Canada’s Venture Capital Market Recalibrates in 2024
In 2024, Canada’s venture capital market showed clear signs of recalibration, moving from a state of panic to one of patience. According to Osler’s annual Deal Points Report on Venture Capital Financings, the total dollars invested rose from $2.2 billion USD in 2023 to $3.73 billion USD across 160 deals in 2024. This increase wasn’t a straightforward rebound but rather a realignment of the market.
Michael Grantmyre, partner at Osler and co-author of the report, noted that the key difference in 2024 wasn’t in the market’s structure but 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.”
The report highlights several defining trends of 2024, including the lengthening of venture timelines, increased up-round activity, and the return of secondary activity in later-stage financings. There was also a higher concentration of AI financings, often at higher valuations than the rest of the market. Despite the longer timelines to close deals, the underlying deal terms remained relatively consistent with historical norms.
Ryan Unruch, Osler partner and co-author of the report, emphasized the consistency of standard terms for preferred share financings. “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,” Unruch said.
The report also noted challenges in certain sectors, such as consumer and retail, where no Canadian company raised beyond a Series B in 2024. This industry experienced the highest concentration of down-round activity. Looking ahead to 2025, Grantmyre and Unruch anticipate a boost in merger and acquisition activity and continued secondary transactions for later-stage financings.
Grantmyre suggests a cautiously optimistic outlook for 2025, highlighting Canada’s ongoing ability to foster globally competitive tech businesses. “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.”
