This report offers a comprehensive analysis of the seed and pre-seed venture capital funding landscape in Canada, focusing on key trends across provinces, deal sizes, foreign investor participation, and top-performing verticals like AI, Web 3, and SaaS. It provides year-over-year and quarter-over-quarter insights, comparing Canada’s seed investment activity with global trends. The report is a valuable resource for understanding venture investment dynamics at the earliest stages in Canada’s startup ecosystem for 2024, providing detailed context on the evolving focus and funding environment.
Dollar amounts are represented in CAD unless otherwise specified.
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Overall Seed Investment in Canada from 2013-H12024 (Including Pre-Seed & Seed Rounds)
Although seed investments (both pre-seed and seed) have always been a significant part of the Canadian VC ecosystem, these stages have gained even more traction over the last three years as investors ramped up support for pre-seed and seed stage companies.
In 2021, there was a sharp increase in seed investment activity, with deal count and value more than doubling compared to 2020. While this was initially seen as a byproduct of the overall record VC activity in 2021, the activity levels in 2022 and 2023 have shown that seed investments continue to endure even as overall VC investment has declined.
Year-Over-Year Overall Seed Investments (Including Pre-Seed & Seed Rounds)
Canada has demonstrated a strong seed investment ecosystem as highlighted by a consistent growth in dollar investments, increasing at an annual average growth rate of 21% from 2013 to 2023. Despite a slowdown in overall investment activity across the later stages of VC investing in 2022 and 2023, due to rising interest rates and inflation, seed investments have continued to rise. This growth culminated in a peak in 2023, with $1.1 billion invested across 383 deals, underscoring the resilience and strength of early-stage funding in the Canadian startup landscape.
In H12024, we saw the first decline in seed investment activity ($292M raised from 148 deals). When compared to H12023, deal value declined by 48% while total deal count declined 31%.
The average deal size also declined for the first time since 2018 as it fell 31% from its peak of $2.88M in 2023 to $1.97M in 2024.
Overall Seed Investment Across Sectors
The majority of seed investments are consistently secured by companies in the information and communications technology (ICT) sector. In the first half of 2024, companies in the ICT sector accounted for 57% of total seed investment dollars and 43% of all seed deals.
Seed-stage companies in the life sciences sector saw peak levels of investment in 2023, with $294 million invested across 106 deals.
Similar trends emerged in the cleantech sector, which peaked in 2023 with $108 million raised from 36 deals. While overall cleantech investment activity has remained stable year-over-year, seed investment levels in the sector have declined. In the first half of 2024, $25 million was invested across 10 deals, reflecting a slowdown in seed funding within the sector.
The agribusiness sector has faced a challenging first half of 2024, with a significant slowdown in investment activity, which also impacted seed investments. While seed funding totaled only $8 million across 9 deals in H12024, this activity represented 56% of all deals and 59% of the total $14 million invested in the sector (from 16 deals). This indicates a focus on nurturing promising early-stage startups in agribusiness despite an overall decline in funding.
Overall Seed Investments by Vertical
Looking at the top verticals in H12024, software as a service (SaaS) companies saw the most engagement from investors with $33M invested across 11 deals, accounting for one fifth (20%) of total ICT investments. This was closely followed by human resources technology (HRTech) vertical which saw $28M invested from 2 deals and in third place were the financial technology (Fintech) companies who saw $16M invested across 6 deals.
Comparing Canadian Seed Activity Globally
In 2023, seed investments in Canada remained relatively stable, even reaching a record high, unlike the significant declines in the U.S. and Europe. Europe experienced a 20% decrease in dollars invested and an 18% decline in deal count, while the U.S. saw a 36% drop in dollars and a 27% reduction in deals. Although Canadian seed investments represent only 5% of U.S. levels, they have grown from 2% in 2020, showing a growing interest in Canada’s startup ecosystem.
Average deal sizes were highest in the U.S. (USD $3.2M), followed by Canada (USD $2.1M) and Europe (USD $0.7M).
Current State of Pre-Seed Investing in Canada
Pre-seed investments reached $18M from 26 deals in Q22024, showing a quarter-over-quarter (Q‑o-Q) increase of 44% in deal count and a 13% increase in deal value.
After significant growth in total investment levels since 2021, the first two quarters of 2024 have returned to mirror 2021 activity, with $16M invested across 18 deals in Q1 and $18M in Q2. Consequently, average pre-seed deal sizes have also reverted to levels seen in 2021.
In H12024, Ontario was the most active province in Canada for pre-seed investments, with 20 startups raising $16M in the first half of 2024. This activity is trending slightly below the record levels of 2023 when $66M was invested in 58 pre-seed companies.
Alberta ranked second for pre-seed investments in H12024, with 10 deals securing $8M. Activity in 2024 is on pace with 2023, when 24 pre-seed companies attracted $17M — the highest pre-seed investment Alberta has ever recorded.
British Columbia and Quebec rounded out the top four provinces for pre-seed investments in H12024, with BC attracting $4M across 4 deals and Quebec securing $3M from 3 deals. Both provinces are trending below their 2023 activity levels, which saw $17M raised across 18 deals in BC and $52M across 28 deals in Quebec.
