Canadian VC market crashes in Q4 2024, with rougher road ahead

Fourth quarter venture capital (VC) disbursements in Canada totaled just $1.19 billion – the second-worst result since 2021, according to analysis from research firm CPE Media.

The Q4 24 retrenchment represented a decline of 67% from Q3 24. The report says Q1 25 has yet to show any sign of turning around.

Short- and medium-term prospects for the Canadian VC market are bleak – as the political and economic relationship between Canada and the United States deteriorates at a remarkable pace under the Trump administration. Canada’s innovation industries are dependent on foreign VC investment, with the US accounting for a whopping 53% of all VC investment dollars in Canada.

“The US federal government's focus on securing American technological leadership will likely result in it actively promoting US VC investment into domestic firms while looking askance at foreign ventures,” said Richard Rémillard, president of Rémillard Consulting Group. “As a result, Canada will need to prepare for a material decline in US VC investment over the short- to medium-term and which will need to be met with increased VC supply from Canadian sources including private, corporate, and government.”

VC disbursements in 2024 totaled $8.89 billion from 739 financings. Canadian governments invested $941 million, while private Canadian VC invested $706 million and Canadian corporates invested $301 million.

US private VC and US mutual/hedge funds were the two largest investors, at $2.09 billion and $1.33 billion, respectively.

The US was the largest source of funding, domestic or otherwise, at $4.7 billion or 53%. The other top foreign sources in 2024 were South Korea ($454 million), China ($168 million), and the UK ($164 million).