Toronto’s AI companies are maturing quickly, with many founders and early leaders coming through the Vector Institute and MaRS pipelines. In this market, equity is not an afterthought. It is the currency that attracts research talent, anchors executives through volatility, and aligns boards ahead of a go-to-market sprint. If you are calibrating compensation for a Toronto AI search, connect with our Toronto team to benchmark what top candidates now expect.
What equity looks like in Vector and MaRS spinouts right now
Across recent Canadian term sheets, option pools at seed often open in the low teens and refresh to support senior hiring at Series A. Osler’s latest market study confirms how deal structures in Canada continue to track U.S. norms while preserving Canadian features on governance and investor protections, which has a downstream effect on option pool math and board approval processes. See the sections on financing structure and valuation in the 2024 Deal Points Report and its related pages for detail, including how fully diluted calculations treat unallocated options (financing structure intelligence). For model language that many Toronto counsel reference, the CVCA model documents remain a practical baseline. “Founders coming through Vector and MaRS usually arrive with cleaner cap tables and a realistic view on pool size, which reduces friction at offer stage,” said Lamarche.
RSUs versus options for growth-stage AI teams
Early teams still lean on stock options for their flexibility and perceived upside. By the time a spinout is raising a larger A or B, we are seeing more RSU grants layered in for senior operators who want less strike-price risk and simpler taxation at vest. General trend data from Carta shows how later-stage companies shift toward RSU usage as they scale, even if the dataset is U.S.-skewed (Annual Equity Report 2024). In Canada, the rules differ by instrument. CRA guidance on employee stock options outlines the vesting limit and deduction mechanics (CRA stock options), while plain-language summaries explain that RSUs are generally taxed as employment income when the units vest and shares are delivered (BDO Canada equity guide). “For senior hires crossing over from industry labs, simple RSUs at market value can beat a large option grant that feels abstract,” commented Lamarche.
How the local hubs shape the cap table
The programs around Vector and MaRS do more than train researchers. They also nudge commercialization choices that show up in compensation. Vector’s FastLane program and collaborative tracks expose founders to IP education, benchmarking, and talent pathways that make equity more legible to non-academic hires (collaborative programs). On the financing side, MaRS supports companies from early advice through to growth, while the MaRS IAF supplies first cheques to Ontario ventures and creates the early governance cadence that drives predictable option approvals. MaRS also convenes communities that tighten norms; programming like Impact AI pulls policy and industry into the same room where founders are refining hiring plans. “When a spinout has lived inside these forums, the equity story is clearer and candidates feel the diligence behind it,” Lamarche said.
Negotiation points that now matter in Toronto AI offers
Four-year vesting with a one-year cliff remains the standard. Beyond that, late-stage candidates ask sharper questions. Double-trigger acceleration on change of control is showing up more often at the VP level, especially when a growth equity round sets a near-term path to sale. The NVCA materials still anchor many conversations on definitions and mechanics, and they are widely consulted by Canadian counsel for comparables (NVCA model documents). Macro tax signals also shape candidate preferences. The planned increase to the capital gains inclusion rate was deferred and then dropped in 2025, which eased concerns for some option-heavy candidates who were modeling future exercises (Reuters coverage of the deferral). Candidates still ask for clarity on employer withholding and post-vesting timelines, so be ready with precise language.
- Clarify whether the offer uses options, RSUs, or a mix, and show the fully diluted percentage after a planned pool refresh.
- Spell out vesting, cliffs, and any acceleration triggers tied to termination without cause or change of control.
- Confirm board approval cadence for grants and refreshers, and identify who recommends equity levels by level.
- Share the most recent 409A or valuation context that informs strike prices and grant timing, even if directional.
- Explain tax treatment at vest or exercise, what the employer will withhold, and any blackout or liquidity policies.
Why Canadian incentives influence cash-versus-equity decisions
Toronto founders rely on the federal SR&ED program and Ontario credits to extend runway and fund technical hiring. That leeway can either reduce equity pressure or support a larger option pool without starving cash. The CRA’s SR&ED overview explains the deduction and investment tax credit framework, while Ontario’s Innovation Tax Credit supports eligible in-province R&D. We often see boards use these programs to keep cash competitive for senior engineering roles while reserving equity upgrades for go-to-market leaders in later phases. Candidates notice when the incentives are understood and integrated into the hiring and grant calendar.
A practical template for a Toronto AI executive package
For a VP-level leader joining a Vector or MaRS spinout at a post-seed stage, a competitive offer in 2025 often combines a salary at the 60th to 70th percentile for Toronto tech, a grant equal to a low single-digit fully diluted percentage, and a written commitment to participate in the next refresher once the Series A closes. If the role is critical to revenue or regulatory milestones, add performance RSUs or a milestone-based option top-up. For growth-stage companies, RSUs pegged to a private 409A or Canadian valuation are increasingly common for executives who need predictable value at vest. Keep the communication simple and transparent, and show how the grant participates in future refreshes. That clarity does more to de-risk the move than any single point of negotiation.
What this means for founders and candidates in Toronto
The most compelling offers in this ecosystem share three traits. They match the science with a credible cap table story. They show a responsible plan to expand the pool as hiring scales. They explain taxation and liquidity with care, rather than burying it in closing paperwork. Vector and MaRS have raised the bar on how fast a new AI company can professionalize. Equity needs to keep pace. If you want help benchmarking ranges or translating your research milestone plan into an offer that wins, our team does this work every week and we are happy to compare your draft against current Toronto norms.