- Canadian venture capital (VC) activity declined in the first half of 2025, with $2.9 billion CAD invested across 254 deals, marking the lowest first-half total since 2020 and a 26% drop compared to the same period last year.
- Economic uncertainty has led investors to be more cautious, focusing on supporting existing portfolios rather than expanding them.
- Pre-seed, seed, and Series A investments have seen a pullback, while mega-deals worth $50 million or more have also decreased, with only eight such deals recorded in the first half of 2025.
Why it matters: The decline in VC activity reflects the ongoing challenges faced by startups in securing funding amid global economic uncertainty, potentially hindering innovation and growth in the Canadian tech ecosystem.
The bright spots:
- Life sciences sector has shown resilience, attracting $894 million across 58 deals, putting it on track to surpass 2024 levels.
- Venture debt financings have spiked to $628 million across 36 deals, marking the highest mid-year total since the CVCA began tracking this category.
- Manitoba has significantly outperformed its 2024 VC funding totals, attracting $125 million in 2025 so far, compared to just $2 million across four deals last year.
What they’re saying:
- “We are seeing more selective deployment of capital, especially at the critical earliest stages of investment,” said David Kornacki, Director of Data and Product at CVCA.
- “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,” Kornacki added.
The regional picture: Atlantic Canada is on track for its worst year of VC funding since 2020, with startups raising approximately $25 million in the second quarter of 2025, largely influenced by a single undisclosed deal in Newfoundland and Labrador.
Looking ahead: Despite the challenges, Kornacki believes it’s a “yellow flag” rather than a “red flag” for the Canadian VC market. However, he expects 2025 overall to be flat or slightly down year-over-year as the uncertainties that impacted the first half show no signs of abating.
