Q1 2025 VC in Canada: a tale of two countries

All dollar ($) figures in Canadian dollars unless otherwise noted.

TORONTO, May 22, 2025 /CNW/ - Canadian venture capital (VC) totalled $1.23 billion from 147 financings for the first quarter (Q1) of 2025, compared to $1.44 billion from 175 financing for the same period in 2024.

CPE Analytics tracks equity or quasi equity capital that flows directly into the companies and excludes known secondary portions of funding rounds (in which no money went to the companies), drug development funding, senior debt/mortgage funding.

Summary

• Ontario accounted for 66% of the total disbursements, Toronto alone accounted for 57% of the total.
• Investments from US Private VC, Canadian Government and Canadian Mutual/Hedge Fund investors accounted for half of the total disbursements.
• 86% of $643 million raised by Canadian VC firms came directly from governments.

Key Observations

I.  Ontario passed 50% share mark for first time since 2017

Q1 2025 Canadian VC disbursements are all about Ontario and City of Toronto specifically. Ontario companies raised $805 million from 70 financings, representing 66% of the total disbursements and 48% of total number of financings. Of the $805 million, $703 million went to companies located in the City of Toronto, or $725 million went to all GTA companies.

II.  Almost all VC disbursements went to ICT, Biotech and Cleantech companies

ICT, Biotech, Cleantech companies raised $666 million, $291 million and $231 million respectively for a combined amount of $1,187 million or 97% of the total disbursement. Disbursements to financial companies (FinTech) were $31 million in Q1, 2025, down sharply from $510 million in 2024. Aerospace and Defence sector received no investment in Q1 2025.

III.  Share of US Investors' investment remains relatively constant

US investors invested $612 million in Canadian companies, or 50% of the total disbursements, down slightly from 52% in 2024, but up from 45% and 43% in 2022 and 2023 respectively.  International investors' share decreased dramatically at 7% down from 17% in 2024, 15% in 2023 and 18% in 2022 respectively.

IV.  Governments steps up in investment 

Canadian governments invested $202 million, accounting for 16% of the total disbursement, just behind US Private VCs which invested $233 million for 19% share of the total disbursements.  Investments by Canadian Private VCs, ranked as a distant fourth, invested $95 million, behind Canadian Mutal /Hedge Funds which invested in $179 million, almost twice of the amount invested by Canadian Private VCs. 

V.  Canadian VC firm fundraising crashing down from non-government/quasi-government sources

Canadian VC funds raised a combined $643 million, including a $500 million internal capital allocation by BDC. Of the $643 raised, $550 million (86%) came directly from governments.  Canadian VCs raised a miniscule of $93 million from all non-government/quasi-government sources.

"The Q1, 2025 data reveal how much the situation facing Canada's venture capital industry mirrors the economic pickle the country as a whole is facing. US venture capital investment in Canada stands at 50% of the total, larger than investment volumes from Canadian sources and dwarfing investment from other foreign sources, which itself was at the smallest proportion (7%) of all investment since 2017. The Q1, 2025 data reveal a sharper drop of investment dollars from the US relative to all of 2024 ($612 million/$4,711 million) than occurred from Canadian sources ($529 million/$2,875 million). Clearly, under the Trump's administration's push for business investment to re-locate into the US, that source of venture capital in Canada is at risk while Canada has failed to diversify its other foreign sources of venture capital supply," commented Richard Rémillard, President of Rémillard Consulting Group (RCG).

"There is much debate within the venture capital industry regarding the 'health' of the industry in the wake of significantly reduced investment and fundraising numbers relative to recent years. In this regard, Q1,2025 data reveal that 86% of the capital raised in the quarter came from government funds, largely the BDC. Again, this reflects the state of private business investment in Canada which has markedly lagged in recent years. On the other hand, the weak investment data reveal what is a 'tale of two countries,' with Ontario generally and Toronto particularly showing resilience while every other city and region appears markedly weaker. So, where one stands on the issue of the weakness or underlying strength depends on where one sits - in Toronto or everywhere else.  Another feature of the Canadian venture capital industry that betrays a certain strength is the sheer heterogeneity of its investor base with upwards of 10 separate categories of investors active in the space - private funds both Canadian and US, provincial and federal government funds, hedge and mutual funds and corporates, etc.'' 

Q1 2025 Highlights

Top cities/areas

Top Canadian VC funding sources

Investors from 27 countries or regions funded Canadian companies.

Top Investor types

Summary report

Summary report can be downloaded from financings.ca website:  https://www.financings.ca/reports/

Methodology

Included

• Equity and quasi-equity investments in companies directly.

Excluded

• Secondary transactions (investor/shareholder exit events) in which companies received no money.
• Acquisition for expansions (M&As)
• PE transactions
• Financing by foreign headquartered/domiciled companies with Canadian subsidiaries.

Rémillard Consulting Group (RCG)

Rémillard Consulting Group (RCG) is a unique, Ottawa-based, bilingual consulting firm specializing in providing private sector, government & trade association clients with creative, research-grounded solutions to business issues and public policies involving the Canadian financial services industry. For more information: rremillard@bellnet.ca

CPE Analytics

With 108,900 financing transactions, and growing continuously and rapidly to its all Canadian Financings database, CPE Analytics is Canada's undisputed leader in financing intelligence.  We provide comprehensive, verified, unbiased and unmatched insights and intelligence on private and public financings, initial public offerings (IPOs), M&As, professional investment firm fundraising activities.

We cover all aspects of VC information, not limited to but including Canada's only information on VC firm fundraising, VC funding sources (where all the VC came from and from which types of investors).

CPE Analytics is the data analytics division of CPE Media & Data Company.  More Info: https://cpeanalytics.ca,  https://financings.ca

CPE Media & Data Company

Founded by Canada's the most experienced private capital and financing research experts, CPE Media & Data Company is Canada's leading all financing news and intelligence provider. More information: https://cpecompany.ca/

SOURCE CPE Media & Data Company