Canadian venture capital (VC) market activity showed some “positive signs” and continued challenges during the third quarter after a particularly bleak first half of 2025, according to a new report.
CVCA’s David Kornacki argued this data is evidence of “a healthy, stable” Canadian VC market.
The Canadian Venture Capital & Private Equity Association (CVCA) tracked $1.8 billion CAD in total VC funding deployed across 123 technology startup deals in Canada in Q3 2025. This represents a continued uptick on a quarterly basis compared to Q1 and Q2, though these amounts have been allocated across progressively fewer companies.
“We’re seeing increasing deal sizes, fewer deals, [and] just more intentional investing,” CVCA director of data and product David Kornacki told BetaKit in an interview, arguing that this signifies a market that is “selective but confident.”
Kornacki said he takes a more positive view of these Q3 VC results than he did of H1 2025, positing that the latest CVCA data offers evidence of “a healthy, stable” Canadian VC market. He described the latest quarter as “a steady Q3, back to what we saw pre-pandemic.”
On the private equity (PE) side of the equation, major privatizations and steady mid-market activity helped the market sustain its record pace during Q3, with $25.4 billion invested across 151 deals. “It’s an exciting time in PE,” Kornacki said.
During the first nine months of 2025, the CVCA recorded $4.9 billion in total VC funding invested across 386 transactions, coming in on the high end compared to pre-COVID-19 levels. The average was between $2.6 billion and $4.9 billion invested through 350 to 400 deals during the same periods between 2017 and 2019.
RELATED: “Wake-up call” unheeded as Canadian VC investment hits lowest level since H1 2020
While these Q3 figures mark a 40 percent decline in total investment and a 23-percent drop in deal count relative to the same period last year, Q3 2024 was buoyed by Burnaby-based legaltech firm Clio’s more than $1.2-billion CAD, “substantially secondary” Series F round.
Though Canada overall saw total VC investment increase and deal count decrease during Q3 compared to Q2, Québec saw declines on both fronts in the third quarter. A report from Réseau Capital found that $108 million was deployed across 23 deals in Q3, representing drops of 63 percent and 23 percent, respectively, compared to the second quarter.
According to the CVCA, this trend towards fewer, larger, and more deliberate VC investments is also reflected in PitchBook data for the United States market.
The report found that average VC deal size during Q3 climbed to $14.7 million, a 20 percent increase compared to the second quarter.
RELATED: Canadian VC pre-seed and seed activity continued to slump in H1 2025
In 2025 to date, mega-deals of $50 million or more have accounted for 60 percent of all dollars invested. Third-quarter activity on this front included large financings by Toronto-based large language model developer Cohere, artificial intelligence (AI) tax research platform Blue J, and AI video generation startup Moonvalley. Kornacki said it has been “nice to see the return” in growth VC deals this year, calling this “a good sign.”
But the CVCA also noted that early-stage investment continues to lag behind the rest of the market. During the first nine months of this year, $650 million has been deployed across 219 pre-seed and seed deals, consistent with 2020 levels and down approximately 15 percent compared to 2024. The CVCA said this is at least in part a reflection of “tighter fundraising [market] conditions.” Réseau did report, however, that Québec has seen an uptick in seed activity.
According to a recent report from VC firm Panache Ventures, the decline in early-stage investment has coincided with a drop in startup formation. The Panache report found that an estimated 800 tech startups launched in Canada during the first half of 2025—down from 1,100 during the same period in 2024, but up from the 700 formed when Panache began tracking this in 2023.
While venture debt activity cooled off slightly during Q3, the CVCA report found that 2025 is still on pace to surpass its previous record from 2024. Sector-wise, it found agribusiness and life sciences have remained areas of strength this year, while cleantech investment has hit its lowest level since the pandemic.
Feature image courtesy Unsplash. Photo by Donovan Dean Photography.