Canada’s relationship with the U.S. is under pressure as new trade tariffs take effect. While public markets brace for the impact, there’s growing concern about how this could affect the Canada venture market.

Despite global challenges, 2024 was a rebound year for Canadian startups. Venture-backed companies raised $6.9 billion — a 17% jump from 2023, when only $5.9 billion was raised. It marked a return to form after a slow year, even though Canada still represented just about 2% of the global venture market.

Fewer Deals, Bigger Checks
Though the total funding increased, the number of deals fell sharply. Fewer than 700 deals closed in 2024, compared to nearly 1,000 in 2023. The higher funding total was driven by several major rounds — particularly in the artificial intelligence space:

• In July, Vancouver-based Clio secured $900 million in Series F funding at a $3 billion valuation. Its legal AI tool, Clio Duo, helps lawyers automate routine work and improve efficiency.
• In December, Toronto chip company Tenstorrent raised over $693 million in Series D funding, reaching a $2 billion valuation.
• Also in July, Toronto-based Cohere raised $500 million in Series D funding at a $5.5 billion valuation. Cohere develops AI models used in custom applications for chat and content generation.

These large investments helped Q3 and Q4 2024 each surpass $2 billion in funding.

Slower Start in 2025
The new year has started slower in terms of total dollars. In Q1 2025, Canada venture funding reached $1.6 billion across 128 deals. That’s a drop from Q4 2024’s $2.4 billion across 118 rounds — but still nearly double the amount raised in Q1 2024.

Notable Q1 deals include:

• StackAdapt, a programmatic advertising company in Toronto, raised $235 million in February.
• Cybersecurity startup Tailscale secured $160 million in Series C funding, valuing the business at $1.5 billion.

Trade War Adds New Risks
The new tariffs between Canada and the U.S. took effect after Q1 ended, so their full impact is still unclear. While hardware is the obvious target, software companies could also feel the pressure. Uncertainty often leads to cautious spending — and software budgets are usually the first to be cut.

After a solid 2024, the Canada venture market now faces fresh challenges. With the global economy still unsettled, the next few quarters will reveal whether Canadian startups can maintain momentum or will need to adjust to a tougher environment.