Key Takeaway
The Canadian VC market displayed striking divergence in 2025. Total LP fundraising fell to CAD $2.1B — the lowest since 2016 — yet Q4 delivered a record CAD $3.8B in quarterly deal activity. Capital concentration intensified sharply, with the top five funds capturing 83% of all commitments raised. The CVCA characterizes its 2026 outlook as "cautious resilience," with 74% of member firms actively fundraising or planning to do so within 18 months. For Rise Partners' efforts supporting Korean companies in pursuing TSXV listings, the tightening private VC environment paradoxically strengthens the case for public market financing via the CPC/TSXV pathway.
# Canadian Venture Capital 2025 Performance & 2026 Outlook: CVCA/RBCx Report Analysis
Executive Summary
The Canadian VC market displayed striking divergence in 2025. Total LP fundraising fell to CAD $2.1B — the lowest since 2016 — yet Q4 posted a record-breaking CAD $3.8B in quarterly deal activity. Capital concentration intensified, with the top five funds capturing 83% of all commitments raised. The CVCA characterizes its 2026 outlook as "cautious resilience," with 74% of member firms either actively fundraising or planning to launch a fund within 18 months. For Rise Partners' work supporting Korean companies pursuing TSXV listings, the tightening of the private VC environment paradoxically enhances the appeal of public market financing via the CPC/TSXV route.
Details
2025 LP Fundraising: A "Perfect Storm"
According to the RBCx report, Canadian VC fundraising in 2025 constituted a "perfect storm" ([BetaKit](https://betakit.com/a-perfect-storm-2025-was-the-worst-year-for-canadian-vc-fundraising-since-2016/)):
21 Canadian VC funds raised a combined CAD $2.1B from LPs
Lowest total capital raised since 2016
Lowest number of fund closes since 2018
Top 5 funds accounted for 83% of total capital raised → deepening concentrationDrivers of the Decline ([RBCx Report](https://www.rbcx.com/canadian-venture-capital-report-2025/)):
Continued absence of meaningful exits
Macroeconomic uncertainty
Delayed federal recommitment to domestic VC funding programs (e.g., Venture Capital Catalyst Initiative) ahead of the 2025 budget
LPs concentrating commitments with established manager relationships → disproportionate impact on emerging managersNew vs. Follow-on Capital Allocation: Only 42% of currently committed VC capital is earmarked for new startup investments, with the remainder reserved for follow-on rounds in existing portfolio companies — marking the first year since 2015 in which initial investments have fallen below reserve allocations.
2025 VC Deal Activity: Record Q4
On the deployment side, the picture was sharply contrasting ([The Logic](https://thelogic.co/news/canada-venture-capital-startups-2025/)):
Quarterly Deal Activity:
Q3 2025: CAD $1.8B across 123 deals
Q4 2025: CAD $3.8B across 165 deals → largest single quarter on record since 2013
Q4 accounted for approximately half of all 2025 investment activityFull-Year Investment:
2025 YTD (through Q3): CAD $4.9B across 386 deals
Average deal size (annual): approximately $14M
Average deal size (Q4): $23M+ → highest quarterly average on recordMega-Deal Concentration:
Deals of $50M or more represented approximately two-thirds of total 2025 VC investment
Waabi's (autonomous vehicle startup) $1B funding round alone accounted for over one-quarter of all Q4 VC activityPre-Seed/Seed Activity Contraction
YTD (through Q3) pre-seed/seed: approximately CAD $650M across 219 deals
Comparable to 2020 levels; down approximately 15% year-over-year vs. 2024
Early-stage funding gap persists ([BetaKit](https://betakit.com/canadian-vc-pre-seed-and-seed-activity-continued-to-slump-in-h1-2025/))Venture Debt Reaches Record Levels
Full year 2025: 69 deals totaling CAD $1.4B
Q4 alone: 19 deals totaling CAD $679M → highest quarterly figure on recordSector Trends
ICT (including AI): approximately $5B, representing roughly two-thirds of total VC investment
Fintech: investment contracted in 2025 following a surge in mega-deals in 2024CVCA 2026 Outlook: "Resilience and Realignment"
Key findings from CVCA's 2026 Canadian Private Capital Outlook report ([CVCA Central](https://central.cvca.ca/data-analysis/resilience-and-realignment-the-2026-canadian-private-capital-outlook/)):
Confidence Index: 56.7 (moderate)
Fundraising Pipeline:
74% of member firms are currently fundraising (41%) or plan to launch within 18 months (34%)
Target fund sizes range from CAD $20M to $700M, with an average target of CAD $195MInvestment Intentions:
83% of VC/PE firms plan to deploy capital into new and existing investments in 2026
74% anticipate improved deal opportunity (65% modestly, 9% significantly)Key Challenges:
68% identify capital access and liquidity as the top challenge facing portfolio companies
Liquidity has surpassed talent acquisition as the number-one operational concernKey Figures
2025 LP fundraising: CAD $2.1B (lowest since 2016)
Number of fund closes: 21 (lowest since 2018)
Capital concentration — top 5 funds: 83%
Q4 2025 VC investment: CAD $3.8B across 165 deals (all-time quarterly record)
Estimated full-year 2025 VC investment: CAD $8.7B+
Average deal size: $14M (annual); $23M+ (Q4)
Mega-deal ($50M+) share: ~two-thirds of total
Waabi single investment: $1B
Pre-seed/seed: CAD $650M across 219 deals (Q3 YTD); -15% vs. 2024
Venture debt: 69 deals, CAD $1.4B
ICT sector share: ~two-thirds of total VC (~$5B)
CVCA Confidence Index: 56.7
Firms fundraising or planning to fundraise: 74%
Average target fund size: CAD $195M Implications
1. **VC Funding Squeeze = CPC/TSXV Opportunity**: With Canadian VC fundraising at its lowest level since 2016, the CPC pathway to public market listing via TSXV can be positioned as a compelling alternative to private VC financing for Korean companies. In particular, the 15% year-over-year decline in pre-seed/seed funding reinforces the motivation for early-stage companies to consider public market entry as a viable capital-raising strategy.