In a year shaped more by patience than panic, Canada’s venture capital market showed signs of recalibration in 2024.
According to new data from Osler’s annual Deal Points Report on Venture Capital Financings, which contains one of the most detailed private datasets on Canadian financings, 2024 was less a story of rebound than realignment.
“The calculus that a lot of investors use to think about their decisions started to change, particularly for late-stage financing.”
Michael Grantmyre, partner at Osler
Total dollars invested rose from $2.2 billion USD in 2023 to $3.73 billion USD across 160 deals. Behind that figure lies a more deliberate deal-making environment, with slower timelines, more detailed diligence, increased late stage secondary activity, higher concentration of capital invested in mega rounds, and more selective conviction.
And while a small group of high-performing companies continued to attract outsized investment, many others faced a slower, more exacting path to capital.
According to Michael Grantmyre, partner at Osler and co-author of the Deal Points Report, the key difference in 2024 wasn’t in the market’s structure. It was in its mood.
“Last year, we didn’t see that continued ratcheting up of interest rates, which had caused a lot of uncertainty, and frankly panic, in the market in 2023,” Grantmyre said. “The economy still wasn’t firing on all cylinders in 2024, but it was predictably so.”
Few firms are better positioned to track that movement than Osler. With hundreds of startup financings completed annually, the law firm plays a central role in Canadian venture deals, on both the company and investor sides.
Its annual report draws primarily from deals where Osler acted as counsel (approximately 70 percent on the company side). “On each deal, Osler tracks a broad range of data points, allowing us to keep clients up to date on market trends, as they happen,” said Ryan Unruch, Osler partner and Deal Points co-author.
“There’s nothing else that makes this kind of data available for Canadian companies,” added Unruch. “It’s our way of giving back to the ecosystem, allowing all market participants to gain a view into what’s actually happening on the ground. Every year we try to provide access to new data points that would be helpful to the market. For example, this year, we are publishing data on pre-money valuations, post-money valuations, round dilution and option pool sizes.”
That perspective gave Osler early visibility into some of 2024’s defining trends: the lengthening of the venture timeline, increased up-round activity, the return of secondary activity in later stage financings, higher concentration of AI financings (often, at higher valuations than the rest of the market), the continuation of financings being done on standard venture terms, and the continuing growth of venture activity in markets like the Prairies and Atlantic Canada.
The broader conditions that shaped 2023, including tight capital, cautious investors, and high borrowing costs, never went away. What changed in 2024 was clarity, according to Grantmyre and Unruch. The Bank of Canada held rates steady for much of the year. Dealmakers adjusted. The urgency to react gave way to a more measured approach.
On average, rounds took longer to close in 2024 across all stages, aside from Series B. The report notes that the uptick of mega-deals involving larger syndicates can increase these closing timelines. But Grantmyre believes it also reflects investors’ increasing conservatism and high focus on diligence.
“The calculus that a lot of investors use to think about their decisions started to change, particularly for late-stage financing, where investors were looking for proven, revenue-generating businesses,” Grantmyre added.
According to Grantmyre, this didn’t mean that investors decided to move away from early-stage financings, noting that the highest concentration of financings in the Deal Points Report was at the seed and Series A stages, but rather that investors, in light of the economic conditions in 2024, allocated greater amounts of capital to later stage, proven, revenue-generating businesses.
Despite the longer time to close, the underlying deal terms remained relatively consistent with historical norms.
“In the five years covered by the 2024 Deal Points Report, notwithstanding the changes in market dynamics, one thing that has remained consistent, on average, is the standard set of terms for preferred share financings, including 1x non-participating liquidation preferences, pari passu securities, non-cumulative dividends, and broad-based anti-dilution rights,” Unruch said.
Each year, Osler’s report arrives in the context of a new disruption. “There seems to have been a particular challenge every single year that the Deal Points Report is released,” Grantmyre noted. “Whether it’s COVID, or interest rates, and now foreign policy creating uncertainty.”
This time, that uncertainty is coming from abroad. Tariffs and geopolitical volatility are already weighing on sectors like consumer and retail, which saw no Canadian company in that industry raise beyond a Series B in 2024. In addition, companies in the consumer and retail industry experienced the highest concentration of down round activity covered by the 2024 Deal Points Report. And as companies revisit past bridge rounds and prepare to convert historical notes, which may have been negotiated on less favourable terms, Unruch said a mild uptick in down rounds may follow.
Grantmyre suggests a carefully optimistic outlook for 2025. He noted that a rise in significant late-stage investment deals in 2024 indicates Canada’s “ongoing ability to foster globally competitive tech businesses that can draw top-tier investors.”
Looking ahead to 2025, with dampened expectations for IPO activity, Grantmyre and Unruch anticipate a boost in merger and acquisition activity and that secondary transactions will remain a staple for later stage financings.
In terms of financing activity, as the ecosystem continues to stabilize, Grantmyre and Unruch believe that well-performing companies will maintain their ability to be well-funded and complete financing rounds on favourable terms, and we will likely see a number of additional megarounds in 2025.
“Other market participants will continue to navigate a more challenging fundraising environment in 2025,” Grantmyre said. “That may involve accepting capital on less favourable terms, undertaking recapitalization transactions, or exploring mergers and acquisitions alternatives.”
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The 2024 Deal Points Report offers one of the most comprehensive views available into how Canadian financings are really getting done.
For a deeper look at the data behind these dynamics, read Osler’s full 2024 report now.
Feature image courtesy of Unsplash. Photo by Morgan Housel.