CVCA says the rise in growth investing is a “good sign,” but early-stage venture capital activity continues to lag.
Activity in the Canadian venture capital (VC) market showed some “positive signs” and continued to struggle in the third quarter after especially gloomy According to a new report, in the first half of 2025.
CVCA's David Kornacki says the data shows a “healthy and stable” Canadian venture capital market.
Canadian Venture Capital and Private Equity AssociationCVCAIn the third quarter of 2025, the total amount of venture capital funding committed to 123 technology startups in Canada was C$1.8 billion. This represents continued quarterly growth over the first and second quarters, although these amounts were spread across fewer and fewer companies.
“We are seeing an increase in deal sizes, a decrease in the number of deals, [and] just more targeted investing,” CVCA chief data and product officer David Kornacki told BetaKit, arguing that this means the market is “selective but confident.”
Kornacki said he was more positive about venture capital's third-quarter results than 1st half of 2025claiming that the latest CVCA data shows a “healthy and stable” Canadian venture capital market. He characterized the latest quarter as a “solid third quarter, returning to what we saw pre-pandemic.”
On the private equity (PE) side, large-scale privatization and robust middle market activity helped the market maintain record momentum in the third quarter, with $25.4 billion invested in 151 deals. “This is an exciting time in physical education,” Kornacki said.
In the first nine months of 2025, CVCA's total venture capital funding invested across 386 transactions was $4.9 billion, the highest level compared to pre-COVID-19 levels. On average, between $2.6 billion and $4.9 billion were invested across 350 to 400 deals during the same periods from 2017 to 2019.
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While these third-quarter numbers mark a 40 per cent decline in total investment and a 23 per cent decline in deal volume compared to the same period last year, the third quarter of 2024 was buoyed by more than Burnaby-based legal technology firm Clio. $1.2 billionImillion Canadian dollars“substantially minor” Series F round.
While Canada as a whole saw an increase in venture capital investment and a decline in deal volume in the third quarter compared to the second quarter, Quebec saw declines on both fronts in the third quarter. Réseau Capital's report showed $108 million was spent across 23 deals in the third quarter, representing declines of 63 percent and 23 percent, respectively, from the second quarter.
This trend toward smaller, larger, and more focused venture capital investing is also reflected in PitchBook's U.S. market data, according to CVCA.
The report said the average venture capital deal size rose to $14.7 million in the third quarter, up 20 percent from the second quarter.
CONNECTED: Canadian venture capital activity continued to decline in the first half of 2025.
By 2025, megadeals of $50 million or more accounted for 60 percent of all dollars invested. Third-quarter activity on this front included a major funding round from a major Toronto-based language modeler. Approveartificial intelligence (AI) tax research platform Blue Jayand AI-powered video creation startup MOvalley. Kornacki said it was “good to see a return” to rising venture deals this year, calling it a “good sign.”
But the CVCA also noted that early-stage investments continues to lag behind the rest of the market. In the first nine months of this year, $650 million was spent on 219 pre- and early-stage deals, consistent with 2020 levels and down about 15 percent from 2024. The CVCA said this is at least partly a reflection of “tighter fundraising”. [market] conditions.” However, Rezo said Quebec is seeing an uptick in seed activity.
According to recent report The decline in early-stage investment has coincided with a drop in the number of startups, according to venture capital firm Panache Ventures. Panache's report said there were about 800 tech startups launched in Canada in the first half of 2025, up from 1,100 in the same period in 2024, but more than the 700 launched when Panache started tracking it in 2023.
Although venture debt activity fell slightly in the third quarter, the CVCA report said 2025 still has a chance of surpassing the previous 2024 record. Industry-wise, agribusiness and life sciences remain strong areas this year, while clean technology investment is at its lowest level since the pandemic.
Image provided Unsplash. Photo by the author Donovan Dean Photography.
