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While many in the alternative investment industry were downing tools in late December ahead of the Christmas and New Year break, U.S. District Judge Beryl Howell in Washington, D.C. rejected a challenge by the U.S. Chamber of Commerce that claimed that President Donald Trump’s $100,000 fee on new H1-B visas conflicts with federal immigration law and will lead many companies, hospitals and other employers to cut jobs and the services they provide to the public.
The Chamber is appealing and the oral arguments will begin next month. But I’m curious as to how this might shake out in the venture capital world.
This article outlines the bull and bear case quite well. I’m closer to the bull case – while I think there will be an impact, I don’t think it will be huge – but I wouldn’t wager on it because there are too many moving parts here.
I have a professional interest of course, as Fundviews supports VCs and early-stage investors. But I have a personal interest as Canada has been making a pitch to global talent looking to find a home (I’m Canadian).
Canada does have a venture ecosystem of course – a thriving one indeed, centered around hubs in Toronto, Montreal, Calgary and Vancouver. Investments in aggregate reached almost $8bn in 2024. While that is much smaller than the US, it’s healthy for the country’s population size.
But let’s say that the Chamber’s appeal loses and the Trump admin does indeed go ahead with its $100,000 levy. First of all, the smaller firms will undoubtedly back off – that’s a big check to write, especially for a start-up. But how much of the talent that misses out will go to Canada?
I’m not sure that much of it will. And it pains me to say that, for obvious reasons. But in my opinion, Canada just doesn’t do a good enough job of supporting entrepreneurs, creating challenges for investors seeking high-growth opportunities. Canadian VC funding is more conservative, limiting bold bets and slowing scale compared to the U.S. ecosystem.
Then you have regulatory hurdles and complex grant processes adding friction, but there’s also a cultural risk aversion that discourages aggressive expansion. The domestic market is modest, forcing startups to look south for capital and customers (often relocating entirely). This talent and innovation drain means fewer breakout successes remain in Canada, reducing long-term returns. For entrepreneurs and investors, the U.S. offers deeper capital pools, faster scaling, and a more dynamic entrepreneurial culture (which is partly why I took the plunge).
And there is another factor – the weather! That’s a real consideration. Canadian winters are brutal. I don’t miss those at all. And yes, you may say that Miami summers are equally as overpowering, but I’d trade the snow for the sun any day.
But in all seriousness, cultural change can take a generation, maybe two. It is not a quick process. The U.S. will still hoover up the top, top H1-B talent and firms with the resources will pay the $100,000 – there will definitely be a mini flight to the big guns here, creating even more of a gap between the haves and have nots and therefore, in VC circles, an amplification of the gap between the top quartile funds and the rest.
But will Canada be able to make a play for the others? Time will tell, and I want to be wrong here; I’d love to see Canada build more Shopify’s, Slack’s and Hootsuite’s. But to do that, a cultural adjustment will be needed that favors more risk-taking on both sides – investors and entrepreneurs.
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Gregory Poapst is a Managing Partner at Fundviews Capital. Connect with him on LinkedIn here.
Fundviews Capital is a full-service end-to-end Fund Management Platform. Our platform provides a complete end-to-end solution for asset managers or wealth managers to structure, launch, operate and grow their professional investment funds. You can launch a fund in a matter of weeks, not months, and with minimal capital outlay – not only reducing the risk of launching a fund but also maximizing your chance of success. Once launched, you will find that a dedicated team of professionals is just a phone call or email away at all times, handling all aspects of the back and middle office for your fund.