The Missing Link for Canada’s MSS SMEs – Growth Capital: We are great at supporting Innovation but not at helping SMEs Scale It
In my recent posts, I tried to communicate a few truths: firstly, the world has fundamentally changed, and secure, reliable critical supply chains are a strategic, not just an economic, imperative (refer to The New Geopolitics of Supply: Canada’s Strategic Pivot From Resource Exporter to Global Mining Supply Powerhouse). Secondly, this supply chain does not start at the mine gate but 10-15 years before the mine is even producing ore. Thirdly, the Mining Supply and Services (MSS) sector is foundational to every linkage of that supply chain, and it continues to be ‘hidden’ and needs to be better supported by government policies (see The ‘Hidden’ Foundation of Canada’s Critical Minerals Economy: The Mining Supply and Services (MSS) Sector). Finally, it should not be isolated from other industries being properly supported but considered as an important integration with other sectors (read From a Dual-Use to a Three-Prong Industrial Strategy: Why Ontario Should Build an Automotive-Defence-Mining Advanced Manufacturing Ecosystem). Now that we understand Canada has a familiar economic development story for decades. We are good at research, good at innovation, and good at developing new technologies, but far less successful at turning the companies with the innovations into large, globally competitive enterprises. The issue is not that Canada needs more innovation support.
The issue is what happens after the innovation is out there in the market.
For many Canadian small and medium-sized enterprises (SMEs), the product or service already exists. The technology works, customers are buying, the market has been validated, and the company has demonstrated there is demand. What these businesses need next is not another research project. They need growth capital.
They need the money to hire salespeople, expand production, build inventory, enter new markets, invest in marketing, strengthen management, develop distribution channels, and turn proven demand into meaningful scale. That distinction matters enormously.
Canada has built an innovation system—but not a complete growth system
Canada has invested heavily in supporting innovation and research and development. Programs such as SR&ED and the NRC IRAP programs help SMEs solve technical challenges, develop innovation capacity, and bring innovative products to market. These programs have real value. This is not an argument against R&D and innovation support; quite the opposite, as this support is foundational. Innovation policy often treats the creation of the product as the finish line. From an economic perspective, it is closer to the starting line, and there is the critical gap between creating something innovative and building a company capable of selling it at scale.
Growth capital is the bridge. Becoming a large world-class company is the destination. If Canada funds the first step but underfunds the bridge, companies will struggle to reach the destination. The most powerful policy would therefore connect the two.
Consider two companies.
- The first has an exciting technology but no customers, no proven business model, and no evidence that the market wants its product.
- The second has a proven product, paying customers, repeat sales and a clear market opportunity—but lacks the capital required to expand.
Which company represents the more immediate opportunity for economic growth? The answer should be obvious.
Yet Canada’s policy architecture has historically placed enormous emphasis on helping companies invent and innovate, while the transition from a successful product to a successful growth company can be much harder to finance.
Canada has a scale-up problem—not an idea problem
Even the federal government’s own research has identified the availability of flexible financing for growth-oriented firms as a challenge. The evidence is increasingly difficult to ignore.
In 2026, BDC described Canada’s challenge directly: the country is exceptionally good at creating innovative companies but struggles to scale and retain them in Canada. Its latest venture-capital landscape report identified a persistent “scale-up gap,” with later-stage financing particularly dependent on foreign investors. For financings above $50 million, foreign investors accounted for roughly 80% to 90% of capital deployed. BDC also noted that Canadian SMEs have fewer financing options than their counterparts in other G7 countries.
This makes the case for growth capital even stronger. That should concern policymakers.
A key policy assumption has been “help a company innovate, and they will grow”. We assert this is backwards. Help SMEs grow their revenue, and they will innovate – that is how a company stays competitive – it’s the law of business.
A company that receives the financing necessary to move from $1 million to $10 million in revenue can subsequently have the resources to invest hundreds of thousands of dollars into R&D that would never have been possible at $1 million.
- Growth creates cash flow.
- Cash flow creates capacity.
- Capacity creates further innovation.
- And innovation creates another opportunity for growth.
This is the virtuous cycle Canada should be trying to create. The main takeaway is that supporting growth is the key catalyst.
There is a huge population of SMEs that aren’t startups anymore. They don’t need funding to prove that their idea works; they need funding to prove how big the business can become. To be clear, that is not simply making venture capital available (diluting ownership), providing loans (creating debt), or a matching dollar-for-dollar (if I have the money, I don’t need you) approach.
The growth-capital gap for MSS sector SMEs is real, and closing it should be a central economic policy objective for Canada. Rather than focusing solely on inventing the future, Canada must also pursue policies that enable its MSS sector to grow, thrive, and own that future.
So, knowing that the MSS sector is foundational and essential to the success of Canada’s Critical Mineral Strategy and it’s an excellent investment in realizing the goal of doubling the value of Canadian exports to non-U.S. markets, the federal government must ensure that this strategic sector of MSS companies has access to the capital and opportunities they need to scale, compete globally, and become industry leaders. This requires the right policies and the right partners with the right platform – we stand ready to be that partner.
This is part of an op-ed series by the Mining Suppliers Trade Association Canada (MSTA CANADA) that discusses Canada’s opportunity as an economic superpower in the context of critical minerals. Ryan McEachern is the Managing Director of the Mining Suppliers Trade Association Canada.
