VCs say latest results are \u201cnot the end of the world\u201d but anticipate continued slowdown.<\/p>\n
<\/p>\n
A new report<\/a> has found that pre-seed and seed-stage investment activity in Canada continued to decline in the first half (H1) of 2025 as investors deployed fewer dollars across fewer deals.<\/p>\n \u201cWe were climbing this great big mountain before, and had the wind at our back, and now we don\u2019t.\u201d<\/p>\n According to Canadian Venture Capital & Private Equity Association (CVCA) data, $297.2 million in venture capital (VC) funding was deployed into Canadian technology startups across 133 pre-seed and seed deals. That marks a 16 percent decrease in total dollars invested and a 28 percent drop in deals at these stages compared to the same period in 2024, according to the CVCA\u2019s H1 2025 report<\/a>.<\/p>\n The CVCA asserted that seed-stage investment amounts and deal volumes reached a \u201chigh point\u201d between 2021 and 2023,\u00a0 only to decline in 2024 and face \u201cfurther reductions\u201d in 2025. This largely mirrors<\/a> the fate of the overall Canadian VC market during this time.<\/p>\n While the CVCA says 2025 is still on pace to exceed Canada\u2019s pre-pandemic average for pre-seed and seed activity, RBCx managing director of VC coverage Matt Roberts argued that the trend line is what matters most, noting that things were improving pre-pandemic.<\/p>\n \u201cWe were climbing this great big mountain before, and had the wind at our back, and now we don\u2019t,\u201d Roberts told BetaKit in an interview.<\/p>\n According to the CVCA, total seed investment declined 12 percent year-over-year, while the deal count dropped by 25 percent. The total pre-seed investment and deal levels respectively fell by 34 percent and 28 percent.<\/p>\n \u201cWe need to invest more in pre-seed and seed-stage deals,\u201d Startup TNT co-founder Zack Storms argued to BetaKit in an interview, citing drops in deal volumes as a cause for concern.<\/p>\n While the latest CVCA data is \u201cnot the end of the world,\u201d according to Roberts, he anticipates that the Canadian VC \u201cslowdown\u201d at pre-seed and seed will continue \u201cfor the foreseeable future.\u201d<\/p>\n RELATED: \u201cWake-up call\u201d unheeded as Canadian VC investment hits lowest level since H1 2020<\/a><\/p>\n \u201cMy concern is that, looking out into the market over the next three years, there seems to be less venture capital [fund] creation going on\u2014I\u2019m a direct example of it, but there\u2019s also others,\u201d Roberts said. \u201cThere\u2019s less limited partner (LP) money in the market today than there was back in 2019, and in 2019 we were trending upwards, and now we\u2019re trending downwards.\u201d<\/p>\n Inovia Capital CEO Chris Arsenault argued in a LinkedIn post<\/a> that Canada needs more emerging managers, which typically invest at the pre-seed and seed stages but have found fundraising more challenging<\/a> as market conditions have deteriorated and LPs have concentrated on more established firms.<\/p>\n For some Canadian VC funds, Roberts said \u201ca slow decline\u201d could be a good thing, as less competition among investors may lead to lower startup valuations. But he noted this could also drive more Canadian founders to fundraise south of the border in search of higher prices.<\/p>\n \u201cIt was far easier to raise in the US\u2014higher valuations and faster execution,\u201d Sakina Roufid, the Canadian founder behind a stealth revenue operations startup, told BetaKit. \u201cSusa Ventures committed to lead my round just two hours after our first call, having back-channeled dozens of references in that time.\u201d<\/p>\n