Canadian venture capital investment declined significantly in the first half of 2025, reaching its lowest level since the start of the COVID-19 pandemic in 2020.
Why it matters: The slowdown in venture capital activity reflects ongoing economic uncertainty, making investors more cautious about expanding their portfolios and supporting early-stage startups.
The details:
- Canadian startups raised $2.9 billion across 254 deals in the first half of 2025, a 26% decrease in dollars invested and a 22% decline in deal count compared to the same period last year.
- Pre-seed, seed, and Series A stages experienced a notable pullback in investment, with a reduction in the number of deals and dollars invested, especially in mega-deals worth $50 million or more.
- Investors focused on supporting their existing portfolios, ensuring capital efficiency and sufficient funds to weather the uncertainty, rather than actively seeking new investments.
- The life sciences sector remained resilient, attracting above-average levels of investment, while venture debt financings reached record highs.
Despite the overall decline, some regions, such as Manitoba, exceeded their 2024 venture capital funding totals.
What they’re saying:
- “There’s uncertainty, and it’s no surprise that Canadian investors are experiencing it. There’s uncertainty in overall macroeconomic trends, and we’re seeing a pullback in Canadian venture capital, which is a risky investment.” – David Kornacki, Director of Data and Product at CVCA
- “We are seeing more selective deployment of capital, especially at the critical earliest stages of investment. What stands out is the continued strength in life sciences, a rise in large venture debt transactions, and the utilization of secondaries to provide liquidation for early investors. These shifts point to evolving investment strategies across a maturing ecosystem.” – David Kornacki
The other side: Canada’s private equity market experienced record-breaking activity in the first half of 2025, with nearly $31 billion invested across 322 deals, possibly driven by longer holding periods and potential declines in company valuations.
What’s next: Experts expect the challenges faced in the first half of 2025 to persist, with overall venture capital investment likely to remain flat or slightly down year-over-year.