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Canadian firms could face ‘material decline’ in funding from U.S. VCs, Ottawa consultant says

David Sali

March 5, 2025

Ottawa ranked eighth among Canadian cities in overall VC fundraising last year, down from sixth in 2023.

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Tech companies in the National Capital Region raised 30 per cent less venture capital in 2024 than the previous year, according to a new report in which an Ottawa-based consultant warned that Canadian firms will need to brace for “a material decline in U.S. VC investment over the short to medium term.” Local firms landed a total of $131 million in venture capital last year, CPE Analytics said in its 2024 Canadian Venture Capital Report released Wednesday. That’s down from $194 million in 2023 and $252 million in 2022. Ottawa ranked eighth among Canadian cities in overall VC fundraising last year, down from sixth in 2023. Overall, Canadian companies raised $8.89 billion worth of venture capital in 2024, the third-highest total ever and well above last year’s tally of $6.07 billion. U.S. venture capital firms were the biggest source of funding for Canadian companies, accounting for 53 per cent of all VC investment dollars in Canada in 2024. In an analysis of the data accompanying the report, Richard Rémillard, president of Ottawa-based Rémillard Consulting Group, said Canadian companies will need to start looking elsewhere for growth funding amid a brewing tariff dispute and the rise of “hyper-nationalism” south of the border. “At a time of hyper-nationalism in the U.S. federal administration today and with fears of economic warfare across multiple fronts surging in Canada and elsewhere, this over-reliance on U.S. VC constitutes a strategic weakness of Canada in the competition for scarce investment dollars,” Rémillard wrote. “The U.S. federal government's focus on securing American technological leadership will likely result in it actively promoting U.S. VC investment into domestic firms while looking askance at foreign ventures. As a result, Canada will need to prepare for a material decline in U.S. VC investment over the short to medium term and which will need to be met with increased VC supply from Canadian sources including private, corporate and government.” Broken down by sector, ICT companies secured 60 per cent of all VC dollars in 2024, up from 53 per cent a year earlier, a rise “driven largely by AI,” Rémillard said. The biotech sector’s share of funding fell from 16 per cent in 2023 to 12 per cent last year, while cleantech companies accounted for 17 per cent of all investment dollars in 2024, up slightly from 16 per cent the previous year. Toronto once again led all Canadian cities in VC fundraising at $3.3 billion, followed by the Vancouver area at $2.1 billion and the Montreal area at $1.2 billion. CPE Analytics tracks equity and debt financing from a range of sources, including angel investors, VC firms, private equity firms and law firms. The company says it tracks capital that “flows directly into the companies” but excludes “known secondary portions of transaction rounds, in which no money went to the companies to help them grow and scale.” The report includes equity and quasi-equity direct investments in companies, but excludes private equity transactions and financing by foreign-headquartered or -domiciled companies with Canadian subsidiaries. As a result, it doesn’t tell the whole story of how investment capital is helping grow Ottawa’s tech ecosystem.