Canadian venture capital deals tumble as investors wait out uncertainty: expert

CTV News

11 hours ago

Canadian venture capitalists have been less active when it comes to dealmaking this year, according to one expert who says economic uncertainty has kept many investors from expanding their portfolios.
'It's uncertain, and it's no surprise that Canadian investors are experiencing it,' David Kornacki, director of data and product at the Canadian Venture Capital & Private Equity Association (CVCA), told BNN Bloomberg in an interview on Thursday.
'There's uncertainty just in overall macroeconomic trends but also, we're seeing a pullback; Canadian venture capital is a risky investment.'
Kornacki said that in 2025, investors have been less willing to take on that risk, adding that there's been a noticeable drop in funding for startups in the early stages of capital raising.
'In the pre-seed, seed and Series A stages, there is a pullback, which does drop down investment counts across the board,' he said.
Much like during the COVID-19 pandemic period, investors this year have been more likely to shore up their existing portfolios rather than attempting to expand them given the uncertainty that's spread to virtually all markets and sectors due to ongoing global trade conflicts, said Kornacki.
'That's what we're seeing as well, we're seeing investors make sure that their current portfolio is reducing burn, that they're remaining capital efficient and that they have capital on hand to make sure that their portfolio can ride out this next phase of uncertainty,' he said.
'So definitely we're seeing a reduced number of deals and dollars invested, specifically on the large scale. Mega deals were down; we only had about eight mega deals, what we define as $50 million-plus. We're definitely seeing investors being more cautious.'
Despite the across-the-board slowdown in venture capital deals this year, life sciences is one sector that seems to be bucking the trend, Kornacki noted.
'We saw this, again, during the times of COVID-19, which made more sense given that was a health crisis, and we saw more investment into healthcare, but we're seeing that again this year,' he said.
'It seems health and life sciences is a resilient sector that doesn't ebb and flow as much as other sectors, specifically when it comes to impact on the supply chain and macroeconomic trends.'
Another positive development within Canada's venture capital space is the broadening of deals across regions outside of the country's three largest provinces, Kornacki explained.
'Back when I first joined the CVCA about eight years ago, we saw investment across basically three provinces,' he said.
'Now we're seeing investment across the board, across the country in the Prairies as well and in the East Coast and the Maritimes. It's exciting to see that investment is more cross-Canada versus the Ontario, Quebec and B.C. markets.'