Analysis: Canadian VC Investment Trends in the U.S. and Global Markets

The Canadian VC ecosystem has long attracted global investors, with U.S. firms playing a particularly influential role due to geographic proximity and their significant participation in Canada’s later-stage, larger venture capital rounds.

Less frequently discussed, however, is the extent to which Canadian VC investors are participating in U.S. and global markets. To better understand this dynamic, the CVCA conducted a focused analysis leveraging insights from CVCA Intelligence to examine the role and reach of Canadian investors beyond domestic borders.

Methodology

This analysis draws on more than a decade of investment data drawn from CVCA Intelligence, covering the period from 2015 to 2024.

To evaluate Canadian venture capital activity outside of Canada, we divided the data into two groups:

1. United States: which includes a breakdown and analysis by individual state
2. International: which includes all countries excluding Canada and the United States

As total round sizes do not distinguish the portion of capital contributed by Canadian investors, this analysis uses the number of deals as the primary metric to measure Canadian participation. A deal is included in the count if at least one Canadian investor was involved in the round. While total round sizes are also reported, these figures represent the full value of the financing round and are not limited to Canadian capital contributions.

This methodology provides a more consistent basis for comparing activity across regions by focusing on investor presence rather than total dollars invested.

Canadian VC Investment Activity by U.S. State

While the United States has played a pivotal role in fueling growth-stage rounds in the Canadian VC ecosystem, Canadian investors have also contributed meaningfully to the U.S. venture landscape. This section highlights the top U.S. states where Canadian investors have been most active in venture deals, along with trends observed over the past decade. Based on deal count, the top five states for Canadian investor participation are:

1. California
   
2. New York
   
3. Massachusetts
   
4. Texas
   
5. Washington

Canadian participation in the U.S. venture capital ecosystem grew steadily from 2015 through 2019. This upward trend was notably disrupted in 2020, when participation levels dropped sharply. While domestic venture activity in Canada remained active during this period ($4.6B invested across 532 deals), the decline in cross-border investment suggests that Canadian investors shifted their focus inward during the onset of the global pandemic.

In 2021, as interest rates eased and capital became more accessible, Canadian investor activity rebounded significantly. This aligned with a broader surge in venture capital investment both in Canada ($15.4B invested across 846 deals) and globally. The responsiveness of Canadian investors to favourable market conditions was reflected in the rapid return to U.S. participation, with no notable lag between domestic and cross-border investment trends.

Given the drop in Canadian investor participation in the U.S. VC ecosystem during 2020, a period marked by global uncertainty, it is reasonable to anticipate a similar pattern emerging in 2025. In times of heightened economic or geopolitical instability, Canadian investors seem to shift their focus and support domestic ventures. With increasing tensions around trade policy and a growing emphasis on national self-reliance, we may see a renewed inward orientation among Canadian VC firms, resulting in a tapering of cross-border activity in the year ahead.

Additionally, Canadian investors were found to be most active in the Seed stage rounds in the U.S., providing crucial capital at the earliest stages of the startup lifecycle. This participation follows a decreasing trend as we progress towards later stage rounds. This is diametrically opposite of what we observed in our analysis on US Investor participation in Canadian VC – where U.S. participation was highest towards the later stage rounds in the Canadian market.

Canadian VC Investment Trends in the Top 3 U.S. States by Investment

California consistently ranked as the top destination for Canadian VC investors throughout the decade. New York followed closely in most years, with the exception of 2020, when Washington temporarily overtook it as the second most active state.

The #3 position proved to be the most competitive, with Massachusetts claiming it in six out of the ten years analyzed. Other states that occasionally took the spot include Colorado, Washington, Illinois, and Texas.

Unsurprisingly, venture activity tended to concentrate around established tech hubs such as San Francisco, New York City, Seattle, and Boston, reinforcing the geographic distribution observed in the rankings.

Canadian VC Global Investment Activity

Using a similar approach to analyze Canadian investor participation in international VC markets outside the United States, we find that England and Germany consistently rank as top destinations for Canadian venture capital.

While there was a noticeable dip in activity in 2020, the overall trend shows a steady increase in international deal participation by Canadian investors over the decade; unlike the United States, where activity returned to pre-pandemic levels after 2021. This may reflect stronger market resilience or a delayed response to interest rate changes.

One factor that may be contributing to this sustained activity is the expansion of Canadian VC firms into global markets. For example, Inovia Capital has established offices in London and San Francisco as part of its global strategy.

Conclusion

Canadian investors’ participation in the United States VC ecosystem is steady, but shows a withdrawal from the market during uncertain global events. There is an advantage in being able to react to changes in economic factors swiftly as we face similar challenges in the near future. The top destinations for these investments are states with well-established tech hubs like California and New York, however, we may be seeing an emerging market in Texas.

Outside of the US, England and Germany are attracting Canadian VC dollars – demonstrating a rising trend over the decade. This may see further growth as investors look for diversification and seek alternatives across the Atlantic.