Canadian VC dips in 2025, sees slight fourth quarter surge

Canadian venture capital investment fell in 2025, while private equity investment rose sharply, driven by a small number of multi-billion-dollar transactions, according to new market overviews from the Canadian Venture Capital and Private Equity Association.

Venture capital totalled CAD $8.0 billion across 571 deals. Capital deployed fell six per cent from 2024, and deal count declined 12 per cent year on year. Activity picked up in the fourth quarter, when CAD $3.8 billion was invested across 165 deals.

Fourth-quarter deal count was close to the five-year average of 176 transactions, even as the full-year picture remained weaker than recent years. Average deal size increased as capital concentrated in fewer transactions. The full-year average deal size was CAD $14.07 million, rising to CAD $23.06 million in the fourth quarter.

Venture capital figures now exclude secondary transactions following a methodology update approved by the association's Data Committee at the end of 2025. Secondary activity is reported separately. The year also saw CAD $1.3 billion raised via secondary transactions.

Stage Patterns

Investment patterns varied by stage. Pre-seed investment matched 2024 levels. Seed-stage capital was similar year on year, despite fewer transactions. Capital deployed at the Series A through D stages fell from 2024, while growth-stage investment increased in both deal count and dollars deployed.

Later-stage rounds also drew stronger participation from investors based outside Canada. That trend was most pronounced at growth stages, where transactions tended to be larger.

Exit markets remained difficult for venture-backed companies. The year recorded 29 venture-backed exits with CAD $358 million in disclosed value, and no initial public offerings. Liquidity relied largely on secondary transactions and limited merger-and-acquisition activity.

"Exit conditions stayed tight, which continues to shape how capital moves through the system. In Canada, that shows up as slower progression from company formation to scale and liquidity, even when quarterly figures improve," said Kornacki.

Sectors And Regions

By sector, information and communications technology dominated venture capital deployment. ICT accounted for CAD $5.06 billion across 269 deals.

Life sciences recorded CAD $837 million across 129 deals after excluding secondary transactions. Cleantech totalled CAD $660 million across 56 deals. Agribusiness reached CAD $251 million across 39 deals, near the upper end of recent years' levels.

Ontario represented just over half of the total venture capital dollars deployed, a result the association linked to the location of several large transactions. Quebec, British Columbia, and Alberta accounted for most of the remaining activity by both deal count and capital invested.

Venture Debt

Venture debt financing reached its highest recorded annual level in 2025, with CAD $1.40 billion deployed across 69 deals. The fourth quarter accounted for CAD $679 million across 19 deals.

The association described the growth in venture debt as occurring alongside equity investment rather than replacing equity rounds, and pointed to broader use of non-dilutive financing.

Private Equity Concentration

Private equity investment reached CAD $57.5 billion across 592 deals. Capital deployed increased significantly from 2024, while deal count fell. Fourth-quarter activity totalled CAD $4.32 billion across 105 deals, below the elevated levels seen in late 2024 and in the first three quarters of 2025.

Large transactions drove the annual total, with five deals exceeding CAD $2.5 billion in disclosed value. Most transactions remained small: 93 per cent were valued below CAD $100 million, consistent with mid-market patterns.

"Private equity investment totals in 2025 were driven by a small number of very large transactions. Outside of those deals, activity continued to sit in the mid-market, where deal size and volume have been more consistent over time. That dynamic means annual totals can shift materially based on individual transactions, even when underlying deal activity is relatively steady," said Kornacki.

Add-on activity and growth investments accounted for a large share of deal volume. A higher proportion of capital went toward privatisations, contributing to the concentration in annual totals. Follow-on investment declined as more capital flowed toward new platforms, acquisitions, and privatisations.

Private equity activity varied by sector. Financial services, media, and security-related investments took a large share of capital due to a small number of transactions. Industrials and manufacturing remained central to deal volume. ICT and life sciences continued to attract investment, though totals shifted depending on which deals were included.