly part in between.

• The engineers.
• The testing.
• The prototype.
• The computing.
• The regulatory work.
• The first hires.
• The first customers.
• The commercialization work that has to happen long before the business throws off meaningful revenue.

That is where promising companies become fragile.

And where capital starts determining what happens next.

The Financing Decision Comes Earlier Than Most People Think

By the time we start worrying about a Canadian technology company being sold, relocating, reincorporating in the United States or relying heavily on foreign investors, many of the important decisions may already be years behind us.

The first serious financing round doesn’t bring only money.

• It brings investors.
• Board members.
• Advisers.
• Networks.
• Future financing relationships.
• And often the people who will be sitting around the table when the next strategic decision gets made.

That matters.

The Senate committee’s own report points to a dramatic shift in where Canadian startups are getting their money.

In 2015, foreign investors supplied 29.5% of the capital raised by Canadian startups that had raised more than $1 million.

By 2024, that figure had climbed to 67.6%.

That isn’t an argument against foreign investment.

Canadian companies should attract capital from everywhere.

The question is whether Canadians have enough opportunity — and enough incentive — to participate in financing the companies we are creating here.

Too often, they don’t.

Why Flow-Through Shares for Technology Startups Could Matter

The argument for Flow-Through Shares for technology startups is not that technology and mining are the same.

They aren’t.

The argument is that both can require substantial risk capital long before profitable revenues appear.

Canada already has a mechanism designed to change the economics of investing in high-risk development.

The question is whether that mechanism can be responsibly adapted and tested for qualifying technology expenditures.

That Is Where FTS-Tech Comes In

The proposed FTS-Tech pilot asks Canada to test a very Canadian idea.

We already use Flow-Through Shares to help mobilize private risk capital into qualifying mineral exploration.

1. Government defines the rules.
2. Private investors decide which eligible companies deserve their money.
3. The investors take the risk.
4. The tax system changes the economics of taking it.

FTS-Tech asks whether that same principle can be adapted to qualifying technology expenditures.

Not forever.

Not without limits.

Not for every company.

A three-year pilot designed to support up to $500 million annually in qualifying technology expenditures financed through private investors’ risk capital.

That distinction matters.

This is not a proposal for Ottawa to write $500 million worth of startup cheques.

It is a proposal to test whether tax policy can persuade more private Canadians to put their own capital at risk behind Canadian innovation.

Why This Could Matter to Startups

For a founder, the benefit is obvious.

Another potential source of capital.

But the larger effect could be more important.

If more Canadian investors participate earlier, more ownership can remain in Canadian hands while the company is still young.

More Canadian investors gain experience financing technology.

More successful founders and employees create wealth that can eventually be recycled into the next generation of companies.

More board members, advisers and executives gain firsthand experience building technology businesses from Canada.

That is how ecosystems compound.

You don’t build a technology economy by funding one company.

You build it when one successful company produces ten new founders, investors, operators and mentors.

Capital is part of that flywheel.

The Senate Recommendation Matters Because It Changes the Debate

Until now, extending Flow-Through Shares to technology could be dismissed as an interesting outside proposal.

That is much harder to do today.

The Senate committee did not endorse our exact FTS-Tech design.

It did not endorse the proposed $500-million annual ceiling.

And it did not say technology startups should automatically qualify.

Those questions still need to be debated.

But the Senate has now formally recommended that Canada consider using the Flow-Through Share mechanism beyond resources.

That is a significant change.

The debate is no longer simply:

Should Flow-Through Shares ever move beyond mining?

A Senate committee has said yes.

The more interesting question now is:

Where should Canada test them next?

We believe technology deserves to be near the front of that line.

A Pilot Would Let Canada Test the Idea Instead of Arguing About It Forever

A three-year pilot for Flow-Through Shares for technology startups would give Canada an opportunity to measure the results rather than debate the theory forever.

Did additional private capital move?

Did more Canadian investors participate?

Did commercialization accelerate?

Did more ownership, intellectual property and strategic decision-making remain in Canada?

Those are questions a properly designed pilot could answer.

Read the Proposal Before You Decide

If you are a founder, investor, technology executive, board member, policymaker or simply someone who cares about where the next generation of Canadian companies is built and owned, I’d encourage you to read the proposal yourself.

Don’t agree with it because I do.

Don’t reject it because it sounds unconventional.

Read it.

Challenge the assumptions.

Look at the financing evidence.

Look at the safeguards.

Look at the proposed three-year pilot.

Then decide whether Canada should test it.

Read the full CanFlowThrough article:

The Senate Just Opened the Door to FTS-Tech

And review the full 2026 Pre-Budget Proposal:

Buy Canadian. Build Canadian. Own Canadian.

The proposal is simple enough to understand:

Government sets the rules. Private investors put up the capital. Investors choose the qualifying companies. Canada measures the results.

Three years.

Then follow the evidence.

Because the issue is bigger than tax policy.

It is about whether Canada is content to create the technology — or whether Canadians also get a better chance to finance it, build it, scale it and own a piece of the upside.

Buy Canadian. Build Canadian. Own Canadian.