Following a slight rebound in 2024, Canadian venture capital (VC) fundraising continued to trend downward in what marked a particularly poor 2025, a new RBCx report has found.
According to the report, released today, 21 Canadian VC funds collectively raised nearly $2.1 billion CAD from limited partners (LPs) last year. These figures indicate 2025 wasn’t just the worst year for total dollars raised since 2016, but also that it had the fewest funds closed since 2018. This drop in Canadian VC fundraising means there is less investment capital available today for domestic tech startups from fewer local firms.
In an interview with BetaKit, RBCx managing director of VC coverage Matt Roberts described 2025 as “a perfect storm,” and attributed this decline to “a bunch of bad things all happening at the same time,” including a continued dearth of exits, macroeconomic uncertainty, and the federal government dragging its feet on re-upping its financial support for domestic VC pre-Budget 2025.
After overallocating to VC during pandemic highs in 2021 and 2022, LPs began pulling back from the high-risk, long-hold asset class in 2023 as the economy worsened. Since then, geopolitical tensions, strong public market performance, and a lack of mergers and acquisitions and IPOs—which have meant less liquidity for those same LPs—have only made them less interested in investing in VC.
Canadian VC fundraising nosedived in 2023, and 2024 initially appeared poised to bring more of the same. However, RBCx found that there was ultimately an increase that year, as 22 Canadian VC funds raised more than $3.4 billion from LPs. But activity declined once more last year.
RBCx director of capital investments John Rikhtegar told BetaKit in an interview that in today’s environment, “LPs are getting hit with significant capital calls while getting very little by way of distributions” due to a scarcity of exits. Meanwhile, longer gaps between startup financing rounds have also translated to weaker on-paper performance.
“[LPs] are realizing venture is incredibly difficult,” Rikhtegar added. “It’s very difficult to exit these investments over a certain timeframe.”
Rikhtegar argued that Canada is no outlier in this respect compared to other countries. “What’s going on in Canada as it relates to the venture data and the fundraising difficulty and the sentiment is absolutely happening across the world, in every venture market,” he said.
Only “cream of the crop” have been able to raise
Penned by Rikhtegar and his colleague Ethan Rotstein, this marks RBCx’s first comprehensive annual report on the state of Canadian VC fundraising. Its numbers come from proprietary RBCx data as well as information from PitchBook and publicly available sources like BetaKit that RBCx has then verified with partners, consolidated, and analyzed.
The report indicates that nearly everyone in Canadian VC felt the pain last year, though it appears that some experienced it more acutely than others.
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“Emerging managers are getting the brunt of the stick,” Rikhtegar said, noting that LPs have kept concentrating their remaining VC investments on existing relationships with more established firms that possess longer track records.
Emerging managers (VCs on their first, second, or third funds, who typically concentrate on earlier-stage companies) have had a tough go since 2023. Last year, in Canada, they raised their lowest annual amount on record, securing $249 million.
Of the 58 Canadian VC funds raised in 2021, RBCx found that only a quarter have raised a successor to date. This marks half the expected long-term average. As Rikhtegar put it, only “the cream of the crop” have been able to raise new funds during the market downturn.
Even top performers that have been able to close new funds in this timeframe have been getting crunched: RBCx found that median and top-quartile Canadian VC fund sizes are at their lowest levels since 2013; Rikhtegar described this as “very worrisome.”
Meanwhile, the rich are getting richer: RBCx found that Canada’s five largest VC funds swallowed up 83 percent of all capital raised in 2025. Rikhtegar argued this is too “top-heavy” and creates “concentration risk” that could lead to “consensus investing.”
Roberts noted that if you remove big Canadian VCs that are likely to deploy the capital they raised in Canada abroad from these results, domestic VC fundraising in 2025 would be much lower.
Fewer, smaller funds being raised has also meant a smaller pool of domestic capital available for Canadian tech entrepreneurs.
RBCx also found that only 42 percent of the capital currently committed to VC funds is dedicated to backing new startups, versus existing portfolio firms. That’s a departure compared to every other year since 2015, when total initial capital has exceeded reserves.
“Not out of the woods”
For his part, Rikhtegar thinks we have now emerged from the bottom of the market. “The past three years have been a real trough for global [VC]; reshaping how capital is raised, allocated, and exited,” Rikhtegar said. “We’re definitely not out of the woods, but I do believe we’ve come off the basement floor of that downturn.”
But unless there is “a meaningful recovery” in distributions and liquidity back into LP portfolios, Rikhtegar said he has a tough time envisioning any “sharp rebound” in VC fundraising in 2026.
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For his part, Roberts anticipates that 2026 will look a lot like 2025.
Rikhtegar expressed hope that LPs stay the course despite the difficulty, arguing that historically, trough years are typically when the strongest returns are generated.
“The [VC] firms raising today tend to be those building truly durable, long-term platforms—and I believe the LPs who continue to invest through this part of the cycle will be the ones rewarded over the long run,” he said.
All images courtesy RBCx.