Pre-Seed Activity by Deal Size
In H12024, nearly half (49%) of all deals with disclosed values were below $0.5M, 23% were between $0.5M and $1M, and 26% ranged from $1M to $3M. Only one deal was between $3M and $5M, with no deals exceeding $5M.
Top 10 Canadian Cities for Pre-Seed Investment
Toronto has solidified its reputation as Canada’s leading city for pre-seed deals, raising $114 million from 96 deals since 2021. Montreal is the second most active, with $85 million raised from 60 deals. Alberta’s efforts to promote innovation are yielding results, with Calgary ranking third, surpassing Vancouver by raising $37 million from 56 deals compared to Vancouver’s $36 million from 34 deals. Edmonton rounds out the top five, raising $15 million from 25 deals, further highlighting Alberta’s growing presence in early-stage investment activity.
Top Sectors Attracting Pre-Seed Investments
The ICT sector remained the most active for pre-seed investments in 2024, raising $20M from 20 deals in H1 2024.
The ICT sector consistently outperformed the other sectors in both deal count and value, peaking in 2022 with $84M across 54 deals. Despite accounting for the majority of pre-seed investments in 2024 (57%), the average deal size in H12024 was $0.9M, down 20% from 2023 and 39% from 2022.
Life sciences saw a decline to $6M from 11 deals, with average deal sizes dropping 43%. Cleantech investments fell sharply, while agribusiness showed resilience, raising $5M across 6 deals, on track to outperform 2022.
Top Verticals Attracting Pre-Seed Investments (H1 2024)
While SaaS remained the most active vertical with 4 deals, Web 3 ($6M from 3 deals) and artificial intelligence (AI) ($5M from 3 deals) companies brought in the most dollars invested in the first half of 2024, reflecting growing investor interest in advanced AI technologies and their applications.
Machine learning and blockchain completed the top five verticals, with machine learning companies securing $4M and blockchain companies receiving $2M in H1 2024.
Percentage of Foreign Activity in Pre-Seed
Interest in Canadian pre-seed companies from US investors has been rising consistently since 2021, reaching 27% in H12024 — a notable increase from 2023 (22%).
International investors (investors from outside of North America) continue to show interest in the Canadian startup ecosystem, participating in 9% of all pre-seed deals in 2024. Though the participation declined 2% in comparison to 2023, it still represents a notable and growing participation from international markets.
Current State of Seed Investing in Canada (Seed Rounds only)
Seed investing reached $136M from 53 deals in Q22024, representing an increase of 4% in deal count and 12% in dollars invested from Q12024. Although investing in seed increased in Q2, on a year-over-year basis, we saw a significant decline in both deal volume (17%) and deal value (45%).
Average deal sizes fell to $2.5M in H12024 from the high of $4.1M in 2023.
Ontario was the most active province for seed investments in H12024, with $110M invested across 44 deals, representing 43% of total seed investments ($257M) and 42% of all seed deals (104). Quebec followed with $49M from 19 deals, while BC and Alberta saw $41M and $39M invested, respectively. In Atlantic Canada, Nova Scotia led with $11M from 5 seed investments, accounting for 62% of all seed investments in the region.
Seed Activity by Deal Size
In H12024, 40% of all deals with disclosed values were below $1M, a notable increase from 2023 when only 27% of deals were under $1M. One-third (35%) of all disclosed deals fell within the $1M to $3M range, and 12% were between $3M and $5M. Deals above $5M made up 13% of the total, totaling $121M, and accounted for nearly 47% of all investment dollars for the year
Top Sectors Attracting Seed Investment
The ICT sector attracted the majority of seed funding in H12024, with $145M across 43 deals, but this marked a significant drop compared to the past three years.
Life sciences investments also declined to $49M from 36 deals, down from $252M across 75 deals in 2023. While seed funding for companies in the life sciences sector since 2023, the deal count remains strong, indicating ongoing support for startups. Cleantech and agribusiness sectors saw similar declines, as investors prioritized companies in the later stages in the first half of 2024.
Top Verticals Attracting Seed Investments (H1 2024)
SaaS companies remain a key focus for seed investors, leading all verticals with $29M invested across 7 deals in H12024. While HRTech secured the second-highest investment amount at $28M, the artificial intelligence vertical saw the most activity after SaaS, raising $9M from 5 deals. Fintech also showed strong activity, with $16M invested across 4 deals.
Top 10 Canadian Cities for Seed Investment
Toronto has maintained its position as the leading city for seed investments in Canada since 2021, securing $864 million across 230 deals, followed by Montreal with $509 million from 144 deals. Calgary ranks third by deal count (96 deals) but is surpassed by Vancouver in investment value, with Vancouver attracting $351 million compared to Calgary’s $225 million during the same period. Edmonton completes the top five with $110 million invested across 37 deals, showing strong activity in the Alberta region.
Percentage of Foreign Activity in Seed
Unlike pre-seed investments, the participation of US investors in seed investments saw a slight decline for the second consecutive year, reaching 30% in H1 2024.
This still reflects substantial involvement compared to the pre-pandemic period when US participation was around 22%, and marks a nearly threefold increase from 11% in 2016 to a peak of 33% in 2023. Similarly, international investors (outside North America) were involved in 13% of all seed investments in H12024, a 2% increase from 2023, but this remains lower than their peak participation of 17% in 2022, highlighting both the volatility and the growing influence of the Canadian startup ecosystem in attracting global market attention.
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